Should Universities pay Property Taxes?

Parents Forum
1

<p>If this topic exists, please ignore and let it die.</p>

<p>The mother af all tax breaks!!! especially for the private universities with SUPER RICH endowments. Harvard University's endowment fund, which is the largest in the country grew by $4.4 billion to $32 billion last year, reaping the university a 21.4 percent return on its investments.</p>

<p>The</a> Case for Making Harvard Pay Taxes</p>

<p>This goes for Stanford, Yale, MIT etc. In Princeton the local residents have a lawsuit against the university.</p>

2

<p>How about they not pay taxes on areas with a direct educational purpose and pay taxes on other areas that don’t have direct educational benefit, such as sports facilities, etc?</p>

3

<p>I personally believe every organization should be treated the same in regard to property taxes- they all pay. That includes universities, religious organizations plus other non-profits. I do not believe it will ever happen.</p>

<p>Youdontsay- they do that now. There are a significant number of cases where these organizations battled the local property tax assessor to determine what is and is not subject to tax.</p>

4

<p>Didn’t know that, tom. Thanks.</p>

5

<p>is there currently a difference between what state schools vs private institutions pay?</p>

6

<p>I believe in OH the state Us do not pay property taxes. There is some rationale for this since most of the property taxes go to fund education… It would be like taking money from one pocket and putting it in another.</p>

7

<p>I could be wrong, but no universities pay property taxes, as they are non-profit institutions. </p>

<p>Even worse, they are raking it in with their investments, like Harvard with $4,400,000,000.00 in returns last year!!! and not paying the 15% capital gains that you and I and private companies pay.</p>

<p>AND no sales tax</p>

8

<p>Here is the list of exempt organizations and the statute that applies for NJ. I would bet most States are similar.</p>

<p>Statutes under which Exemptions are claimed
Exempt Statute Number
Boy Scouts 54:4-3.24
Burial Ground (not exceeding 10 acres) 54:4-3.9
Cemetery (not exceeding 250 acres at one location - see 8A:5-10) 54:4-3.9
College - Private 54:4-3.6
College - Public 54:4-3.3
Conrail 54:4-3.3
County-Owned Property 54:4-3.3
CYO 54:4-3.24
Delaware River Basin Commission 32:11D-89
Delaware River Joint Toll Bridge Commission 32:8-9
Delaware River Port Authority 32:3-2
Disabled Veteran 54:4-3.30
District Superintendent of a Religious Organization (Residence) 54:4-3.35
Educational Organization 54:4-3.6
Environmental Opportunity Zone 54:4-3.150
Federal Property (other than military or railroad) 54:4-3.3
Five Year Exemption/Abatement (with “in-lieu” tax payment) 40A:21-1
Five Year Abatement/Exemption 40A:21-9
“Fox-Lance” (see Urban Renewal)
Fraternal Organization 54:4-3.26
Garden State Parkway (New Jersey Highway Authority) (27:12B-16 Repealed) 27:23-12
Girl Scouts 54:4-3.24
Graveyard (not exceeding 10 Acres) 54:4-3.9
Green Acres (State acquired) 13:8A-19
Highway Authority (27:12B-16 Repealed) 27:23-12
Historic Site 54:4-3.52
Hospital 54:4-3.6
Housing Authority (local) (55:14A-20 Repealed) 40A:12A-1
Humane Society 54:4-3.6
Interstate Sanitation Commission 32:18-2
Limited Dividend Housing (55:16-18 Repealed) 40A:20-1
Long Term Exemption Law 40A:20-1
Medical Office/HEZ 54:4-3.6
Military Purposes 54:4-3.5
Moderate Income Housing (see New Jersey Housing Finance)
Municipally - Owned Property 54:4-3.3
Municipally - Owned Land in another county (up to 5 acres) 54:4-4
Municipal Parking Authority 40:11A-19
Museum 54:4-3.6
Natural Lands Trust 13:1B-15.119
Natural Open Spaces Land for Recreation and Conservation 54:4-3.64
New Jersey Economic Development Authority 34:1B-15
New Jersey Educational Facilities Authority 18A:72A-18
Revised as of January 2010
70
New Jersey Housing and Mortgage Finance Agency (supported projects) 55:14K-34
New Jersey Sports and Exposition Authority 5:10-18
New Jersey Transit 27:25-16
New Jersey Turnpike Authority 27:23-12
Palisades Interstate Park Commission (32:14-1 Repealed) 32:14-1.3
Parsonage 54:4-3.6
Passaic Valley Sewerage Commission 54:5-3.4
Port Authority of New York and New Jersey 32:1-35.5
Railroad Property (paying franchise tax) 54:4-3.11
Red Cross 54:4-3.27
Redevelopment Agency (1949- current) 40A:12A-1
Religious Organization 54:4-3.6
School - Private 54:4-3.6
School - Public 54:4-3.3
Senior Citizen Non-Profit Rental Housing (55:14I-5 Repealed) 40A:20-1
South Jersey Port Corporation 12:11A-20
South Jersey Transportation Authority 27:25A-32
State-Owned Property 54:4-3.3
Tax Title Lien (Foreclosed) 54:4-3.3
Tax Title Lien - conveyed to the County (Chapter 73, P.L. 1940) 54:5-127
Tax Title Lien - conveyed to the State (Chapter 73, P.L. 1940) 54:5-121
Television Station - Educational 54:4-3.6A
Tract lying between two districts (in district NOT assessing) 54:4-25
Turnpike - without toll 54:4-3.18
Urban Renewal (1961) (40:55C-65 Repealed) 40A:20-1
Urban Enterprise Zone (UEZ) Residential (1984) 5 Year 54:4-3.139
Urban Renewal (1965) - Improvement only is exempt (40:55C-97 Repealed) 40A:20-1
Urban Renewal (1991) 40A:20-1
Veteran Organization or Post 54:4-3.25
Volunteer Fire Company 54:4-3.10
Volunteer First Aid Squad 54:4-3.6
Widow of a Disabled Veteran or of a Serviceman 54:4-3.30
YMCA, YWCA, YMHA, YWHA 54:4-3.24
Youth Organization 54:4-3.24
4-H 54:4-3.24</p>

