Reforming Boston’s PILOT Program

When I was an undergraduate at the University of Chicago, I worked in the development office for the College Telefund. A cadre of students gathered each evening from 6 to 9PM, calling alumni to ask for “even a modest donation to increase participation in the Annual Fund”. It was a thankless job, complete with (some) irate folks on the other end complaining that the Grey City was now too liberal, too encouraging of alternative lifestyles, too whatnot have you.

It’s been over twenty years and I still remember the script verbatim. There was some play allowed as we could throw in a few stock phrases, including “The physical plant is in need of your assistance.”

At the time, I did not know what was meant by a “physical plant”, suffice to say that it sounded somewhat humorous. I came to know that this phrase refers to the necessary infrastructure required to maintain a facility. With this knowledge, I used to wander around the august campus and identify key parts of our physical plant, making notes in a notebook with a phoenix rising out of the flames. This was not some symbol of Youthful Rebellion, but rather the University’s seal.

College campuses and their physical plants are tremendously valuable as symbols of their institutions. Beyond mere symbol and image, they are also in many cases valuable places of real estate.

No place is this more apparent than in Boston. The city’s dozens of colleges and university are an integral part of the city’s cultural, historical and economic landscape. And with few exceptions, tend to be in areas of the city where land values are particularly high.

Boston has a number of challenges, as it leans quite heavily on property taxes to fund a myriad of civic programs and basic services. Additionally, over 50 percent of all the land in Boston is tax-exempt.

Obviously, the city of Boston delivers services to these campuses and doesn’t hand them an official bill.

However, the city does have the Payment in Lieu of Taxes (PILOT) program which asks all non-profits to make a voluntary donation to the city coffers. There is no binding resolution, no requirement, no official decree that requires this dispensation.

Not surprisingly, some of the institutions just don’t pay. In 2016, Harvard University paid approximately half their recommended payment and Northeastern University elected to offer up just a bit over twenty percent of their payment.

Just to give you a sense of what schools might be required to pay, let me share with you that a 2009 study conducted by the city of Boston demonstrated that educational and medical tax-exempt property would have generated $347.9 million if it were taxable.

That’s a whole trailer of textbooks, right?

Maybe even a few affordable housing units to boot. Boston could use a few more.

Unlike other industries, colleges and universities can’t just get up and leave. Most of the ones have invested many millions in their, well, physical plant, elaborate learning centers, and so on.

This situation presents an opportunity to address some of Boston’s most pressing concerns.

My three point plan is as follows:

1) Require that all colleges and universities deliver their annual voluntary payments to the city of Boston.

2) Require complete transparency in how colleges and universities calculate their “community benefits” as part of their payments via the PILOT program

3) Require that a percentage of these PILOT programs be dedicated to developing affordable housing units.