Apr 23, 2009 11:13 pm US/Eastern
I-Team: Some Non-Profits Not Required To Pay Taxes
BOSTON (WBZ) ―
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City documents obtained by the I-Team reveal that Emmanuel College, located in prime real estate in the Fenway, actually makes no PILOT payment on tax exempt property valued at $165 million.
WBZ
For any homeowner, a property tax bill is one of the worst things to get in the mail. But across the state, the I-Team found that some of the largest property owners aren't feeling the same pain. That's because they are not required to pay a dime to their host community, even as some of these cities and towns are laying of municipal workers such as teachers and firefighters.
Natasha Kapij, a property owner in Boston's South End was surprised to hear of the special status for non-profits. She told us she has to pay very high taxes herself.
Tanya Pontillo owns a home in Dorchester. She also feels that this system is unfair and makes no sense.
In Boston alone, there are dozens of non-profits that literally don't have to pay property taxes on their tax exempt holdings. Northeastern University, for example, has about $1.3 billion of tax exempt property in the city. It pays about $30,000 a year in what's called a "PILOT," or payment in lieu of taxes. It's a voluntary system in which non profits make a payment to their host city to offset to the use of municipal services.
The system is also not standardized, which troubles Barbara Anderson of Citizens for Limited Taxation. "Anything that is arbitrary is open to all kinds of abuse. So the easiest thing is if everyone pays the same property tax rate."
But that is not the case. Harvard University, with a $30 billion endowment, voluntarily pays the city of Boston about $2 million on property that would, by one estimate, fetch about $40 million if taxed like a regular business.
Boston City Councilor Stephen Murphy doesn't think that is fair. "They own Allston outright. They have just expanded into Allston, it's certainly not fair."
City documents obtained by the I-Team reveal that Emmanuel College, located in prime real estate in the Fenway, actually makes no PILOT payment on tax exempt property valued at $165 million.
Murphy said, "I don't think they pay because they can get away with it. The law is on their side right now."
He added that the PILOT system hasn't been updated in almost 40 years. He's filed two proposals to force the non-profits in Boston to pay more.
The current system, he says, isn't fair to average homeowners. "We are trying to put on a police force on, fire protection, and educating your children. With more and more of the geography being gobbled up by non-payers, or not for profits, which pay what they want on a whim, pretty soon you are going to hit a financial wall, and we are pretty close to that here in the city of Boston."
Being home to highly acclaimed institutions like Massachusetts General Hospital, Dana Farber, and Boston University adds prestige to the city. They are also a powerful economic engine, employing thousands of workers.
Richard Doherty, the president of the Association of Independent Colleges and Universities in Massachusetts, says that non-profits pay their fair share. "The colleges and universities and teaching hospitals in Boston pay about $15 million a year in payments in lieu of taxes . . . that's the highest amount, I believe, of any city in the country."
Boston isn't the only city in Massachusetts collecting pennies on the dollar from non profits. In Newton, the I-Team found a similar situation, with four colleges paying nothing to the city. Only Boston College offers any money; $100,000 on what would be a $5 million tax bill if they were taxed like a regular business.
The I-Team found the same situation in Worcester with only the Massachusetts College of Pharmacy writing a check to the city to cover various services.
These services cost communities a lot of money, particularly as they try to balance budgets during difficult times. Wealthy institutions quickly become a ripe target for more revenue.
Doherty defends the status quo, saying, "You would be hard pressed to say that colleges and universities, the hospitals in Massachusetts aren't the envy of the country, the envy of the world, so there is something that we are doing right here. I would be a little concerned about wholesale tinkering with it."
Some frustrated homeowners, like Gertrude Anzre of Hyde Park, are willing to more than tinker, however. "Everybody is getting all the breaks, and the little people are not getting any breaks."
Some schools are starting to more on their own. For example, Northeastern has agreed to pay the same amount of property tax on a building they just acquired, even though they could claim it as tax exempt.
All non profits could be feeling some political heat. In Boston, Mayor Thomas Menino has convened a task force to see if there is a way for these institutions to pay more to the city.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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