9

<p>Taxing colleges would seem to me to be like taxing businesses, in that they would just have to pass the tax along to the consumer of their services. I am sure the government would be happy to get the extra revenue, but in the end the increase in taxes would be paid by the citizens. That’s the way it has to be.</p>

10

<p>The problem in Boston (and presumably other areas) is that the schools seem to be continuously expanding into the surrounding communities, and taking those properties off of the tax rolls when they do.</p>

<p>The mayor of Boston has been stepping up pressure in the PILOT (Payment In Lieu Of Taxes) program, where non-profits make “voluntary” payments to the city to cover the cost of city-provided services. It has met with mixed success.</p>

11

<p>Without the colleges Boston would probably be a smaller and less wealthy city. There is plenty of tax revenue that arises from the location of these schools. Many taxpayers would not be in Boston area without these schools. Much of the schools’, faculty, and student spending is taxed directly or indirectly. They pay plenty.</p>

12

<p>^ Debatable, and unknowable. And irrelevant. Every business that employs people could make the same claim. Are we going to stop taxing all office buildings and shopping centers on the grounds that they employ people?</p>

<p>Non-profit tax exemption covers about 10% of all of Boston property by value. That’s a huge hit to take. Why should a resident of Boston pay 10% more so Harvard can sit on tens of billions of dollars, while consuming city resources?</p>

<p>How many units of rental housing (a.k.a. dorms) does Harvard own? These are not necessary to the core function of Harvard, and almost certainly generate huge profits for Harvard. Why shouldn’t Harvard be paying property taxes on them?</p>

13

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<p>Definitely. MA would be experiencing net population decline without
students continuously coming in. As it is, MA is treading water.</p>

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<p>The problem in Boston is that the income and sales taxes go to the
state; not Boston. There are some cities that impose a local meals
tax - I believe the State Legislature passed a bill to allow this.
I don’t know if cities can impose general local income and sales
taxes.</p>

<p>I know that Mayor Menino had a dust-up with Boston College a few years
ago on Payment In Lieu of Taxes as BC wanted to buy a property in
Brighton (I believe) to use as a dorm. I don’t know what the end
result was but you could look at a dorm as a residence (which pays
property taxes) or as a hotel (which pays property taxes and probably
obscene business traveler taxes). From Boston’s perspective, it would
be better if the apartment building wasn’t sold to BC as it would
basically be serving the same purpose (housing) while the city gets
explicit revenue.</p>

