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Tufts Doesn’t Pay its Fair Share in Somerville

What about in Somerville? According to a recent email I got from the City’s Assessing Department, “if the University was a taxable entity it would generate residential tax at $596,700 and commercial tax at $6,103,800.”

Tufts University West Hall,Mason Contractors

In the U.S., there’s a funny tax break for some of the wealthiest organizations and institutions in the country. Enterprises categorized as “non-profit” – even wildly wealthy ones like some universities and hospital chains – do not pay real estate taxes.

But across the nation, local governments count on real estate taxes for an average of 30 percent of their annual revenues, according to the Urban Institute.

In almost half of the U.S. states, non-profits don’t hand over a dime. But increasingly, city and town halls are asking them to make a “payment in lieu of taxes,” also known as a PILOT.

In Somerville,Ma., Tufts University makes PILOT payments every year, sending $275,000 into the city coffers and also providing other services like some tutoring and access to playing fields, all as part of a five-year PILOT deal cut in 2013.

But while $275,000 might sound like a pretty good deal, it’s not.

Just a few miles away, Tufts gives Boston proportionally much more. Why?

Because the City of Boston asks all the large non-profits to make a PILOT payment of 25 percent of what they would pay if they were subject to real estate taxes. Some of the payment can be in kind, but some must be cash.

In FY 2017, Boston told Tufts that if it had to pay property taxes, it would owe $4,913,594. Twenty-five percent is $1,139,798.

What did Tufts do?

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Tufts ponied up $569,899 in services and another $569,000 in cash for the city coffers.

What about in Somerville? According to a recent email I got from the City’s Assessing Department, “if the University was a taxable entity it would generate residential tax at $596,700 and commercial tax at $6,103,800.”

That’s a total would-be tax bill of $6,700,500. Even higher than in Boston.

Does Tufts currently pay 25 percent of that to the City of Somerville? Not even close.

The $275,000 cash payment represents just 4 percent. Even if the services the university currently provides equal another $275,000, that makes just 8 percent. Not 25 percent, as in Boston.

Why does Tufts give Somerville such a raw deal?

And why did the 2013 agreement allow for a flat fee, rather than one that goes up with property values, like in Boston? Or just automatically goes up, like in Cambridge, where Harvard’s payments rise three percent a year, and those from the Massachusetts Institute of Technology bump up two-and-a-half percent?

In Cambridge, colleges and universities also have to file extensive impact reports with City Hall so that lawmakers can keep track of how many students live off-campus, how many university vehicles are on the roads, and so on.

When asked why Tufts paid so much more in Boston in 2013, a spokesperson sent a statement that said, “This partnership agreement is just one part of a strong relationship that includes many programs in the public schools as well as projects with non-profit organizations across the city.”

They added: “We do not consider these payments in lieu of taxes, however some cities and towns call them PILOTs. We believe that the payments represent part of our relationship and that is more important than the label.”

Will Tufts and Somerville agree to a Boston- or Cambridge-style PILOT this time around?

As Somerville grapples with gentrification, rising housing costs and transportation challenges, Tufts should negotiate a fair, equitable and transparent agreement that treats Somerville the same way it treats Boston, at the very least.

The author, currently a professor of journalism at Boston University’s College of Communication, first became interested in PILOTs while running Somerville Neighborhood News in 2014. She has taught three courses at Tufts Experimental College.