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Boston Task Force Asks Nonprofits To Pay Up

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The city of Boston (file image)

The city of Boston (file image)

420x316-grad-stevens1 Carl Stevens
Carl Stevens is an award-winning general assignment reporter for WBZ...
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BOSTON (CBS) – A special Boston Mayoral task force released a plan Wednesday designed to get nonprofits to pay more to the city in lieu of taxes.

It is an issue that has bothered Mayor Tom Menino for quite awhile, because there are so many tax-exempt nonprofits in the city. So after two years of study, a mayoral task force came up with a formula for getting universities, hospitals and other nonprofits to pay more in cash and good deeds.

“My goal in establishing this task force has been to update the [PILOT] program so that it is fair and consistent,” said Mayor Menino. 

“It’s about fairness,” Menino told WBZ News Radio 1030. “It’s about how do you want to participate in this city that you get city services from: police, fire, public works. I think you should share in those costs.”

Mayor Menino Talks to WBZ News Radio

Right now there is a huge discrepancy between what various nonprofits pay to Boston in lieu of taxes. A recent report by the Lincoln Institute of Land Policy showed that Boston University, for example, pays the equivalent of about 8.5% of what it would owe in property taxes. By comparison, Northeastern Univeristy paid less than one percent.

Not surprisingly, several nonprofits in the city are voicing opposition to the plan. A Boston College spokesperson told the Boston Globe that they are among those opposed to the plan. Menino minced no words in reaction.

“That’s typical. You expect that from BC,” the mayor said. “They’re always angry about anytime they have to participate in programs that will help the city of Boston.

WBZ News Radio 1030’s Carl Stevens reports

The bottom line of the task force’s recommendations will be for nonprofits to pay, in cash and good deeds, 25 percent of what they would owe in property taxes. That number is far above what most pay now. The program will remain voluntary.

From the Mayor’s office:

Task Force members voted unanimously to accept the following PILOT program recommendations:

  • PILOT program should remain voluntary.  Task Force members hope the “spirit of partnership” continues to be a motivating force with payments in lieu of taxes.  Members did not recommend changes to state law to establish legal or statutory requirements for non-profits.
  • PILOT program should be applied to all nonprofit groups.  Task Force believed that all nonprofits should participate in the program.  However, the Task Force determined that an exception should be made for smaller nonprofits that might lack the resources to fully engage in the PILOT process.  Task Force members suggested a total property value threshold of $15 million for program participation.  
  • PILOT contributions should be based on the value of real estate owned by an institution.  Payments should reflect the size and quality of the institution’s real estate holdings and be consistent with the approach taken for taxable properties. The Task Force believed that PILOTs should be calculated as 25% of what the nonprofit’s property would yield if taxable.  It is suggested that each nonprofit receive an exemption of $15 million in property value. 
  • Give credit for community benefits offered by the institution.  The Task Force recommended that a credit for Community Benefits should be limited to 50% of full PILOT payment.  Examples of community benefits include public/community health initiatives, targeted scholarships for Boston Public School students, and summer jobs.  
  • Give credit for property taxes paid on certain properties.  Institutions would receive a credit on their PILOT in the amount of real estate taxes paid on properties that would ordinarily qualify for a tax exemption based on use.
  • Allow institutions and the City of Boston time to make adjustments that are in keeping with the new PILOT calculation formula.  The Task Force suggests that a gradual approach will allow for a smooth transition to the new program and that the new formula should be phased in over a period not less than five years.
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