Boston Asks Nonprofits to Triple 'Payments in Lieu of Taxes'

For the first time, Boston’s major tax-exempt institutions — its premier hospitals, universities, and cultural centers — are being asked to make regular voluntary payments to the city based on the value of their property to help offset the rising cost of city services and cuts in state financial aid.
Although many of the city’s nonprofit organizations have been making so-called Payments In Lieu of Taxes for decades, this marks a major change to a system that feels to some organizations uncomfortably close to tax bills. Boston officials recently mailed letters to leaders at 40 major nonprofits asking them to pay up to 25% of what they would owe if their property were not tax-exempt. ...
The new revenue-raising plan — the first of its kind in the nation — is based on the estimated cost of providing basic city services, such as police and fire protection, snow removal, and emergency medical treatment, which account for roughly 25 percent of the city’s budget. And it is designed to gradually increase annual financial payments to the city by the major tax-exempt organizations from the $15 million they paid this year to $48 million over a five-year ramp-up period.
That is still significantly less than the $404 million nonprofits would pay if they were not tax-exempt. New assessments of the property owned by the city’s 40 largest major nonprofits show that its collective value is $13.6 billion, or the equivalent of more than half of the city’s commercial tax base, which is about $25 billion, according to Boston’s Assessing Department.
But support for the plan — the product of a mayoral task force that included representatives from nonprofits — appears mixed among the organizations being asked to pay.
Some nonprofit leaders voiced unequivocal support for the initiative during interviews with the Globe, asserting that their success depends in large measure on attracting visitors — students, hospital patients, and culture lovers — to a safe, well-managed city.
“My primary goal in life is to make Boston University a better institution, but it can only be a better institution if the city thrives,’’ said Boston University president Robert A. Brown .
Eric Buehrens, the interim president and chief executive officer at Beth Israel Deaconess Medical Center, said the hospital is also committed to the new Payments In Lieu of Taxes (PILOT) plan, even though it calls for Beth Israel Deaconess to increase its contribution from $167,000 this year to $750,000 next year and to $3.1 million after five years.