Should Universities pay Property Taxes?

[BCEagle91]

<br>

<p>Really? That is in Boston’s City Charter? They HAVE to provide day care? The City HAS
to provide after-school programs?</p>

<br>

<p>I don’t live or work in Boston.</p>

<p>I suppose that you can leave children to fend for themselves. But you’ll wind up paying for it in social services, foster care, etc. Also remember that your kids have to go to school with these kids.</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>

<br>

<p>Is donating to the city charitable works?</p>

[tom1944]

<p>The authorities are where the politically connected go for plum jobs.</p>

[chocoholic]

<p>I’m pretty sure that one of the criterion for being classified as non-profit is that surplus revenues are earmarked for achieving the goals of the non-profit, and cannot be distributed as profit or dividends.</p>

<p>Non-profits do not have to report to anyone other than their board and can pay themselves (employees) exorbitant sums in compensation.</p>

<p>A charity is a sub-set of non-profits, and the finances come under public scrutiny.</p>

[BCEagle91]

<p>In the case of the MWRA, they spent tens of millions of dollars on ad campaigns to convince homeowners that it was a good thing to pay $1,000/year on your water bill - this was in the 80s I think.</p>

[barrons]

<p>Actually non-profits, except churches have to file long and fairly informative IRS returns. It lists pay for the top earners and many other details. Form 990. Just Google it for any non-profit you know and you should find one. </p>

<p><a href=“http://www.bu.edu/cfo/files/2011/05/2010-Boston-University-Form-990.pdf[/url]”>http://www.bu.edu/cfo/files/2011/05/2010-Boston-University-Form-990.pdf&lt;/a&gt;&lt;/p&gt;

[BCEagle91]

<p>Very interesting to look at those numbers. That’s a view of colleges that I haven’t seen before. Profits/book of 5%.</p>

[bluebayou]

<p>well since you are a BCEagle, how about: </p>

<ul>
<li><p>Boston-Brighton starts a day care center and after-school program, and then sends the bill to Boston College? </p></li>
<li><p>Newton builds the most expensive new high school in the State for the tune of $200 million and then sends an invoice to BC to help defray its costs? </p></li>
</ul>

<p>Is this essentially what you are suggesting?</p>

<p>As you are aware, BC has students who live off campus in Brighton bcos the City refuses to issue a permit for BC to build more on campus housing; perhaps the City is still seeking it’s facilitating payment. :rolleyes:</p>

[BCEagle91]

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<p>Boston-Brighton starts a day care center and after-school program, and then sends
the bill to Boston College? Is this essentially what you are suggesting?</p>

<br>

<p>I haven’t lived in the Boston area for about 23 years so am not so familiar with the local needs of the Brighton community.</p>

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<p>As you are aware, BC has students who live off campus in Brighton bcos the City
refuses to issue a permit for BC to build more on campus housing; perhaps the City is
still seeking it’s facilitating payment.</p>

<br>

<p>How do you know whether students are living because there isn’t dorm space or if it’s just their choice? The battle with Mayor Menino has been going on for a while - I do not know the current status.</p>

<p>Boston College does have room to build on the existing campus. I think that the mods were built around the 1950s and those are either one or two story dorms surrounded by high-rise dorms. BC could replace the mods with two high-rises. BC also has a lot of space on upper campus where they could replace existing dorms with high-rises but they would need Newton’s permission to do that. They have a fair amount of land on Newton Campus too that they could build high-rises at with Newton’s permission.</p>

<p>There were a lot of town-gown issues over traffic between Newton and Boston College many years ago - related to the Football Games. I believe that those have been reasonable resolved. I don’t know if Newton is looking for property tax money from BC.</p>

[xiggi]

<p>A few years ago, there was a “similar” discussion on CC related to Harvard’s wealth. </p>

<p>[Bill</a> would tax rich colleges’ endowments - The Boston Globe](<a href=“http://www.boston.com/news/local/articles/2008/05/08/lawmakers_target_1b_endowments/?page=full]Bill”>http://www.boston.com/news/local/articles/2008/05/08/lawmakers_target_1b_endowments/?page=full)</p>

<p>

Massachusetts lawmakers desperate for additional revenue are eyeing the endowments of deep-pocketed private colleges to bolster the state’s coffers by more than $1 billion a year, asserting that the schools’ rising fortunes undercut their nonprofit status.</p>

<p>Legislators have asked state finance officials to study a plan that would impose a 2.5 percent annual assessment on colleges with endowments over $1 billion, an amount now exceeded by nine Massachusetts institutions. The proposal, which higher education specialists believe is the first of its kind across the country, drew surprising support at a debate on the State House budget last week and is attracting attention in higher education circles nationally.

</p>

<p>Be it through property taxes or different mechanisms, it seems that the hyenas and vultures who believe that collecting taxes is a common or public good are determined to go after “unfair” pockets of wealth, especially when structured as non-profit organizations.</p>

<p>This says it all:</p>

<p>

“It’s mind boggling that one entity not paying taxes has $34 billion. How do you justify that?” said Kujawski, who serves on the influential House Ways and Means Committee. “When people can’t afford to live. How do you justify not taxing them?”

