Abandoning Auto-PILOT

University officials might see the recent call by Cambridge city councillors for a reassessment of the city’s losses due to Harvard’s tax exemptions as just an annoying political ploy. After all, nobody can force the University to renegotiate the thirteen-year-old payment in lieu of taxes (PILOT) agreement that was designed to govern the University’s voluntary payments to Cambridge until the year 2010.

But such an attitude would be short-sighted for University planners. The forthcoming report, and the debate over how much Harvard ought to compensate the city, poses a great opportunity for Harvard administrators to demonstrate their willingness to cooperate after years of rancorous fights with local politicians.

According to city officials, Harvard’s tax-exempt status deprives the city of Cambridge more than $30 million in foregone property-tax income each year. One hundred ninety acres of Harvard property go untaxed. But Harvard’s PILOT only requires a $1.5 million annual payment to the city and—if not renegotiated—is locked in for the next seven years.

As city councillors have pointed out, the $1.5 million is “woefully inadequate,” especially in light of the more generous payment plan Harvard offered to Watertown earlier this fall. Watertown, which agreed to allow broad development of the University’s properties, was given $3.8 million by Harvard this year to offset any substantial losses the city will incur as a result of the University’s tax exemptions.

Harvard’s true hometown deserves a better deal: it is time for the University to substantially increase its PILOT payment to Cambridge. Voluntary renegotiation of the old PILOT agreement would show great magnanimity on Harvard’s part, and represent a departure from our narrowly self-interested policies of the past.

As the University’s administration will be quick to point out, Harvard pays other taxes and has done much in the way of bringing prestige and business to Cambridge. But PILOT payments are a good investment in positive relations with our neighbors. Recent fights over Harvard development—including, notably, the defunct plans for a tunnel under Cambridge Street and a modern art museum on the Charles River that never materialized—demonstrate that both the school and the city lose when politics turn ugly.

Increasing the PILOT payment is a good step towards encouraging lasting cooperation between Harvard and the city. In the long run, larger PILOT payments will appease the University’s neighbors and advance Harvard’s development agenda among grateful city councillors—especially those who have explicitly called upon Harvard to demonstrate its good will.

If Harvard has the good sense to act generously, it will be the City Council’s turn next. Now it is up to Harvard officials to inaugurate a new era in town-gown relations, characterized by generosity by the school and cooperation from Cambridge in return.

In several interviews, Vice President for Government, Community and Public Affairs Alan J. Stone said that he would sit down with Cambridge officials and renegotiate the PILOT agreement. We hope he follows through on his commitment.