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BU's a lot different than Northeastern
By adamg on Tue, 11/30/2010 - 9:31am
At least, when it comes to reimbursing Boston for city services.
A new report by the Lincoln Institute of Land Policy in Cambridge looks at "payments in lieu of taxes" negotiated between some municipalities and their non-profit, non-property-tax paying landowners. Boston collects more of these payments than any other city in the country (and Massachusetts has much more cities collecting them than any other state), but because they're negotiated separately, the amount each local institution pays varies considerably.
The money shot of the report, at least for Bostonians, is a chart (page 22, if you download a copy of the 4.5M PDF file) showing just how much local non-profits paid the city in 2009. At the very top is BU, which paid $4.89 million, followed by Harvard, at just a pinch under $2 million. Northeastern? It paid all of $30,571. Now, the total worth of BU's and Harvard's land holdings in Boston is more than that of Northeastern, but not that much more. The authors also look at how much in taxes the institutions would have to pay if they were for-profit concerns and what percentage of that amount the voluntary payments reflect: For BU, it's 8.5%, Harvard, 5% and Northeastern, 0.08%.
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Comments
Some paid none
The report's list also shows that Emmanuel, Simmons, and Fisher didn't make any PILOT payments in FY '09. Anyone know why? Good negotiating?
Like NU they might be paying
Like NU they might be paying real estate taxes on, at least some of, their properties rather than deal with PILOT. Someone really needs to be asking why Harvard and to a lesser extent BU is able to own and operate some property, apartment buildings & offices leased out to private entities , which aren't being used for academic purposes without paying taxes on it.
Somebody should ask, but the
Somebody should ask, but the probable answer is that they do pay taxes. BU has a for profit subsidiary that handles activities not directly connected to the educational mission. The bookstore, for example, falls under this entity. I suspect commercial real estate does, too. If so, the properties would be taxable. I'm sure Harvard has a similar subsidiary.
As I mentioned in a comment
As I mentioned in a comment below, if institutions aren't using the land for institutional uses, they pay the same taxes as any other land owner. MIT is the largest tax payer in Cambridge, largely due to all of the science/lab space that it owns.
Massachusetts has MORE cities
Massachusetts has MORE cities collecting them. Or much more.
The more the merrier
Fixed, thanks!
Actually now that I think
Actually now that I think about it it should be many more. Cities can be enumerated and so many is appropriate as opposed to much which is used for unenumerated quantities.
Sorry about that
signed, Grammar Nazi.
Why pay at all?
Yes, the PILOT program leads to inequalities.
But, really, how many of us pay more in taxes than the IRS says we owe?
Not many
But I was told by a former senior IRS agent that many in the HNW crowd intentionally overpay so they avoid an audit.
Make it fair, tax them all
Universities gobbling up real estate then paying no taxes on it is one of the biggest scams out there. Time to revoke their tax-exempt status.
Churches, too?
Churches, too?
I agree
These colleges and universities haven't been "non-profit" in quite some time. As with many other sections, this portion of the tax code should be updated to reflect current realities.
meanwhile, they provide
meanwhile, they provide thousands of students who spend money on local stores while using almost 0 city/state services.
To suggest they use "almost
To suggest they use "almost 0" state and city services is absolutely ridiculous. You need a source to back that crap up, pronto.
I should also fix your quote...
"meanwhile, they provide thousands of students *who overpay for their college education to* spend money..."
If these colleges want to charge $40,50k a year, they're clearly not anywhere near as 'non-profit' as they like to claim to be... and should have to pay all local taxes. Non-profits own close to 50% of the city's land at this point... and don't have to pay any taxes. It's the #1 reason why the city struggles to meet its budget. If the colleges and other big-time money-making non-profits had to pay their fair share, Boston would almost be immune to budget gaps.
I won't disagree with you on
I won't disagree with you on the non-profit issue.
But the 50% land number needs to be presented accurately. As noted in a comment below, the vast majority of that (80% of the 50% or 40% of the total land in the City) is owned by the City and State. According to the BRA, only 2% of the City's land is owned by "Higher Education and Medical."
Jobs
Lots of jobs - most with good pay and benefits. People with jobs spend money and pay property taxes.
Funny how private industry demands bribes to stay in the state, but Universities are a serious target for demands for money.
and?
I agree that people with jobs spend money and pay property taxes.
But that's true whether their employer also pays taxes or not. So I'm not sure I get your point.
Leased land?
I know Northeastern leases a large part of it's west campus from Wentworth, are they not considering that part of their property when factoring this PILOT payment?
That isn't actually true and
That isn't actually true and anyone familiar with Northeastern IMP over the last decade could tell you that. Wentworth has unofficially been peddling that fib for years out some sort of school pride issue. I can't blame them with MassArt invading their campus, but it's rather silly to hear tour guides tell that outright lie to perspective students.
