<p>The colleges and universities provide an educated workforce for the financial, high-tech, medical and biotech industries in the Boston area so Boston would be worse off without the colleges and universities in the area.</p>
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<p>Lowell is becoming like Boston in this way - Marty Meehan has been buying up a lot of property for UMass Lowell. I’m wondering if the Lowell campus of Middlesex Community College will be buying up property to deal with the booming demand for college services. The downtown area is a complete mess with all of the college students driving in and out.</p>
<p>Massachusetts has cut its budget for several years including state aid and unemployment is still high in the state (though a bit lower than the national rate). I think that Boston has many expenses that are difficult to cut so they are in a squeeze. The public isn’t particularly in the mood for tax increases given that everyone is getting squeezed so it’s a lot safer politically to find someone with rich pockets to tax or beg.</p>
<p>Just a note: the numbers for some schools may seem low due to being partially in Boston and partially in another city. Harvard’s number is eye-popping because a good chunk of it is located in Cambridge which isn’t part of Boston.</p>
<p>Harvard’s long term goal seems to be to buy up all of Allston, which is an area of Boston just across the river from the Cambridge portion of the campus.</p>
<p>They’ve been accused of using dummy buyers in order to prevent protests and other roadblocks to their continuous expansion.</p>
<p>Yeah, I remember the mess that they made in those research labs that they were going to build which got delayed/canceled because of their investment return problems. Sometimes I wonder what the difference is between the research labs that they run and some of those run by private companies. They get government grants, hire scientists, pay them, maybe make money off of the research. Maybe the difference is that the scientists have to teach.</p>
<p>Colleges run cafeterias, bookstores, bowling alleys, convenience stores, laundry facilities and athletic facilities - why do these get to be tax exempt?</p>
<p>I seriously do not think it is as low as 10% let alone 0%. But the area and the colleges are so intertwined with such a long mutual history it is hard to separate them.</p>
<p>We’re located in a small upper-middle class suburb with two universities, plus usual collection of churches and church sponsored elementary and high schools. A significant portion of our suburb is tax exempt, and our small house (3 bdrms) has a $18,000 tax bill. It’s time that non-profit institutions pony-up an equitable payment for their use of municipcal services: fire protection, police protection, sewer and water utilities, and street maintenance. These university institutions are able to pay high salaries to their administrative staff, and the presence of a university within a community is not sufficient “compensation” for their reliance upon those municipal services. This notion that mere “presence” alone is adequate “payment” is a specific position held by one university president in our suburb, though that university doesn’t allow its neighboring residents to use its sports facilities, library, or other facilities. We’re merely “allowed” to purchase tickets to their cultural events at same public rate. (That same university had a water main problem which wasted millions of gallons of municipally-paid water for years until it finally fixed the problem.)</p>
<p>Some universities have negotiated “Payment in Lieu of Taxes” (“PILOT”) annual payments to compensate municipalities for their services to the university properties. RE taxes are most significant source of annual budgetary dollars for most municipalities, and the “free ride” needs to end because the cost of those services (including pension burden) is becoming prohibitively high.</p>
<p>Same issue occurs with large nominally non-profit hospitals that can afford to pay their CEOs (and senior administrators) million-dollar salaries while seemingly unable/unwilling to pay for water and sewer services, much less real estate taxes. These hospitals claim their charitable work should exempt them from tax rolls, yet the cost of that “free medical care for indigents” is really passed on to the paying patient-consumer, and the budgetary percentage of that “charity” is often less than 2% and in many cases less than 1% of total expenditures.</p>
<p>In contrast to higgins, we have a company in our town that employes a lot of people, generates quite a bit of truck traffic, is moderately profitable and uses a lot of water. They have their own water supply and apparently their own power (they were running even in the massive recent power outage). They allow their vast grounds to be used for civic and charitable events and they’ve built their own water supply. They pay lots of property taxes too and they are in general, a good community citizen. They also maintain a stable of impressive horses that the public can tour for free.</p>
<p>The company is Anheuser-Busch (they provide free tours and free beer too).</p>
