By Zack Sampson, News Staff
Northeastern administrators, along with officials from other major Boston non-profit organizations, are in discussions with the city’s government about a possible increase in the Payment in Lieu of Taxes (PILOT) program.
Boston’s PILOT policy allows the city to draw revenue from major tax-exempt non-profit institutions, like universities, hospitals and museums, which own about 52 percent of the city’s land. The program is voluntary but 32 local colleges, health institutions and museums participate.
A task force appointed by Mayor Thomas M. Menino in 2009 recently announced recommendations for an altered program that would ask non-profit organizations to contribute up to 25 percent of the amount they would pay if taxed.
This change, intended to provide financial support for city services such as police protection and snow removal, would increase Northeastern’s payments by nearly $715,000 each year for the next five years.
In 2009, Northeastern made $30,571 in direct payments. Its total PILOT contribution also included another $1,947,985 paid on normally untaxed property. In total, Northeastern’s offering was $1,978,556 – far less than the nearly $37 million the task force estimated the university would have paid if all its property was taxed.
Under the recommended guidelines, city officials would expect Northeastern to contribute more than $9 million, 25 percent of what the university’s tax payments would be, in five years.
Detailed in the task force’s final report, the expected increase in Northeastern’s payments is greater than those of all other Boston-area colleges. Northeastern’s position on the recommendations is still unclear.
“We’re supportive of this city and mayor, and certainly we understand that a strong city is good for all of us,” said Mike Armini, senior vice president for external affairs. “We’re going to have conversations in which we will work all this out. We just want to make sure that everyone understands the value we bring to the city is more than cash payments.”
But the task force also recognizes the nearly $2 million in property tax payments already made by the university and allows for a 50 percent deduction in payments, according to an organization’s community benefits credit. Community initiatives such as service projects and scholarships provided to Boston-area students are part of this credit.
With all parts of the PILOT program considered, Northeastern’s actual expected payment in five years is $3,604,971.
Armini said the community benefits credit is particularly relevant to Northeastern. He pointed to a 2009 Community Service Report which the university submitted to the task force as evidence. In the report, officials in the Office of Government Relations and Community Affairs wrote, “Northeastern is the most extensively civically engaged institutional community in Boston,” saying that, by their estimation, the school’s students, faculty and staff contribute $17.6 million in service and funding to the area.
With this in mind, Armini said a significant concept to recognize in discussions about the recommendation is that “contributions universities make to the city are far larger than past payments.”
Armini said an important part of conversations between non-profit organizations and the city is the potential spread of the proposed PILOT program.
“One thing that I know has come up is a lot of the universities own property in many different cities and towns,” he said. “Northeastern has property in Burlington, Dedham, Nahant, Brookline, Ashland. So one of the things that we have to be mindful of is whether or not this could replicate itself in other communities.”
Though he did not recognize this factor as a problem, Armini said such a spread could increase the financial strain of PILOT.
“I mean, obviously any time you’re making these kinds of payments, it has to come out of the budget. It has to come from somewhere,” he said.
Still, Armini said he does not anticipate the city’s request for increased contributions as an obstacle to the physical expansion of Northeastern’s campus amid the university’s rapid growth.
“If we need more teaching or research facilities, those decisions are driven by institutional planning, it’s not driven by taxes or payments,” Armini said. “I don’t think any university would be curtailing its academic aspirations based on PILOT. You have to put your students, and your faculty, and your mission, first.”
