Politics as Unusual: This ship needs a PILOT

July 24, 2013
By

In a number of mayoral forums thus far, there’s been roundabout acknowledgment of the simultaneous benefit and burden that tax-exempt players bring to Boston. Aside from the Catholic Church—which, in case you’ve forgotten, covered up an Old Testament-worthy epidemic of pedophilia—our hospitals, houses of worship and other nonprofit cohabitants typically provide more good than bad, more comfort than liability. At the same time, a lot of colleges and organizations do take advantage of their vulnerable neighbors. The trick for our next mayor, of course, is to leverage the potential contributions that such entities can offer—ideas, volunteers, artistic integrity—while at the same time minimizing the deleterious effects that partners can yield under imperfect circumstances.

In Boston, budget-weary bureaucrats and wonks have argued endlessly about these institutions and their net impact on municipal prosperity. So have elected officials. Payment In Lieu Of Taxes—or PILOT, as it’s known in the world of retail politics—may be the most commonly discussed issue that our chosen officials reliably ignore as soon as they arrive in office. It took nearly two decades for Mayor Tom Menino to address the lopsided symbiosis of the city and its institutional squatters; in 2009, Hizzoner finally quelled critics by commissioning a task force to “examine the relationship.” In turn, his ad hoc posse—a hodgepodge brain trust comprising academic, healthcare, financial, legal and law enforcement interests—devised a litany of sensible ideas culminating in a system that asks institutions to pay dues through a combination of cash and local services. Their hard work and research, however, was compromised by one particular recommendation—that participation in the PILOT program should remain voluntary.

In defense of this position, the task force declared that “any attempt to impose a legal or statutory requirement would face significant opposition, and runs counter to the spirit of partnership between the City and its institutions that a successful PILOT program would provide.” That may be true – but it’s also a clause that no sane businessperson would embrace. As it’s currently written, PILOT has already produced a 52 percent increase in revenue since 2011; nevertheless, at its core, the program merely glorifies the kinds of goods and services that first-class neighbors should be furnishing anyway—providing scholarships, paying permit and inspection fees, lending facilities for public use, helping with everything from street cleaning to job training. The task force’s symbolic nudge spurred some improvement; in the least, their report shamed utter mooches like Northeastern University, which was shown to be especially slacking in the community service department. Still, without a binding pay structure, PILOT revenue still constitutes less than 2 percent of Boston’s operating budget.

Often citing the legal complications of forcing nonprofits to pay up, few mayoral candidates have pitched meaningful PILOT proposals. Even fewer have shown adequate rage over the pathetic annual contributions of, say, Emerson College and Boston College—both of which occupy prime real estate, and give less than half-a-million dollars each in annual payments. There were, however, a few bright signs at the WGBH studios yesterday, where the Allston and Brighton Boards of Trade, along with the Brighton Allston Improvement Association, held a community forum that attracted eight mayoral hopefuls. City Councilor Charles Yancey, who was the only candidate to address institutional expansion in his opening remarks, said before the debate that he would push for mandatory PILOT contributions. Another promising moment came when Codman Square Health Center co-founder Bill Walczak called Harvard a “medieval institution” for its abuse of Boston’s good will, and derided City Hall for placating the university.

At this juncture, the most creative new PILOT idea seems to have come from City Councilor Mike Ross. A Mission Hill resident, Ross played a watchful role in Northeastern’s planning of the Hub’s first dormitory managed by a for-profit developer. In a metropolis where property taxes account for more than 60 percent of the overall budget—and where more than half of the land is non-taxable—every little bit counts. For-profit dorms, unlike ordinary college-owned residences, will add to that base.

“This can easily happen across the city,” says Ross. “I’ll press for it, though I may not have to, since I think tax policy will catch up in four or five years. For me, it’s about more than supporting this one building—it’s knowing that once the first for-profit dorm was built, more would follow. This project alone will bring in $1.5 million in [annual] revenue.”

Nobody likes paying taxes, even if they’re only asked to give a fraction of what they would otherwise pay on prime properties. When the PILOT study was completed three years ago, Museum of Fine Arts Director Malcolm Rogers threw an embarrassing hissy-fit over the suggestion that his institution pay $250,000 a year (less than half of his annual salary)—up from previous PILOT assessments of between $46,000 and $65,000—with the tab quadrupling to more than $1 million by 2016. Absurdly, Rogers went so far as to say that “for 140 years [the MFA] has been serving the city of Boston and the community of New England at no cost [whatsoever] to that community.” Our next mayor will have to deal with such resistance diplomatically, and continue to build proactive relationships with everybody from MGH to the ICA. But if they plan to get partners to pay their fair share, they’ll have to explain to Rogers and the rest of them that, despite their bombastic remarks, in a healthy community, everything comes at a cost.

Chris Faraone is a former Boston Phoenix reporter and author of “99 Nights with the 99 Percent” and the upcoming “I Killed Breitbart.” He lives in Jamaica Plain.

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