Lack of Participation in the City’s Payment in Lieu of Taxes Program Upsets City Council

After seeing a decline in participation in the City’s Payments in Lieu of Taxes PILOT agreement with tax-exempt institutions, Councilors Lydia Edwards and Anissa Essaibi-George filed a hearing order to give a nudge to these institutions to contribute more to the City of Boston.

“I am presenting this hearing order today because of the decline of universities in the Payment in Lieu of Taxes PILOT program we have in the City of Boston,” said Essaibi-George. “At the same time that they are declining we find that many of our home owners are facing incredibly increasing taxes on their property.”

Boston depends heavily on property tax revenues to fund education, housing, social services, road plowing and maintenance, police and fire departments and other investments in public goods.

However, nearly half of Boston’s land is tax-exempt, including land owned by educational, medical, cultural and religious institutions, city departments, state agencies, the federal government, and quasi-public organizations such as the Boston Planning and Development Agency and the Massachusetts Port Authority.

The Councilors argued that many of these institutions depend extensively on the city’s infrastructure, housing stock, roadways, and social services.

“Many of the institutions say the programs they offer make up for the PILOT payment plans,” said Essaibi-George. “Yes, those programs are indeed powerful but the city plows the roads for their tens of thousands of employees to get to work and delivery vehicles and buses, and that costs money. The city protects their buildings from fire and crime and that costs money.”

The Mayor’s PILOT Task Force calls upon tax-exempt institutions to submit payments for 25 percent of the assessed value of their property, deducting from that payment certain community benefits that demonstrate clear value to Boston residents and any real estate taxes paid based on use.

Participation in the program has deteriorated significantly since 2012, with institutions paying only 65 percent of dollars requested in 2017.

In 2017, educational, medical, and cultural institutions were expected to contribute approximately $49.5 million in cash and $52.3 million in community programming but, those programs only contributed $32 million. Several institutions did not contribute at all last year and some even charged the City for Boston Public Schools’ use of athletes fields.

“One look at an income statement shows that they have indeed thrived despite that some institutions have not paid a penny to the city in years,” Essabi-George said. The matter was assigned to the Committee on Government Operations for a future hearing.