Boston Taxes the Nonprofits

Boston has apparently now created a plan to force (er, “formally ask”) colleges and universities to pay property taxes. According to an article by Michael Rezendes in the Boston Globe:

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.

Boston officials recently mailed letters to leaders at 40 major nonprofits asking them to pay up to 25 percent of what they would owe if their property were not tax-exempt.

The new plan is supposedly based on the cost of providing city services. According to longtime Boston Mayor Thomas Menino, “This isn’t something we drew up on the back of an envelope. It’s something we put a lot of thought into.’’

Well that’s reassuring. This has major implications for Boston’s many colleges. Many of the city’s nonprofits already contribute something called Payments In Lieu of Taxes, but the prices are apparently going up.

Harvard University pays $2.1 million to Boston. Under the new plan it will owe $5.8 million. Boston University contributes $5.1 million and would send about $1.7 million more to city hall under the plan. Northeastern University would owe the city $4.3 million. Currently it only pays about $31,000, a year.

The city of Pittsburgh, Pennsylvania tried a similar tactic back in December 2009, but gave it up after the city’s universities agreed to make voluntary payments.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer