Ivy League PILOTS

Harvard is still negotiating a new payment in lieu of taxes (PILOT) agreement with Boston and Cambridge, its host cities.  Harvard signed its agreement with Cambridge in 2004. It pays Cambridge $4.7 million annually. But Cambridge, pointing out that Harvard’s budget and endowment have doubled since then, wants an increase. The Crimson has an interesting background report on PILOTS at all eight Ivy League schools.  The original version of the picture above (in the article) links to data showing each school’s endowment and PILOT. Here is a sample from the article:

Relying on a mix of public records and university reports, the Crimson found existing agreements that ranged from contractual to voluntary, and running from just a few years long to several decades, each reflecting a possibility for the next iteration of Harvard’s own PILOT programs. Ultimately, how much the University ends up committing to pay — and for how long — may come to reflect the extent of goodwill existing between the institution and the cities that host it.

Harvard’s 50-year contract with Cambridge represents the longest out of the Ivies’ PILOT agreements, a possible sign of goodwill between the two entities. Ivies in much smaller towns, like Cornell and Princeton, tend to have shorter-term contracts — and joined the program later in the game. Princeton’s agreement with the borough of Princeton, the municipality it lies in, is just five years long, making it the shortest of the Ivies.

And while Harvard has been making PILOT payments since 1929, Cornell, located in the town of Ithaca, entered its first ever PILOT agreement with the municipality just last year. Overall, Yale’s PILOT payments are the highest of the eight, averaging $22.5 million to the city of New Haven annually over a six year period. Columbia’s payments, meanwhile, total to $4.72 million annually, as part of a 36 year agreement with West Harlem — a similar amount to that of Harvard’s original 50-year PILOT agreement that had since been terminated.

Along with stark differences in the length and amount of payment agreements, the allocation of these funds within municipalities also varies widely between the universities. Some universities, such as Yale and Brown, pay their sum directly to the city’s budget without strings attached. Others, like UPenn and Princeton, focus their money on specific initiatives within the municipalities, such as addressing environmental hazards in Philadelphia public schools or Princeton’s sewer infrastructure and fire department improvement.

Princeton’s choice of contribution reflects a popular argument advanced by PILOT advocates, who say that tax-exempt universities still benefit from core city services like sewer systems, police and fire services, or snow removal, and therefore ought to direct a portion of property taxes back to the city to help fund those services. Partly as a result, some universities’ preference for participating in PILOT programs through community benefits has angered residents, who criticize it as a cop-out from making the hard payments that cities need. In Boston, Harvard counts half of its PILOT contributions in community benefits, and has failed to meet the city’s requested cash payments for the last 12 years of available data. Similarly, UPenn specifically has faced scrutiny over their unwillingness to pay PILOT payments outside of their public school initiative.

darryll k. jones