Opinion: An Appeal for PILOT Parity
Amherst College. Photo: amherst.edu
The following column appeared previously in the Daily Hampshire Gazette.
Recently, there have been several letters on the question of what colleges and non-profits could contribute to their local communities in lieu of property taxes (PILOTs). This issue has a long history dating back to reports prepared by the City of Boston in 2010 and Northampton in 2015 in which both encouraged non-profits and colleges to contribute a modest 25% of their full taxable value towards funding their local schools and town halls.
For Northampton and Amherst the importance of the PILOT issue is sharpened because local schools are dealing with painful budget gaps at a time when municipal tax revenues have been seriously depreciated by long-departed taxable industrial properties replaced by non-taxable properties, declining state aid, and a mandated property tax cap of 2.5%.
Since 2020, there have been six new college PILOT agreements which are noteworthy due to their substantial financial value and recurring annual payments. Note as follows:
- In 2023, Providence and its 4 colleges agreed on a $442 Million 20 year PILOT. ($22M Year)
- In 2021, New Haven and Yale agreed on a $141 Million 6 year PILOT ($23M yearly)
- In 2024, Princeton University (PU) announced a $71 Million 5 year PILOT ($14M annually).
- In 2020, U Penn agreed to a $100 Million 10 year PILOT ($10M annually).
- Since 2020, Harvard has contributed $100 Million to Boston ($10M annually)
- In 2023, Ithaca and Cornell agreed on a $60 Million 15 year PILOT ($4M annually).
The average annual PILOT contribution for the six northeastern college agreements is $14 million. But locally, there are no long-term PILOT agreements with Amherst College, U Mass Amherst and Smith College. This despite a combined total endowment value of $6.3 billion. Specific incidental contributions are listed below. Note that inquiries seeking accurate contributory data were responded to by UMass but not Smith College or Amherst College.
- In 2024, Amherst College agreed to a one time $1 Million donation for the Jones Library.
- Since 2021, Smith College has contributed an average of $224,500 annually to the City of Northampton with one time contributions of $250,000 to Cooley Dickinson Hospital in 2023 and $150,00o to Smith Vocational School in 2024.
- In 2023, U Mass and the Town of Amherst agreed on a $1 million annual 5 year PILOT.
Where Town Gown Works
A positive example of “Town Gown” relationships is in Princeton, New Jersey where the Town Council and Princeton University have worked for many years on funding municipal, educational, housing, and infrastructure projects guided by an annual public meeting with the mayor and town councilors. Perhaps this collaboration can be a model for Hampshire County?
Multi-College PILOT Agreements
The Providence, Rhode Island four college agreement should raise the hope and certainly the precedent that the three larger colleges in Hampshire County could also agree on a proportionately similar regional PILOT agreement.
Connecticut PILOT Program
Connecticut currently operates a PILOT program which reimburses municipalities for property tax losses from tax exempt properties. By statute, the reimbursement rates are 77% for private colleges and 43% for public colleges. In 2024, Mansfield, Ct. received $10.5M in PILOT reimbursements, New London received $7.7M and Middletown obtained $14.4M.
Summary
The value of the most recent northeastern PILOT agreements clearly demonstrates that many colleges are substantially contributing to their local communities. Hopefully, these northeastern agreements will re-frame the local conversation about PILOTs and on a state level there can be progress in replicating the Connecticut PILOT reimbursement program.
Terence Masterson is an Amherst resident and a longtime economic development director, formerly serving Westchester County, N.Y, Cayuga County, N.Y. and currently Sturbridge MA. He also served as Deputy Mayor and Trustee, Irvington, N.Y. (1983-93, 2009-2010)
Thank you Mr. Masterson for this much needed look at PILOT programs. Since Amherst hosts the largest state university, it seems town officials should seek a combination of state reimbursement, as in CT, as well as direct agreements with AC and HC. It has always shocked me that since I have been in town (1993) no town official to my knowledge has strongly and actively advocated for a lasting PILOT agreement with AC, with its multi-billion-dollar endowment. Think of that — the town has perhaps $10m in “free” cash compared with what AC has — billions. As Willie Sutton said, when asked why he robbed banks: “because that’s where the money is.” The town should be actively seeking PILOT agreements with all 3 institutions plus the state. And all 3 institutions should be actively doing the same, as it’s the right thing to do. It’s hard to denigrate UMass because they have stepped up, seemingly as best they can. HC continues to struggle, but still for all the benefits they enjoy, because of Amherst taxpayers, they could do more and should. But it is AC that really needs to step up — and town officials to do the same.
Any negotiation would seem to be affected by today’s (& historic) power dynamics. We see this reflected in what is currently occurring. “Get what you can/are offered.” My belief is a standard should be used. It would best be based on impact not endowment size (the effects of history could be debated as a determiner as we have no PILOT currently and a long history with these tax users). As we have been raided I seek not to raid back.
Possibly a percent of ‘actual taxes not paid’ could be assessed according to the mentioned impact (student population – use of city services typical to those populations). Example: AC does not have lots of married/child bearing students on campus. We have no idea (given different figures every ask same year) on versus off campus populations. UMass, however, seems to have these numbers higher in their own student populations. Our state senator is working on this formula.
Here’s hoping something can be passed soon that can represent real costs rather than the coin currently offered. Next, I’d like to see flexibility as the city can support as well as receive when we have a business failing like Hampshire College. Ie lower when struggling, more normative when a stronger community participant.
Lastly, this should not be absorbed by increased student fee. Colleges do not make money on teaching. They make it on room and board. Those living in new luxury suites on campus can pay, ‘student activity fees’ should not rise as we come to 100% PILOT or whatever is eventually (if ever) created.