</p>

[BCEagle91]

<br>

<p>Be it through property taxes or different mechanisms, it seems that
the hyenas and vultures who believe that collecting taxes is a common
or public good are determined to go after “unfair” pockets of wealth,
especially when structured as non-profit organizations.</p>

<br>

<p>I’ve seen property taxes before but I haven’t really seen wealth taxes.</p>

<br>

<p>"It’s mind boggling that one entity not paying taxes has $34 billion.</p>

<br>

<p>That bill was at the state level and MA receives income and sales
taxes from the people that work and study there. That’s a different
matter from local property taxes.</p>

<p>Negotiations also work in the other direction, at least at the state
level. The well-known examples are Evergreen Solar which suckered $58
million from the state with Governor Patrick’s blessing, opened a
plant in 2008 and then shut down earlier this year, and Fidelity
Investments which was given a tax break if they increased their
workforce (in MA I presume) by 5% for five years. They met the
criteria and continued to get the tax break even while shedding
employees from the state (they moved them to New Hampshire and Rhode
Island).</p>

[bluebayou]

<p>

Boston College does have room to build on the existing campus.

</p>

<p>Sure they do, and BC has been trying for several years. But the City of Boston refuses to give the college a permit to build. Indeed, the City even refuses to give BC an occupancy permit to use an apartment building that the college owns outright as a dorm.</p>

<p>Jes’ awaitin’ that facilitating payment, I guess.</p>

<p>

I haven’t lived in the Boston area for about 23 years so am not so familiar with the local needs of the Brighton community.

</p>

<p>If the community politicos think there is a need, they build it. All of a sudden, they need more tax dollars and if I understand you correctly, it is ok to extract those dollars from the local colleges, including your alma mater.</p>

[BCEagle91]

<br>

<p>But the City of Boston refuses to give the college a permit to build. Indeed, the City
even refuses to give BC an occupancy permit to use an apartment building that the
college owns outright as a dorm.</p>

<br>

<p>Build in Newton. BC has more space to build in Newton than in Boston.</p>

<br>

<p>If the community politicos think there is a need, they build it. All of a sudden, they
need more tax dollars and if I understand you correctly, it is ok to extract those
dollars from the local colleges, including your alma mater.</p>

<br>

<p>MA has gone through some pretty hard times for several years and that includes Boston. I don’t particularly have a problem with Boston extracting taxes or money from universities as they would from businesses to provide services to the city.</p>

[notrichenough]

<p>

The Massachusetts plan has also brought to the fore a more radical notion: whether certain colleges have amassed so much wealth that they no longer deserve to be tax-exempt.

This is a legitimate question, IMO.</p>

<p>For less than 1% of Harvard’s endowment per year, everyone could attend for free. For a tiny fraction of 1% they could pay their entire property tax bill. “We don’t feel like it and you can’t make us” is a pretty feeble justification for not paying in this case.</p>

<p>A plan I liked better (that was also short-lived) would have required non-profits to spend an amount equal to 5% of their endowment per year to keep their non-profit status. Maybe that would end the pointless hoarding of money.</p>

[xiggi]

<p>

A plan I liked better (that was also short-lived) would have required non-profits to spend an amount equal to 5% of their endowment per year to keep their non-profit status. Maybe that would end the pointless hoarding of money.

</p>

<p>Are the distributions usually much lower than 5 percent? Do they get a break when facing massive losses? Can they really avoid distributing less than 5 percent. </p>

<p>Unless I am missing something, isn’t 5% of 26B not 1.3 billion? </p>

<p>

The Harvard endowment, the nation’s largest, grew by about $4.6 billion to $32 billion over the school’s fiscal year. The fund also contributed an estimated $1.5 billion to the university, covering about a third of Harvard’s operating budgets for the year.</p>

<p>The fund’s performance marked the second consecutive year it earned a double-digit investment return since suffering a sharp loss of more than 27 percent in the university’s 2009 fiscal year. The endowment’s assets had slumped from an all-time high of $37 billion to $26 billion that year.</p>

<p>Those losses and other financial concerns in 2009 prompted endowment managers to adjust the way Harvard invests. Besides portfolio gains in the most recently fiscal year, the university also said today that it continued to made progress in efforts to increase financial flexibility and improve risk management. </p>

<p>Harvard’s investment performance continued to outpace other funds over longer periods of time. The Harvard endowment has produced an annualized return of 5.5 percent over the past five years, compared with 5.1 percent earned by the big funds track by Wilshire.

</p>

[notrichenough]

<p>

The Harvard endowment has produced an annualized return of 5.5 percent over the past five years.

Yet the size of the endowment has grown by almost 30% during this time. If they are spending 5% or more, and only making 5.5%, where is this growth coming from? Are they really getting $1 billion+ per year in donations? The math seems a little funny.</p>

<p>Here’s an eye-opening stat I came across:</p>

<p>

University operating budget in fiscal year 2010: $3.8 billion (by comparison, operating budget of the city of Boston: $2.39 billion)

Harvard’s yearly budget is almost 60% larger than the entire city of Boston’s!</p>

<p>I think Harvard could shake enough money loose to pay their fair share without even noticing it.</p>