By Emily Cassel, News Correspondent
Boston’s universities, along with hospitals and other tax-exempt non-profit organizations, may soon be asked to contribute millions more annually to the city of Boston as part of the city’s PILOT program.
Boston is one of a small number of American cities that uses the PILOT – which stands for payment in lieu of taxes – a voluntary payment made by tax-exempt organizations. Because non-profit organizations are exempt from taxation, the payment in lieu of taxes helps cover city services such as the police force and snow removal.
A task force was appointed by Mayor Thomas Menino in January of 2009 to “evaluate the relationship between the city and tax-exempt organizations,” according to the City of Boston website, Cityofboston.gov, with the goal of “setting a standard level of contributions” by tax-exempt organizations.
In addition, the task force was to “develop a methodology for valuing community partnerships made by tax-exempt institutions, propose a structure for a consolidation program and payment negotiation system … and clarify the costs associated with providing city services to tax-exempt institutions.”
If necessary, the task force would then recommend changes in legislature at the city or state level.
The city is pushing for institutions to pay 25 percent of what they would be paying in taxes, were they not exempt.
Mike Armini, Senior Vice President for Administration and Finance at Northeastern, said that if enacted, the new policy would put pressure on the university.
“We don’t know what’s going to happen yet, but it may be that Northeastern has to pay millions of dollars in additional funds to the city if these changes are enacted,” Armini said. “It’s a difficult time for many universities, and to have to pay an additional $3 million to $4 million annually, which is the number we’re looking at, would have an impact on the institution, there’s no doubt about it.”
The task force is still making a decision regarding the PILOT owed by universities, but Armini said he hoped the task force and the mayor would take the many non-monetary contributions made by the university into account when making their decisions.
Armini said Northeastern currently spends over $10 million annually on scholarships for Boston residents, $6.2 million a year in public health initiatives around the city, and about $2.1 million in public safety initiatives around the city. In addition, the university provides Boston Public School students with tutors in math and reading and allows public schools to use Matthews Arena for events.
“We’re contributing approximately $30 million a year in community benefits,” Armini said. “And those are the programs that some people will look at to reduce first if we have to make a very large PILOT payment.”
Dustin Sylvia, a freshman communication studies major at Northeastern, said that he supports the increase as long as the money is going to public programs, and the school doesn’t cut programs such as sports.
“If [the administration] doesn’t cut anything out of my college experience, then I support this, because it doesn’t affect me that much,” Sylvia said.
Joel Yamasaki, a freshman business major, said that if the city needed money he wasn’t entirely opposed to the idea of colleges paying more.
“Actually it might not be such a bad idea,” Yamasaki said. “If you look at the high percentage of college students in Boston, it would disperse the costs among a lot of people.”
While Armini said it was too early to say for certain what the outcome of these changes would be, he said that increase costs could result in changes for the university.
“Any time there’s more pressure put on our budget, we have to find ways to either generate revenue or cut spending,” Armini said. “Ultimately, we have a budget, and we have to balance it.”
