PILOT-ing a New Way Forward for Harvard

“We have taken the route of communicating our concerns in a transparent fashion…. The result is a model for town-gown relations. We know it is far from perfect. But we are working together and determined to make it successful,” Somerville Mayor Joseph Curtatone and then-Tufts University President Lawrence S. Bacow wrote in a 2009 Letter to the Editor in the Somerville Times, describing the relationship between Tufts and Somerville.

When he led Tufts, Bacow spoke frequently about the importance of strong community relationships. In 2004, he negotiated a plan to formalize the payment of community benefits to Somerville and Medford, where Tufts is located, including it in a September update to the university. After a conversation with Somerville Alderman Jack Connolly, he inaugurated a tradition of “Community Days,” bringing Tufts affiliates and Somerville and Medford residents together. Now over 15 years old, the annual event combines student performances with presentations from community-based agencies and city departments.

In a letter presenting a 2006 report entitled “Connecting with Neighbors: Tufts and the Somerville Community,” Bacow traced the success of Tufts’ relationship with Somerville to “the promise of mutual respect and a desire to share our cultures and resources.”

This respect does seem to have been mutual. During a flare-up of town-gown tensions in 2007 after the rowdiness and “rude behavior of some Tufts students,” Curtatone penned a letter to the editor of the Somerville Times urging calm. He cited his strong working relationship with Bacow and lauded several of Tufts’ community outreach programs, and made particular note of their 2004 agreement, which he stated would “net the City of Somerville more than $1.2 million over a ten-year period” in “direct in-lieu-of-tax contributions.”

Direct payments like these are part of a broad trend of payment-in-lieu-of-tax, or PILOT, agreements between tax-exempt institutions and the communities that host them. Legally, these payments are voluntary, but they often fill critical holes in municipal budgets in cities where a high concentration of tax-exempt land on hospital, university, and museum campuses shrinks the commercial tax base and strains public funds. Some cities, including Cambridge and Somerville, set payment plans through individual negotiations with universities. The City of Boston independently calculates an expected contribution based on estimates of the value of a university’s property and of the cost of city services that they are likely to consume and requests that each institution pay the calculated amount. But even after counting programs with community benefits toward the sum, many institutions fall far short.

While the $120,000 per year in the Bacow-Curtatone agreement is nothing to sneeze at, it is pocket change for either a university or a city, and less than either of the two men involved in the deal drew in salary in the waning years of the ten-year agreement. As the Tufts Daily noted in 2016, Boston had received more from Tufts in 2011, 2012, and 2013 under their formula-based payment system than Somerville had under the Bacow-Curtatone agreement. A new negotiated agreement between Tufts and Somerville pays more to the city at $275,000 per year, but still falls short of the $556,000 that they paid in 2016 under the PILOT agreement with Boston. A payment at this level is laudable if the alternative is nothing, but laughably small as a substitute for the property tax payments that form the backbone of local budgets.

Harvard is not fulfilling its financial obligations under either the negotiated settlement or the formula system. In Boston, Harvard has been delinquent for each year of the six-year formula program, and only paid 53 percent of its 2017 obligation, or less than 7 percent of what it would pay if its property were taxable. In Cambridge, payments are set under a 20-year negotiated agreement that has been unpopular with Cantabrigians since it was signed in 2005. At the time, then-City Council University Relations Committee co-chair Marjorie Decker called it “just a pittance.”

Bacow improved the relationship between Tufts and Somerville in many ways. Under his leadership, Tufts may have been the “almost perfect neighbor” that Curtatone describes. But payments in lieu of taxes are one way in which universities in greater Boston could be a lot more perfect, and Harvard is a lead offender.

The new administration will have a lot on its plate when Bacow, now the president-elect of Harvard, takes office on July 1. But if he hopes to realize his neighborly ambitions from his time at Tufts, he owes it to Cambridge to renegotiate a fairer PILOT agreement, and he owes it to Boston to meet Harvard’s full payment obligations under the contribution formula, which calculates payments as a percentage of the standard property tax based on the share of city budgets that fund services that universities are likely to consume.

Bacow’s new administration has an opportunity to set an example of a true “model for town-gown relations”: to abandon a broken PILOT paradigm that lets universities off the hook for the financial burden that they place on their host communities—the cost of keeping the roads around them plowed and maintained, the water that flows through their pipes clean, and the neighborhood around them safe—and to set higher payments that fully compensate them for it.

Will H. MacArthur ’20 is a Social Studies concentrator living in Currier House. His column appears on alternate Wednesdays.