May 20, 2018
Nonprofits Paid City of Boston $32M in Lieu of Taxes

August 19, 2017 —-Thirty-two major, Boston-based nonprofit organizations, from which the city sought $47 million in voluntary payments in lieu of property taxes during the last fiscal year, made payments ranging from 6% to 100% of the amount requested, while another 17 made no payments at all, according to figures released by the city.

The city, which released the figures this week, said it received $32.4 million in what are called PILOT (payment in lieu of tax) contributions in fiscal 2017, which ended June 30, or $0.3 million (0.9%) more than it received the year before.

The city sought a total of $49.5 million from 49 cultural, educational, and health care organizations, which if they were not tax-exempt, collectively would have owed $432.3 million in property taxes.

Beth Israel Deaconess Hospital, for example, which would have owed $25.24 million in taxes were it not tax-exempt, paid all of the $3.17 million requested. Similarly, WGBH, which would have owed $1.55 million in taxes if not tax-exempt, paid the $138,807 requested.

Boston University, which traditionally has paid the most in lieu of taxes to the city, paid 76% of the $8.05 million sought in fiscal 2017. If it were not tax-exempt, the university would pay $64.31 million in property taxes.

While nonprofits by law are exempt from paying federal, state, and local taxes, voluntary payments in lieu of those taxes are sought to offset the cost of municipal services they receive, such as street maintenance, snow clearing, trash removal, and police, fire, and related emergency services.

Sixteen nonprofits made no PILOT payment to the city in fiscal 2017. For example, according to city data, The Institute of Contemporary Art, which would have owed $1.15 million in taxes if it were not tax-exempt, was asked to voluntarily pay $88,140, but paid nothing. The New England Aquarium, which would have owed $2.18 million in taxes if it were not tax-exempt, was asked to voluntarily pay $219,435, but also paid nothing, as did the Museum of Science, from which $79,156 was requested and which would have paid $1.08 million in property taxes if it were not tax-exempt.

Tufts University was the only major higher education institution that paid the full amount requested, $569,899. Simmons College, from which the city sought $496,051, and New England Conservatory, from which the city requested $58,649, made no payments.

In addition to Boston University, higher education institutions that made either a full or partial PILOT payment included Berklee College, Boston Architectural College, Boston College, Boston Conservatory, Emmanuel College, Emerson College, Fisher College, Harvard University, MCPHS University, New England College of Optometry, Northeastern University, Show Institute, Suffolk University, Wentworth Institute of Technology, and Wheelock College.

Beginning in 2011, the city, with input from nonprofit educational, medical, and cultural institutions, launched a program that asks nonprofits which own property valued in excess of $15 million to voluntarily pay a share of property taxes that would be assessed if the property were not tax-exempt.

The city said it received $17.2 million (113.8%) more in fiscal 2017 than it in the year prior to the implementation of the new PILOT guidelines.

Each nonprofit is eligible for a community benefits deduction generally limited to 50% of the PILOT contribution. The guidelines also allow a deduction for any real estate taxes paid on property owned by the institution that is used for a tax-exempt purpose.

Many nonprofits that decline to make PILOT payments previously have said they make up for it by contributing to the community in many ways, including providing scholarships, medical services, and reduced or free entrance to cultural institutions.

Last year, in a letter to a legislative conference committee, Massachusetts nonprofit leaders noted that forcing Massachusetts nonprofits to pay property taxes "would significantly impede the operations of nonprofits, harm their fiscal solvency and threaten access to essential programs for residents across the state."

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