Good to know
I have a friend who is a Wentworth alumn who insists his tuition was low because Northeastern leased property from them!
The tuition thing is another
The tuition thing is another fib I've heard peddled around which doesn't make any sense. The whole reason why Wentworth's tuition has been low for years is an utter lack of expansion and property maintenance. Look at most of Wenthworth's buildings, they are quite ill maintained and austere. With the expansion of their campus and the badly needed rehabilitation of their existing facilities, their tuition will be climbing significantly in the next few years.
Ask your friend how and why any institution would get financing (which would be impossible) and spend several hundred million dollars constructing buildings on land they did not own any stake in.
It's time for the old
It's time for the old institutional land grab canard to appear.
It is a complicated problem and it is even more complicated when you look at the numbers. According to 2000 BRA data, 50% of the land in Boston is taxable and 50% is tax exempt. What I think is interesting is how that 50% tax exempt breaks down: 26% owned by the state, 14% owned by the City of Boston, 8% by "other exempts," and 2% by Higher Education and Medical.
Same is true in Cambridge. "Private Education" as the City defines it, makes up 9.5% of the land area in terms of ownership. As someone who grew up around here, I had always assumed (and heard) that MIT and Harvard owned something like 40% or 50% of the land in Cambridge.
Clearly the assessed value of the land is really high but I think too often the discussion focuses on the acreage of land.
One other point to keep in mind is that the institutions pay commercial taxes on land that is not used for institutional uses. MIT is the top commercial taxpayer in Cambridge. For all the commercial/industrial land in Allston, Harvard is paying the commercial/industrial tax rate on that land until it changes the zoning to make that land part of its campus.
All that said, clearly the PILOT system in Boston is oddly unbalanced. I'm amazed at how little Northeastern pays.
"Other exempts" = churches,
"Other exempts" = churches, for the most part?
Northeastern
It is a low PILOT payment - which as we all know is "voluntary, ha ha - but NU also pays about $2 million in property taxes on property it doesn't have to, because the university agreed at one point to just hold the city harmless on land acquisitions.
Add PILOT plus taxes for every institution and you would get a very different chart. And now Boston is going to go after high schools, museums and other institutions, not just colleges and hospitals. Houses of worship, though tax-exempt under the same statute, will likely be a no-go for revenue.
(West campus leased? Not so much.)
All non-profits that own land must pay, or none
You can't just cherry-pick the institutions you want to pay - you can't just say "big universities". It has to be all or nothing. All non-profits that own land within the city's limits.
So, big universities such as
Northeastern University
Harvard University
Boston University
and also small colleges such as
Emerson College
Berklee College of Music
and hospitals such as
Mass General
Brigham & Women's
Beth Israel / Deaconess
and big museums such as
Museum of Science
Museum of Fine Arts
and, small museums such as
The Gibson Museum
and public television stations such as
WGBH
and homeless support organizations such as
Pine Street Inn
and others such as
Salvation Army
YMCA
YWCA
etc., etc., etc.
When you're all willing to tax Elmo, we can have a serious talk about this.
don't be stupid
any rational being can agree that churches and colleges should be treated differently, and that even institutions within the same sphere can and should be treated differently -- our tax code even recognizes that with its different income brackets. So, if one school makes its tuition affordable for regular families, while the other charges $45k a year, I think we can all agree that maybe they should be taxed differently.
And who will be the grand decider?
It's not stupid. It's practical and fair.
You're obviously not a homeowner. There's only one property tax rate for residents and one property tax rate for commercial properties.
And, you're obviously not a Massachusetts' taxpayer. We only have one rate for income taxes in the Commonwealth.
Many cities and towns have a
Many cities and towns have a residential property tax exemption, where a fixed amount is deducted from any property tax bill where the owner lives there. It would be easy to do the same thing for non-profits -- just pass a law that the first X million of property value is untaxed.
Elmo's World
That little furry red bastard has been skating by on our penny for far too long...and LAUGHING all the way to the bank because of it!
Isn't that right, Mr. Noodle!?
Mr. Noodle is keeping mum.
How about reevaluating the "tax-exempt mission"?
Universities are not really "charitable organizations", are they? They sell an expensive product that many cannot afford, and compensate most of the people involved in selling the product pretty generously, especially their executives. Rosie's Place charges the homeless nothing for the services provided, and pays the majority of its employees a lower-middle-class wage.
Harvard University and Pine Street Inn are hardly in the same business- they have very little in common besides their non-profit status. How large is the "endowment" of the Great Boston Food Bank, for instance? Do they even have such a thing?
Very well put
.