<p>I don’t see why Colleges and Universities don’t make payments to be good community citizens.</p>
<p>I’m pretty sure that Boston College allows the public to use their library outside of mid-terms and end-of-semester as I’ve walked into the library with nobody challenging me for an ID (I have an ID but I like to see if they check for them). Boston University’s main library requires an ID to get in (I have one there too) but their smaller libraries don’t require ID. On athletic facilities, BC students pay for access in their tuition/fees. I believe that I can purchase a membership as an Alum; I’m not sure whether or not residents can do that.</p>
<p>Technically, you are correct about property taxes. But, the City of Boston extract plenty of $$ from the local colleges. It may be ‘voluntary’ but is also borders on extortion to any college that wants to upgrade/expand facilities in Boston proper. If you want to upgrade existing dorms, for example, one needs a permit from the City. And to obtain that permit…</p>
<p>Call it a facilitating payment. :)</p>
<p>Some other cities have similar ‘voluntary’ programs.</p>
<p>It seems to me a more serious question is how much of ‘city services’ do colleges actually use? They tend to have their own police forces, for example. Some even have their own fire response units.</p>
<p>OTOH, if a college has an event that requires city police to direct traffic, such as a football game, the college should pay for the OT.</p>
<p>But as someone pointed out upthread, you could make exactly the same argument about any major business. Municipalities know that. That’s why there’s such intense competition for things like large commercial office buildings. How much in municipal services do they really require? Office buildings don’t have children, so you don’t need to provide schools, parks, playgrounds, and libraries for them. The upscale ones have their own security systems and security forces; you may get the occasional police call but it’s going to be pretty rare, and the ratio of what they pay in property taxes to what they cost in police and fire services is enormously favorable from the municipality’s perspective. The municipalities with the highest fiscal capacity–those able to offer the most deluxe services to their residents at the lowest cost in residential property taxes–are newish suburbs with lots of large office and retail developments (and not many non-profits), because those land uses generate far more property tax revenue than they cost in municipal services.</p>
<p>That’s true in Boston, too, by the way. Yes, it’s true that BU and Harvard don’t cost the city very much in municipal services. But neither does the Prudential Center, or the John Hancock Building. Yet the latter pay lots and lot of property taxes, while the universities get off with voluntary PILOT contributions at a small fraction of what they’d pay if they were taxed like everyone else. Or consider the hospitals. If Mass General were organized as a for-profit corporation (as some hospitals are), it would pay $39.5 million a year in property taxes. But because it’s organized as a non-profit, it gets off with a $2.2 million annual PILOT payment. Its executives might get paid as much as the for-profit hospital’s executive. The docs probably get paid the same. It generates the same jobs and income taxes and (indirectly) sales taxes for the state whether it’s for-profit or not-for-profit. It provides as many benefits to the City of Boston, and costs the city the same in municipal services either way. But as a non-profit it saves $37.2 million/year in property taxes. And leaves the city $37.2 million poorer than it would be if a for-profit company had a facility of comparable size and value on that site.</p>
<p>I think it’s probably the case the Boston isn’t spending more on municipal services for those non-profits than it takes in in PILOT payments, at least from those making the bigger contributions. (On the other hand, Northeastern’s $30,000 PILOT payment in lieu of what would be a $36 million tax bill seems really disproportionate). From the perspective of non-profits like BU and Harvard that are making multi-million dollar PILOT payments, it may look like they’re doing their share. Boston’s bigger problem, IMO, is that it has a tiny land base, and with half of its land tied up in non-profits there’s a huge opportunity cost; there’s just not very much room for expansion of the tax-generating commercial property that every municipality is competing for, unless you start to carve up traditional residential neighborhoods, and in Boston people will resist that like crazy. I don’t think Boston is looking to kick out the non-profits. I don’t think it is even entirely serious about taxing them. I do think it’s serious about getting them to boost their PILOT payments to something that more closely reflects the value of the real estate they do own, and consequently more closely reflects the revenue the city would get from a for-profit commercial use of that space. But that’s a pretty hard sell. The most effective selling point may be to raise a semi-credible threat of taxation.</p>
