Piloting The Ship
Earlier this month, Clark University became the latest private, tax exempt university in Worcester to agree to make long-term, voluntary payments in lieu of taxes to the City of Worcester. Under terms of the agreement, Clark will pay $262,000 to the city this year and that amount will increase by 2.5 percent every year for the next 20 years for a total commitment of about $6 million.
The money will support the Worcester Public Library and improvements to the city's Main South neighborhood where Clark's main campus is located.
Clark's arrangement comes a little more than a year after Worcester Polytechnic Institute agreed to pay $9 million over 25 years. And that agreement came on the heels of the Massachusetts College of Pharmacy and Health Sciences' agreement to pay between $1.25 million and $1.5 million over the same period of time.
These PILOT agreements are the right move for the colleges and for the city.
Economists may argue that the recession has been over for more than a year, but that is little comfort to the hardworking taxpayers of Worcester. Seeing the colleges doing something to directly contribute to city coffers engenders a strong sense of community spirit and makes the colleges seem more empathetic to the struggles of their city.
The payments are relatively affordable for the colleges, and Clark's willingness to help out a public partner during such difficult times is welcome, indeed.
Property Ladder
For the colleges, this is probably the easiest option for appeasing the city council. Arguing with the council's economic development committee, which has been on a years-long campaign to browbeat the city's larger exempt organizations into paying their "fair share" of property taxes, would be a frustrating waste of time.
The committee isn't satisfied with the colleges' contributions and makes no secret of its intentions to convince more of the nonprofit organizations to pay up, too.
Enumerating the millions upon millions of dollars Clark, WPI, MCPHS and others have poured in to the city on their own seems to fall on deaf ears, and the committee is quick to point out that the sums agreed upon by the colleges are far less than the revenue the city would realize if those properties were not exempt.
This has been a real exercise in the policy of public pressure. Has the council cajoled the colleges into a payment to the city or have the schools made self enlightened gifts to their hometown? It's really a moot point. Municipal acceptance of something, rather than the nothing they are legally entitled to is how codified PILOT programs work.
Politically, an ad-hoc PILOT program for exempt organizations is relatively low-hanging fruit.
Will these new PILOT fees from the three area colleges cure Worcester's structural budget deficit? The truth is they'll hardly make a dent. The hard work of nursing Worcester back to economic health was begun in earnest in the spring by Mayor Joseph O'Brien's Task Force on Job Growth and Business Retention.
One of the task force's primary recommendations is to "substantially narrow the disparity in property tax rates between business owners and homeowners."
In the current fiscal year, commercial and industrial property owners pay taxes at a rate of $33.28 per $1,000 of assessed value. Residential property owners pay $15.15 per $1,000.
Residential property owners, while paying a very low rate, shoulder a completely unreasonable and inequitable 80 percent of the city's total tax burden. During the recession, property values have declined, making the tax rate disparity a recipe for economic disaster.
In addition to accepting the colleges' contributions, the city council must get serious about "narrowing the disparity" between these two divergent rates at the very least, and should close the gap completely.
In its report, the task force provided models and strategies for how to achieve this, but didn't mention going after colleges for money for these PILOT payments.
Clark, WPI and the College of Pharmacy have shown that they are willing to contribute to the greater good, and that is to be commended.
With these three leading institutions already at the table, it seems likely more of the schools will follow. Their contributions should encourage the city and its residents to show the same kind of commitment to the city's future by agreeing to a single, fair and equitable tax rate.
The city is obviously an attractive place for the colleges that call it home. Their willingness to contribute testifies to that. If the city can make itself more attractive to businesses and investors it can look forward not just to recovery, but to prosperity.
WBJ Web Partners
Most Recent
Most Recent
0 Comments