Every Year, Boston Asks Its Colleges to Pay for Their Footprint. Every Year, They Come Up Short.

Take a stroll through Boston, and it won’t be long before you come across a building owned by Harvard University. Or Boston University. Or any of the other 27 colleges that hold property in the city.

The prominence of higher-education institutions in the city has left it with a revenue problem. Seventy percent of Boston’s revenue comes from property taxes, but the property of nonprofit colleges is tax-exempt. The problem only gets starker when you consider that many colleges are trying to expand their footprints in the city.

In 2012 the city asked its largest nonprofit groups, including colleges, to contribute to a program of payments in lieu of taxes, known as Pilot, to help bring in more money.

Now, however, Pilot contributions have started to lag relative to what the city requests. The most significant shortfalls involve some of the area’s most prominent educational institutions — Harvard University, Northeastern University, Boston College, and Boston University.

The program faces fresh criticism from residents who say it asks too little of the institutions and receives even less. Activists want the city to come down harder on the prestigious colleges, whose success has relied in part on a mutually beneficial relationship with the city.

That relationship has also been strained by the effects of gentrification, which activists say are aggravated by the colleges’ building plans. They could help by paying more to the program, the activists say, with the extra money helping deal with income inequality in the city by funding public schools, affordable housing, and health care, said Enid Eckstein, a leader of the Pilot Action Group.

“It’s a matter of character and respect for the community that you’re in,” Eckstein said. “The city has sent you a bill to help mitigate your growth and the ripple effects of your growth, and you’re not even paying that.”

Public/Private Partnership

About half of Boston’s property is tax-exempt, most of it government buildings. Educational, medical, and cultural institutions occupy just 5 percent of the land. But the property value of those institutions totals $13.9 billion, according to the Boston Municipal Research Bureau.

In 2009, as the recession wreaked havoc on the city’s budget, the mayor, Thomas M. Menino, formed the Pilot Task Force to reassess the city’s relationship with its nonprofits. The new program focused on tax-exempt private entities — excluding religious institutions — with at least $15 million in property value. Today that includes 47 colleges, hospitals, and museums.

The institutions were asked to pay 25 percent of their 2009 assessed property value to the city, with the amount phased in over the course of five years. As much as half of the payment could be made in community benefits like scholarships and job training, instead of cash. The program has been voluntary ever since its inception.

Boston University’s president, Robert A. Brown, served on the task force. “My primary goal in life is to make Boston University a better institution,” he told The Boston Globe in 2012, “but it can only be a better institution if the city thrives.”

Other campus leaders were more hesitant. Officials at Harvard University, Boston College, Emmanuel College, and Emerson College all declined at the time to say whether they intended to meet the Pilot targets, according to the Globe.

Before the program began, the city sent formal agreements to each of the nonprofits, asking that they sign to show they were “willing voluntarily to make certain payments” to the city.

When asked if the university had signed the agreement, a representative of Northeastern said that it hadn’t, in large part because the program is voluntary. A representative of Boston University did not comment on whether an agreement had been signed, but noted that the president was a member of the task force. Harvard declined to comment on whether or not it had signed.

Still, the city achieved 91 percent of its first-year goal, with 10 of the 23 educational institutions meeting the total amount requested, including Northeastern, Boston, and Tufts Universities.

By 2016, the city projected, it would be receiving $46.7 million in yearly payments. The actual amount received that year was $32.1 million. Even as requested payment amounts have increased, the contributions have fallen off, particularly among colleges and universities.

Entirely ‘Voluntary’

Of all the nonprofits in the program, Boston College and Northeastern, Harvard, and Boston Universities have the largest gaps between what they’ve paid and what they’ve been asked to pay. Combined, the four colleges were short $12.2 million of the requested amounts in 2018, accounting for 77 percent of the shortfall among all 21 educational institutions.

Officials at Boston College said at the start of the program that the college would not participate. Last year, the city said, the college paid 10 percent of the $3.6 million requested.

“Boston’s Pilot program is voluntary,” said Jack Dunn, a college spokesman. “As a nonprofit educational institution and a religious affiliate, we choose not to participate in the Pilot program so as not to relinquish our tax-exempt status.”

Instead the college pays the city roughly $335,000 annually for fire-protection services. The city counts that payment toward the Pilot amount, said Dunn.

“As a Jesuit, Catholic university that is committed to service,” Dunn said in an emailed statement, “we believe that the best way we can assist the City of Boston is through the more than $30 million in community benefits that we provide to the city and its residents each year through scholarships, jobs, volunteer outreach, community grants, and the public and private funding we procure for Boston’s public and parochial schools.”

Last year Boston University was asked to pay $16.5 million. The request to Harvard was for $12.5 million, and to Northeastern $11.2 million.