<p>I do have an example of two organization that I do feel shouldn’t have to pay property taxes as non-profits. The first is a local soup kitchen. They do not charge those that they serve. The depend entirely on donations and volunteer services. I do not know whether or not they even have a payroll.</p>
<p>The second is the local Boys and Girls club. They charge token amounts for membership and some programs but they mainly serve parents that work one, two or three jobs and need a semi-supervised place for their kids until the evening. The public schools take busloads of kids to the Boys and Girls club and drop them off - if the Boys and Girls club didn’t exist, then the buses would drop the kids off at empty homes or the school district would have to come up with afternoon services. They receive food donations from a large restaurant chain along with other donations from smaller businesses and, of course, get a lot of money and supplies in the form of donations. They do have an organizational structure and they do have employees but I don’t believe that they are paid very much.</p>
<p>These two examples contrast sharply to the big universities in Boston.</p>
<p>I think there is room for compromise here. We have the issue of a college trying to take over a neighborhood and we simply can’t afford losing the revenue. If they paid taxes at least on the dorms that would go a long way to helping. They use our fire department, police and sewers, I really don’t see why they don’t have to help pay for them. Many colleges (including Harvard) do make “Payments in lieu of taxes”, but the colleges in our town don’t pay a penny.</p>
<p>The problem, BC, is where do you draw the line? As mathmom notes, even the soup kitchen and Boys & Girls Clubs use police, fire and sewer services. (Of course, the easy fix for NYC is to eliminate rent control, but that is a discussion topic for another time.) But unlike the mature adult workers at Corporate HQ’s – like the Hancock – colleges bring in primarily very young adults. Those young adults are single, primarily, and childless. Even few grad students have school-aged children. According to Boston documents, a huge chunk of its budget goes to its K12 schools, which the 6,000 undergrads at Harvard or 9,000 undergrads at Boston College have no need nor use for.</p>
<p>Again, where do you draw a line? Sure, H is richer than Congress so H can afford it. But what about a poor college? Don’t they use police, fire and sewers too? If H has to pay, doesn’t fairness dictate that all should pay, even if it means that ‘poor’ college goes out of business? </p>
<p>In the case of the soup kitchen and Boys & Girls Club, they provide
services that the city would otherwise have to provide whether in the
form of after-school programs, day care or welfare benefits.</p>
<p>Drawing the line is for legislators and they seem to do it with aplomb.
Look at state or federal income tax rules and regulations. There are so
many lines drawn it makes one dizzy.</p>
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<p>Singles, the elderly and childless couples could make the same argument.</p>
<p>Non-profit appears to be more of an organizational term as opposed to
an accounting term. Perhaps looking at their equivalent of retained
earnings could better help determine whether or not they are
non-profit.</p>
<p>Water sewer and other utiltiy services provided by cities are typically run to break-even or make a profit. When I worked for a city they put many city workers on the utility dept. payroll even if they worked on other things most of the time. They are often hidden taxes for the city used to offset other more obvious taxes that get citizens upset.</p>
<p>I wanted to repeat from earlier, not only are universities not paying property taxes on vast acreage, </p>
<p>**what’s 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 AND no sales tax **</p>
<p>Really? That is in Boston’s City Charter? They HAVE to provide day care? The City HAS to provide after-school programs?</p>
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<p>Non-profit doesn’t mean ‘no profit’. It just means that the organization is exempt from federal and state income taxes. But to maintain its non-profit status, it must continue to perform charitable works.</p>
<p>Anyone can make a logical argument about “fairness” on either side of any tax policy. The one I like to keep in mind is the fact that if you exempt one person or organization from taxes that means all the others have to pay more. Taxes pay for services, plain and simple, even though a lot of them are “hidden” - like planning, emergency preparedness, safety inspections, etc. So any time you want to talk about a tax exemption or a tax cut for one person or organization, consider who you are dumping the additional bills on, because they have to be paid by someone.</p>
<p>Tax policy is a crude and readily abused means of subsidizing activities we approve of as a society, whether it’s a soup kitchen, a college or a cathedral. I think it would be better to collect taxes based on benefits received from governmental services and then issue overt subsidies to whichever ones we want to subsidize. At least then we’d know what we’re paying for, and why.</p>