Deadbeat universities

It’s time for higher education to pay its fair share of city costs. Plus, how to improve the Boston City Council.
By EDITORIAL  |  November 14, 2007

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Richard Freeland, who stepped down as Northeastern University’s president this past year, does not deserve to be the poster boy for overpaid leaders of academia — the nearly $2.9 million he received in 2006 included a substantial one-time severance package. Nonetheless, Freeland’s appearance at the top of the Chronicle of Higher Education’s annual list of moneymakers stands in telling contrast with the relative pittance Northeastern pays to the city of Boston.

Like all nonprofit institutions in Boston, Northeastern is exempt from paying property taxes on its estimated quarter-billion dollars’ worth of land and buildings. Were this not the case, Northeastern would face a $3 million annual tax bill, according to an Alliance of Boston Neighborhoods estimate. Instead, the institution pays $141,132 each year as a voluntary “payment in lieu of taxes” (PILOT). That’s one-twentieth of what it recently paid Freeland.

Our local colleges claim that they can’t afford to pay more. They also argue that they contribute to the city in many other ways, which is certainly true. But so do a lot of residents and businesses that do pay property taxes, which help to sustain basic infrastructure we all rely on, from road repairs to clean water.

It’s time for Northeastern, and other colleges, to pay more — and to do so through an agreed-upon, standard formula.

Currently, the city collects roughly $7.5 million in total PILOT payments from Boston’s colleges and universities. That figure should be at least doubled, according to many — including Mayor Thomas Menino and city councilors such as Steve Murphy, who have long advocated on this issue without success.

That extra $7.5 million might seem a minor portion of Boston’s $2.2 billion budget, but it is greatly needed, and might impel increased PILOT agreements on other exempted properties, including some hospitals and state-owned property.

And it’s not just the dollar figure that needs changing; it’s also the disparity in what various schools contribute. It is long past time for standardized PILOT agreements to be done by formula, instead of the current set of haphazard individual deals — some of which are volunteered by colleges and universities out of a sense of good citizenship, others extorted by the city when leaders have an opportunity to obstruct a school’s plans.

It makes no sense, for instance, that Boston University pays $4.4 million each year, and Harvard $1.8 million, while Emerson College, Berklee College of Music, and Wentworth Institute pay just over $350,000 combined. Simmons College pays nothing at all.

Certainly not every school should pay the same dollar amount. A campus that houses and feeds many of its students might use more city resources — sewage, water, fire, trash collection, etc. — than a commuter school, to say the least. And buildings housing science labs and lecture halls should be treated differently than those leased by universities to commercial retail outlets, which, under the current agreement, are also exempt from paying property taxes if located on school-owned land.

It will be hard to find a formula that everyone finds fair. But it would be impossible to find one that’s less fair than the one currently in place.

Some elected officials view the current expansion plans of Harvard, BC, BU, and other schools as an opportunity for more PILOT negotiation by duress.

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