“We pay about 88 percent of what’s been asked of us,” said Jake Sullivan, vice president for government and community affairs at Boston University, “all the while growing a very robust community-benefit program to respond to the changing needs of our neighborhoods. We feel that we make a decent payment.”

Community benefits can make up half an institution’s Pilot payment, and most have delivered on that aspect of the program. In 2018, Boston University spent $8.2 million on community benefits like its Thomas Menino scholarship, which each year gives 25 students in the Boston Public Schools full merit scholarships.

The university has been making payments in some form to the city since the 1980s, but the value of its contributions to the city extends beyond Pilot, said Sullivan. “We weigh not only our cash payments but our significant community benefits, taxes, and the other services we provide to the community, all as part of the estimation.”

Harvard, whose primary campus is across the Charles River, in Cambridge, but which owns 126 properties in Boston, puts a similar emphasis on the community benefits it provides. These include the law school’s pro bono clinics and access to the Arnold Arboretum, one of the city’s largest public green spaces, owned and operated by the university.

“Harvard has a long tradition of paying taxes and making voluntary Pilot payments to its host communities,” the university said in a statement. “As a reliable and engaged partner, the university seeks to strike a thoughtful balance between taxes, Pilot, and mission-driven community programs both in Allston-Brighton and the City of Boston.”

Northeastern University, which contributed the total request of $1.7 million in cash and benefits when the program began, in 2012, now pays roughly the same amount in cash alone, even as the requested contribution has increased to more than $11 million.

Michael Armini, senior vice president for external affairs, said the university viewed its contributions as donations rather than payments.

Northeastern has, however, increased spending on Pilot community benefits, from $847,721 to more than $5.6 million, over the past seven years. The university offers scholarships for public-school students and has spent $26 million to renovate a local historic park. It has also committed to spending $82 million to maintain the park over the next 30 years.

“We feel like the best way that the university can contribute to the community is not through Pilot but through all sorts of service programs and financial aid for local Boston students,” Armini said. “We always want to have our contributions be as connected to the people, the education, and the research of the university, and not cash payments.”

‘Institutional Arrogance’

Last December a group of activists staged a rally at City Hall. Dressed in Christmas sweaters, they sang carols rewritten to demand that the city force nonprofit institutions to pay up.

The protesters, organized by the Pilot Action Group, had with them a petition with a thousand signatures asking that changes be made in the program. Eckstein, one of the group’s leaders, said reforming Pilot is an issue that most residents can get behind.

“Some of these institutions have really been part of the problem on gentrification and displacement,” she said, “so there was already a fair amount of anger in terms of the role they play in our community.”

A study by the group found that colleges were contributing least to the program. That report has been endorsed by more than 20 community groups, including the NAACP. A primary goal of the activists is to get more community oversight of the program.

One of the biggest problems with Pilot, said Lydia Edwards, a member of the Boston City Council, is that the program still uses property-value assessments from 2009. Her own home assessment has almost tripled in the past 10 years, she noted. “There would be an even larger gap if they actually assessed it based on the current year’s property value. It seems like the city doesn’t want to embarrass the universities by being honest about how much money we’re being shortchanged.”

The relationship between these institutions and the city government plays a large part in why the Pilot program continues. Northeastern, a spokesman said, participates because of that “collaborative relationship.”

“Even though we don’t think it’s the best way to contribute to the city, we have made those contributions primarily out of respect for the mayor of Boston and his agenda,” Armini said.

Mayor Martin J. Walsh’s office did not return requests for comment.

Edwards said the city should be more aggressive in demanding that the colleges make their Pilot contributions. She has suggested withholding zoning permits as the colleges continue their expansion plans. She also supports taxing college endowments.

“These universities are tightly rolled in within our community,” she said. “There’s no doubt that they’re here, and that anything that they do, positive or negative, directly impacts our community.”

The community benefits that colleges provide aren’t as effective as they could be in alleviating problems, like Boston’s affordable-housing shortage, that are aggravated by the colleges, Edwards argued. The community should be telling these institutions what they need, not the other way around.

“We’re not debating that they give a lot of things to the city, but these are institutions that make a lot of money. Their endowments are in the billions,” Eckstein said. “The fact that they argue that they can’t afford to pay the city is, to me, institutional arrogance and nothing more.”

Updated (5/17/2019, 4:20 p.m.) with a statement from Boston College.
Correction (5/20/2019, 11:00 a.m.): This article originally stated that Northeastern University had committed $26 million to maintain a local park. The university has already spent that amount on the project and is committeed to spending another $82 million to maintain the park over 30 years. The article has been updated to reflect that.

Zipporah Osei is an editorial intern at The Chronicle. Follow her on Twitter @zipporahosei, or email her at zipporah.osei@chronicle.com.