Nonprofit ‘tax’ payment info to come

June 8, 2012
By

The City of Boston is poised this week to release the details of a reportedly successful new effort to get large nonprofit institutions to make tax-like payments.

The so-called payment in lieu of taxes, or PILOT, system will have no written agreements with the colleges and hospitals that make the payments, unlike an earlier PILOT system that was reformed after political pressure. Instead, the institutions are all supposed to follow the same set of guidelines, making a payment equivalent to 25 percent of normal property tax.

Participation by targeted institutions in this first fiscal year of the reformed PILOT system has been about 95 percent, Mayor Thomas Menino said in a recent interview with city reporters.

“That far exceeds my expectations,” he said.

But a part of the system that allows institutions to deduct up to 50 percent of the PILOT cash payment in the form of “community benefits” remains undefined. PILOT-paying institutions, including Jamaica Plain’s Showa Boston Institute of Language and Culture, previously told the Gazette that they were confused about what would qualify as community benefits.

Mayor’s Office spokesperson John Guilfoil told the Gazette that “qualified” community services can be counted toward PILOT, but he could not say exactly how a program would qualify. He said the City is keeping the definition loose.

“The City wants to leave room for new programs…not to try to create an exhaustive list,” he said.

In general, such community benefits as scholarships for Boston Public Schools students will count as they did under the previous PILOT system, he said.

Part of the reason for PILOT system reform in 2009 was the Gazette’s discovery that payments were negotiated in secret meetings by unknown formulas with few records. Some institutions, such as Showa Boston, did not even know that community benefits deductions were available, while other institutions made liberal use of them. Showa Boston President Ron Provost did not return a Gazette call for this article.

The new system was developed by a task force that included representatives of several large nonprofits. The idea is that PILOT will now treat all institutions equally by guidelines they themselves formulated. In practice, some institutions declined or delayed payments earlier this year, while others greatly boosted their PILOT payments.

PILOT is a voluntary system of payments made in exchange for the City services that large nonprofits consume.