Boston’s Non-Profit PILOT Program

The PILOT program, Payment in Lieu of Taxes, is currently a volunteer program for Boston’s non-profit organizations to make small payments to the city of Boston. Currently, the program’s volunteer status has resulted in these non-profits paying close to nothing to the city, placing a burden on us taxpayers. To put it in numbers, “Currently, the city’s universities and hospitals contribute $13.3 million under the voluntary PILOT program,” reports The Boston Herald’s Thomas Grillo, “If they were taxed as commercial properties, the tax bill would be $344.8 million.”

Now, however, our government wishes to reinstate the program as a mandatory one, an overhaul that would call for nonprofits to pay 25% of their properties’ tax assessment for city services, a move that would call for Hospitals and Universities in Boston to pay $25 million more in annual payments. However, certain nonprofits could receive credits for properties and community benefits deduction that could reduce the payment from 25% to 12.5% of the assessed value.

“We’re trying to devise a formula that works for nonprofits but works better for Boston taxpayers,” said City Councilor Stephen J. Murphy, a member of the task force. “If nonprofits cooperate, we could get an additional $4.5 million in 2011, which would erase the library’s $3.6 million deficit.” This however, raises certain concerns about the cost of doctors visits and college tuition, things already considered to be more expensive than they should be, continuing to go up.

As expected, complaints from non-profits have been filed: Grillo reports, “In a letter to the PILOT Task Force, Wentworth Institute of Technology President Zorica Pantic said if her school is required to make the contribution in cash she would have to raise tuition by 3 percent and cut nearly 6 percent of the school’s work force. She suggests that the 25 percent figure be a ‘goal’ and ‘not a firm standard.'” Hospitals have also reported that if implied, the overhaul in the PILOT program could cause hospitals to charge an additional $2 per doctor visit. However, task force manager Steven Kidder replied, “We’re not looking to unduly burden institutions with this program, but everyone recognizes that the city is so reliant on the property tax, and the total land area is over 50 percent that is occupied by nonprofits. Given that, it puts a real burden on the city’s taxpayers.” And more expensive check-ups and tuition isn’t a burden?

The reinstatement of the PILOT program as a mandatory one with tax credit deductions would greatly benefit the city, however, especially in municipal branches like the police and fire departments, and as mentioned before, the additional funds brought in by the program could eradicate the library’s deficits in one year.

The program is expected to be made public next month and will be phased in over five years. Questions have been raised, however, about the program being subjected to hospitals and universities only. What about museums, private schools, and cultural institutions? We’ll have to wait and see…

Thoughts? Leave a comment below.

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