Massachusetts bill would force nonprofit universities to pay their 'fair share'

Potential university payments to municipalities would be tied to property value.

The bill's sponsor is a member of the Democratic Socialists of America.

The Massachusetts state legislature is considering a bill that would allow local governments to “tax” nonprofit colleges and universities. 

The bill, HD3207, would allow cities to force traditionally tax-exempt organizations owning at least $15 million in property to pay PILOTs — payments in lieu of taxation — “equal to 25% of the amount that would be paid if the property were not exempt from taxation.”

Speaking to the Harvard Crimson in AprilState Rep. Erika Uyterhoeven, the bill’s sponsor and party member of the Democratic Socialists of America, said that the legislation was crafted to target universities. 

“Unfortunately, Harvard has failed to pay their obligations, and this bill is attempting to address that problem,” Uyterhoeven said. “This is an attempt to say, ‘Look, let’s just then make it law, rather than having these agreements between municipalities and various nonprofit institutions.’”

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“The burden has been, particularly in Boston, increasing on residents who are struggling to stay in their homes, particularly through this Covid pandemic,” Uyterhoeven added. “We really want to encourage institutions to step up and take seriously, right, what does it mean to be part of our community and part of supporting our community and its residents?”

State Rep. Lindsay Sabadosa (D-MA), a co-sponsor of the bill, told Campus Reform that “currently, these programs are voluntary, which is why institutions like Harvard have not made payments for 8 years running.”

“In my district, Smith [College] was asked to opt into a PILOT program,” she elaborated. “It refused to do so and instead paid the City $300,000 over three years as a ‘donation.’  During that same period, the City had to pass yet another override (the second in ten years) in order to continue to make ends meet.”

Campus Reform asked Rep. Sabadosa whether requiring PILOT payments may trigger job loss as universities lay off employees; she pointed out that Harvard University and Smith College have endowments of $49.2 billion and $2 billion respectively.

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“Any institution with an endowment that large that threatens layoffs at the mention of paying its fair share is not behaving ethically and is certainly not being forthright about its finances,” she explained. “These institutions thrive because of the communities in which they are located. These PILOT payments help to keep that community affordable and provide services that attract faculty and staff to work on campus and live in the community.”

Universities across the nation have faced criticism for refusing to pay PILOTs. 

Most recently, University of Pennsylvania and Drexel University students and faculty marched through the streets of Philadelphia to demand that both schools offer the optional payments. The march was organized by Penn for PILOTs, Philly Democratic Socialists of America, Drexel Community for Justice, and other activist groups.

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“Public school buildings are reopening, yet the many health and safety hazards present in those buildings have still not been meaningfully addressed,” read the organizations’ Facebook event. “Meanwhile, nonprofits like Penn & Drexel continue with multi-million dollars construction and renovation projects. Parents, educators, students, and activists and organizers across Philadelphia are calling for these wealthy nonprofits to contribute 40% of the property taxes they don’t pay to the School District for safe and healthy facilities through Payments In Lieu of Taxes (PILOTs).”

Campus Reform reached out to Harvard University and the legislation’s sponsors for comment; this article will be updated accordingly.

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