Council Endorses Bill Allowing Cities to Require Payments From Large Nonprofits, Including Harvard

The Cambridge City Council voted on Tuesday to endorse a state bill that would allow the city to require large institutions like Harvard to pay 25 percent of their assessed property value through Payment in Lieu of Taxes payments.

Nonprofit institutions participating in the PILOT program — including universities like Harvard — that own over $15 million in property are asked to voluntarily pay a fraction of what they would pay in property taxes to supplement the city’s budget. Institutions can also count the value of “community benefits” toward up to 50 percent of the PILOT payment.

Harvard has current PILOT agreements with both Boston — which it has consistently underpaid — and Cambridge. Under the proposed bill, cities and towns could opt to require eligible institutions to make PILOT payments equal to 25 percent of their assessed property value.

In the meeting, some councilors stressed the necessity of the PILOT payments for supporting the city’s growing budget, particularly regarding large landholders like Harvard, which owns more than 16 million square feet of property in Cambridge.

Councilor Patty M. Nolan ’80 said the goal is to “get to a point where those nonprofits that can afford to give more to cities in which they operate in exchange for some of the benefits” and to “increase the contribution to be commensurate with what a community believes is necessary.”

But the bill, though unlikely to pass, raised questions in the meeting about how exactly the city would place a valuation on Harvard’s sprawling campus — especially its academic and administrative buildings.

In the Tuesday meeting — a continuation of the marathon Council meeting which began Monday — City Manager Yi-An Huang ’05 also noted the difficulty in evaluating Harvard’s property because there is little precedent for taxing classroom and administrative buildings.

“Valuing for instance, classrooms and classroom lab space that doesn't typically sell or rent doesn’t have a lot of case law,” Huang said, “If you are talking about tax exempt properties that are not selling or have many different uses, it’s a little bit harder to value those, at least upon quick review.”

“This isn’t a reason to support or not support, but I think it's a little hard to evaluate exactly what the implications might be,” he added.

In an interview on Tuesday, Huang said he was open to the idea of the bill but wanted to see more “discussion of the contours of the legislation.”

“I think broadly, the idea that municipalities would have more flexibility in finding revenues makes sense to me,” Huang said. “I do think that the level of shift in policy to actually tax nonprofits is pretty significant, and so I don’t really take that lightly.”

Councilor Paul F. Toner raised concern over what other nonprofits would be affected by the new PILOT program, citing off-target burdens on larger nonprofit affordable housing developers who own large amounts of land in the city, like Homeowners Rehab Inc. and Just-A-Start.

“It’s possible that through that ordinance, we would be able to say which organizations were subject to this and which weren’t, but I’m not 100 percent sure if we would have that flexibility,” Acting City Solicitor Megan Bayer said in the Tuesday meeting.

Harvard spokesperson Amy Kamosa defended Harvard’s contributions to Cambridge and Boston in a Monday statement, saying the University is “deeply engaged in and committed to partnerships and collaborations in our host communities.”

“In addition to a long history of making voluntary PILOT payments in both Boston and Cambridge, the University makes other direct contributions through real estate taxes, water and sewer fees, and other fees and permits,” Kamosa wrote, adding that Harvard also provides programs and initiatives that benefit both cities.

—Staff writers Ayumi Nagatomi and Avani B. Rai contributed reporting.

—Staff writer Laurel M. Shugart can be reached at laurel.shugart@thecrimson.com. Follow them on X @laurelmshugart or on Threads @laurel.shugart.