14

<p>A local example of this issue is our YMCA. It was originally a health club that went bankrupt and the YMCA eventually bought it out. It grew to provide day care, K-5 private school, all kinds of lessons and it leases out space to other organizations. Part of the health club is the tennis courts which used to not have court costs. The local private tennis courts complained for many years that they lost business because playing tennis at the YMCA was much less expensive than what they charged.</p>

<p>Other day care providers that aren’t non-profit don’t have the advantage of non-profit status. Companies that lease space at the YMCA have an unfair advantage of lower rent.</p>

<p>Does this benefit the community? I believe that it does from what I’ve seen as they do serve the community but what is the balance? I don’t know. Non-profit status can certainly be abused.</p>

15

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</p>

<p>Good luck determing what is “educational” and what is not.</p>

16

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</p>

<p>The problem for the City of Boston is that 50% of the land in the city is tax-exempt. It’s not all colleges, of course. It’s also federal, state, and city government; K-12 schools (public and private); churches, synagogues, mosques, and other houses of worship; not-for-profit hospitals (huge in Boston); museums; cemeteries; Logan Airport and other MassPort facilities. But the colleges are a big part of it. It’s a relatively small city (48 square miles total) just jam-packed with all these public and non-profit tax-exempt institutions. That means half the property needs to be taxed at much higher rates to pay for a normal level of municipal services, unless the tax-exempts chip in with voluntary payments-in-lieu-of-taxes to make up for their share. But as you might expect when you ask people to voluntarily pay their fair share of taxes, some do and some don’t. Last I saw, PILOT contributions from all the tax-exempts made up something like 1% of Boston’s municipal budget. This is not a trivial problem.</p>

<p>BCEagle is correct that the income and sales taxes generated by the faculty, staff, and students of the colleges and universities go to the state, not to the city. The City of Boston gets some state aid to partially compensate for its “lost” property tax revenue, but nowhere near what they’d get if these institutions were taxable. And the City just doesn’t have many other revenue options. By state law it can’t add a city income tax or an additional sales tax. It is allowed to add an additional hotel occupancy tax to what the state already charges, and it is allowed to tax jet fuel—and it does both those things. But property taxes still generate over 80% of the city’s revenue, and it’s coming from just 50% of the property. </p>

<p>If I were a property taxpayer in Boston, I’d want to tax the tax-exempts.</p>

17

<p>This is a really big issue in the smaller college towns. My town is about 50% college students by population and non-profits represent the largest landowners. Yes schools bring major business and employment to town. However, they also consume significant resources in fire, ambulance, police, and school costs for graduate students living in non-taxed student housing. I don’t think taxing tuition revenues is a good solution - it would just get passed onto students. However, I do think colleges should pay their own freight on public services. There is no easy answer here - but PILOT agreements do help alleviate some of the stress.</p>

18

<p>Hasn’t this been a issue since the time of the famous Dartmouth College case, which many first year law students are required to read?</p>

<p>PILOT have been contentious in almost every community where not-for-profits and government institutions dominate precious acreage and where the municipal budget is pinched. For now, in my opinion of taxing NFP colleges is a bad idea, but cities like Boston have a legitimate gripe when it comes to mega wealthy NFP institutions. At least the feds provide ‘impact’ funds to help local communities with the costs of providing services like puiblic education in towns with large military instillations (at least they used to).</p>

<p>Barrons makes a good point also; in a lot of college towns the major draw IS the college. One example, UAlabama Birmingham and its hospital is the largest employer in its metropolitan region. And without its colleges, Boston may well be nothing but another Lowell, Troy or Hartford: severely distressed northeast towns. It’s a stretch but it a legit debate.</p>

19

<p>The city of Boston budget shows nice growth in both the property tax base and total revenues over the last 5 years and more. The biggest change has been the loss of state funding–much of which is probably related to B’s relative wealth versus more depressed areas which are getting relatively more state aid that is being taken away from Boston. </p>

