IN LATE OCTOBER, the city of Boston posted the preceding year’s payment in lieu of taxes (PILOT) contributions of large institutions with over $15 million in property holdings. Alas, in fiscal year 2023, they fell short again.
Some will cheer that the institutions contributed $35.7 million in cash, but collections were short by over $28.5 million. Since the program’s creation in 2010, the city has been shorted over $204 million. Imagine what the city could have done had those funds been collected.
In 2018, unions, community groups, faith-based organizations, and housing advocates came together in a coalition, the PILOT Action Group, to address program shortcomings and advocate for stronger policy. This year, only 22 percent of the 45 Boston-based PILOT-requested institutions made full payments consistent with the formula set with institutional participation over a decade ago. The question of whether Bostonians are getting a fair deal remains as relevant as ever.
Boston relies heavily on property taxes as the major source of revenue to fund city operations. Property taxes make up 74 percent of the budget, a number that has risen steadily over the last 20 years from 52 percent. With over half of Boston’s land deemed tax exempt, residents and commercial owners carry the burden of funding the city, a regressive tax burden given Boston boasts some of the wealthiest institutions in the world as neighbors.
Boston requires consistent revenue to meet resident needs. PILOT, the brainchild of former Mayor Thomas Menino and the work of the PILOT Task Force, was a creative solution to the city’s unique identity as home to some of the nation’s most prestigious educational, medical, and cultural institutions. Institutions like Boston University, Harvard, Boston College, and Northeastern (as well as large hospitals and cultural centers) all contributed to city life, but they also hold large swathes of land, use city services, impact communities and are tax exempt.
The PILOT Task Force brought together institutions, elected officials, and community leaders and developed a consensus set of guidelines. Institutions with over $15 million in property were asked to contribute 25 percent of what their commercial tax would be based on an initial assessment from 2009. The 25 percent was an approximation of the percentage of the city budget dedicated to essential city services. An institution could offset half of that in the form of a “community benefit” which they needed to report to the city.
Yet each year contributions have failed to meet even this modest standard. While some smaller institutions may be financially challenged, many larger institutions also consistently fall short. Boston College makes some payments, yet their PILOT payment of $434,777 represents only 11 percent of the cash the city requests. BC does not comply with the city’s requests on community benefit and files no report.
Harvard’s cash contributions consistently fall short. The city requested $7,018,635 and Harvard contributed $4,044,987, providing only 58 percent of the requested cash. These institutions are well endowed; Harvard’s endowment stands at $50.7 billion—more than twelve times Boston’s annual budget—and could certainly afford $7 million.
Overall, hospitals come closer to the PILOT standard, but there is also room for improvement.
Another challenge beyond the cash: while 50 percent of PILOT requests can be offset by “community benefits,” there are no common standards for what qualifies. Over $500 million has been credited as community benefits since the program began. Many individual projects are laudable, but given the lack of standards for benefits or community engagement, it’s clear this $500 million is less impactful than it could be.
How can this change? One thing is clear: The city cannot sit back and wait for the institutions to act. While many institutional leaders say they are committed to the future of the city, action—or in this case, inaction—speaks louder than words. Clearly, there needs to be a reengagement and recommitment by leaders. Providence and New Haven recently engaged in similar discussions with their large institutions. Most notably Yale and New Haven arrived at a
six-year agreement in 2022 in which Yale announced it would nearly double its current yearly payments to the city of New Haven. Combined with money the university already promised, Yale will contribute $135 million over six years in lieu of property taxes. Recently Providence created a new PILOT payment program, where Brown and others committed to hard cash payments.
What about Boston?
The PILOT Action group continues to advocate for a range of reforms. First, Mayor Mixhelle Wu should appoint a new PILOT task force comprised of community advocates, institutional leaders, and city officials. The task force should be charged with the following responsibilities:
● Engage with institutions to rebuild program consistency and consistent payment.
● Develop a clear framework for community benefits. The city could designate specific “buckets for contributions,” much as the attorney general guidelines request nonprofit hospitals to contribute to buckets to address the social determinants of health. A task force could delineate priority areas—e.g., housing, childcare, education, transit, etc.
● Require a defined community engagement process so that community actors can weigh in as to what counts as “community benefit.”
● Implement the 2021/2022 property valuation of the institutions. The PILOT Action Group successfully campaigned for revaluation of the PILOT properties, but the City still uses earlier valuations, despite the rapid increase in property values since.
The bottom line: everyone must contribute to the common good. This includes the city’s educational, medical, and cultural institutions. By respecting common standards and centering engagement that works “with” and not just “for” communities, the city can realize Mayor Wu’s vision to “reach deep in the dirt to pull up the roots of the challenges that block our view of the
sky” and build a better Boston.
Enid Eckstein is co-chair of the PILOT Action Group, Steve Dubb is a volunteer for Boston UJIMA Project and author of the Road Half Traveled: University Engagement at the Crossroads, and Lydia Lowe is executive director of the Chinatown Community Land Trust. All the authors are part of the PILOT Action Group.