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Letter from PILOT Action Group: NU, wealthy nonprofits should pay fair share

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Letter from PILOT Action Group: NU, wealthy nonprofits should pay fair share

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Dear President Joseph E. Aoun,

We, the PILOT Action Group, are a coalition of Boston-area community, education, student, housing, faith and labor organizations. We thank you for your commitment to making Boston a city that provides education and opportunity for all. We thank you for striving to live up to your words: “We have to reaffirm this social compact [to society] in whatever community we find ourselves. … If we want to be global and national, we have to be local. We need to be more in tune with the needs expressed to us than we have been.”

The relationship between Northeastern and the city of Boston is incredibly rich and important to both the university and the city.  In 2009, the city of Boston sought to address its relationship with large tax-exempt hospitals and universities when then-Mayor Thomas M. Menino created a task force to formalize the Payment in Lieu of Tax, or PILOT, program. The newly reformulated PILOT began in fiscal year 2012. The city’s PILOT program collects funds from Boston nonprofit institutions, from hospitals and universities to cultural institutions. The current PILOT program asks large nonprofits to contribute 25 percent of their potential property taxes based on their 2010 tax assessment, and includes a 50 percent community-benefit offset to serve the needs of Boston residents.

We believe our wealthy and world-renowned nonprofits should pay their fair share to the city. We recognize Northeastern has made various community benefit contributions to the city, yet there is little transparency in reporting to the city. Northeastern seeks to be a good neighbor but there is little direct community engagement with key community organizations. Boston residents should have input to gain appropriate return for the tax exemption afforded to hospitals, universities and major cultural institutions covered by the PILOT program, including Northeastern University.

Northeastern’s property value is $2 billion, $1.4 billion of which is tax-exempt. If Northeastern was not exempt from property taxes, its annual tax would be about $44 million. In fiscal year 18, Northeastern’s annual PILOT contribution requested by the city was $11 million, half of which can be offset in community benefits, so the city requested $5.5 million in cash payments. Yet Northeastern only paid $1.5 million. And without reported community benefits, this totaled only 13 percent of the city’s request.

President Aoun, we ask you to be a leader in Boston, and to set an example for all other large universities and nonprofits. We ask three things of you:

  1. Pay your full PILOT cash contribution for fiscal year 18 by adding $4 million to the $1.5 million you’ve already paid, and your full ficas year 19 contribution as requested by the City.
  2. Institutionalize a reporting process for community benefits as requested by the City of Boston.
  3. Work with community organizations to create a community engagement process for determining community benefit programs.

We believe the university has a critical role to play in the community. We would very much like the opportunity to meet with you and your community benefit team to further discuss our concerns. Thank you in advance for contributing Northeastern’s fair share to Boston and leading the education sector.

Please inform us of your response by January 1st, 2019.

Sincerely,

The PILOT Action Group

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