<p>The value of every piece of real estate in and around Boston is much higher because of what Boston is and much of that is due to the fact that major colleges are located in and around Boston. Is it 25% higher or 50% higher–maybe. But substantially higher for sure. </p>

<p><a href=“http://www.cityofboston.gov/Images_Documents/04%20Revenue%20Estimates%20and%20Analysis%20A_tcm3-24768.pdf[/url]”>http://www.cityofboston.gov/Images_Documents/04%20Revenue%20Estimates%20and%20Analysis%20A_tcm3-24768.pdf&lt;/a&gt;&lt;/p&gt;

20

<p>

Or maybe it’s 10%. Or 1%. Or zero.</p>

<p>Maybe it’s from the giant financial companies like Fidelity and John Hancock. Maybe it’s from the hundreds of businesses along Rte 128. Maybe it’s from the synergy between them.</p>

<p>Maybe it’s not a net benefit to have RE prices so high, as young people can’t afford to buy houses and leave for cheaper states.</p>

<p>Regardless of what the effect has been, I don’t see any reason why giant NFPs like Harvard and Northeastern can’t be responsible for their share of the costs for the services provided to them. Especially when the amount Harvard is paying is in the “pocket change” category.</p>

<p>



Table 4
Estimated Property Tax Revenue if Taxable and PILOTs for Nonprofits in Boston (FY2009)</p>

<p>Institution                      Exempt Value   Property Tax   PILOT      PILOT as % of
                                  (FY2009) ($)  Revenue if     Amount($)  Revenue if
                                                Taxable                   Taxable 
Educational Institutions
Boston University                 2,115,919,700   57,362,583   4,892,138   8.53
Harvard University                1,477,225,500   40,047,583   1,996,977   4.99
Suffolk University                  237,230,300    6,431,313     375,290   5.84
Berklee College of Music            161,741,600    4,384,815     361,222   8.24
Boston College                      561,952,500   15,234,532     293,251   1.92
Mass. College of Pharmacy           106,910,300    2,898,338     227,980   7.87
Tufts University                    151,760,200    4,114,219     152,159   3.70
Emerson College                     177,826,400    4,820,874     139,368   2.89
Showa Institute                      54,718,800    1,483,427     120,966   8.15
Wentworth Instit of Tech.           207,977,400    5,638,267      40,747   0.72
Northeastern University           1,351,225,100   36,631,712      30,571   0.08
Simmons College                     152,572,500    4,136,240      15,000   0.36
New England Law Boston               15,888,500      430,737      13,125   3.05
Emmanuel College                    165,162,000    4,477,542           0   0.00
Fisher College                       16,719,000      453,252           0   0.00
Wheelock College                     60,362,200    1,636,419           0   0.00</p>

<p>Medical Institutions
Massachusetts General Hospital    1,457,667,100   39,517,355   2,200,964   5.57
Brigham and Women’s Hospital        815,886,700   22,118,688   1,315,822   5.95
Tufts Medical Center                581,770,900   15,771,809   1,015,628   6.44
Mass. Bio-Medical Research Corp     146,236,500    3,964,472     818,728  20.65
Children’s Hospital                 691,857,800   18,756,265     250,000   1.33
Boston Medical Center               300,928,700    8,158,177     221,644   2.72
Beth Israel Deaconess Med. Center   823,114,100   22,314,623     167,000   0.75
Dana Farber Cancer Institute        226,522,000    6,141,011     131,475   2.14
Spaulding Rehabilitation Hospital    86,751,700    2,351,839      77,534   3.30
Caritas St. Elizabeth’s Med. Center 252,504,700    6,845,402           0   0.00
Faulkner Hospital                   181,881,400    4,930,805           0   0.00
New England Baptist Hospital        144,781,500    3,925,026           0   0.00</p>

<p>Total of All Institutions        12,725,095,100  344,977,325  14,857,589   4.31

</p>

<p>From <a href=“http://www.lincolninst.edu/subcenters/significant-features-property-tax/upload/sources/ContentPages/documents/PILOTs%20PFR%20final.pdf[/url]”>http://www.lincolninst.edu/subcenters/significant-features-property-tax/upload/sources/ContentPages/documents/PILOTs%20PFR%20final.pdf&lt;/a&gt;&lt;/p&gt;