Payment in Lieu of Backbone

Last week’s agreement between Harvard and the City of Cambridge to increase Harvard’s voluntary payment-in-lieu-of-taxes (PILOT) was an unfortunate step in the midst of cooling relations between Harvard and city landowners. We are glad that Harvard has been making a stronger effort to foster agreeable relations with Cambridge residents over housing issues, yet we are hesitant to condone Harvard’s agreement to renegotiate a higher PILOT with the City’s government.

Harvard is far and away Cambridge’s largest landowner, owning around ten percent of the city’s real estate along with MIT. However, because of the University’s non-profit status, the city of Cambridge loses out on over $30 million worth of property taxes per year. In an agreement reached in 1990, Harvard had been paying the city an annual PILOT of $1.7 million in addition to the $4.3 million it already pays on non-exempt land. Under the new agreement reached Monday, Harvard will pay $2.4 million in 2006 with provisions for periodic increases over the 50-year settlement. The city has estimated that the deal could be worth over $255 million over the five decade period.

From a town-gown relations standpoint, the increased PILOT will help Harvard get back on the Cambridge government’s good side after years of acrimonious debate over the fee. Coupled with progress made in coexisting and communicating with residents of the Riverside and Agassiz neighborhoods, Harvard’s stock with city residents and local government officials has rarely reached such heights. That said, it is unfair that Cambridge should essentially bully Harvard into paying pacification money—in exchange for better town-gown relations—long before the former PILOT agreement was scheduled to run out. Harvard has long been a popular scapegoat for city officials. But in reality, Harvard is the primary reason for the city’s fame and consequent ability to attract technology companies and various other businesses (which all pay taxes themselves).

Doubtless, Harvard owes Cambridge much as well, and for more than just basic city services. However, their relationship is symbiotic—cooperation and trust is key. By asking for a renegotiation of the PILOT many years in advance, Cambridge breached this trust. And Harvard administrators, perhaps rightly, chose to cave. What worth the University wrings in the future from this new agreement and the attendant improvement in town-gown relations remains to be seen. For $255 million over 50 years, funds that could be utilized elsewhere, we expect a lot from Harvard’s obstinate host.