PILOT, PILOT everywhere

The Downing Street closure (and PILOT) was discussed on the last 508.

I also got a question about whether the library has gotten PILOT funds from WPI a couple of weeks ago.  (I think the real question is whether the city has used the PILOT funds in addition to whatever they would normally pay for the library, or whether the PILOT funds are just being used to cut library services less.  I haven’t yet received a response to this question, but I’ll let you know when I do.)

I’ve probably talked about this before, but here are four reasons I don’t like PILOT:

First, PILOT discussions put contributions to the city at a purely financial level.  Should I feel like less of a member of the community because I might pay a few hundred dollars less in property tax than my neighbor across the street?  Is the non-profit that runs the group home next to my house less of a community member because it does not pay taxes on that property?

So, when Brendan says that one of the most important considerations for a project like the Downing Street closure is “Is the neighborhood behind it?”, I find that the question gets a bit tricky.

First, Clark is part of the neighborhood, and some of the discussion I heard at the Council meeting that night (not least of which was from State Rep. Binienda) made it sound as if Clark had just materialized from nowhere and taken over a few city blocks overnight.  The university’s been there for more than 100 years, and they have been a very involved neighbor and pretty positive influence on the neighborhood.

Colleges, businesses, residents, and folks who just commute to Worcester all use resources and many contribute to the city (tangibly or not).  I’ve become concerned that we only rate someone’s worth to the community based on whether they pay property taxes or PILOT.

Second, PILOT amounts to solicited influence-peddling.

From the text of The Municipal Fiscal Crisis and Payments in Lieu of Taxes by Nonprofits by Daphne A. Kenyon and Adam H. Langley, emphasis added:

These conversations should also touch on what the nonprofits need for their future success. In practice, municipalities are often most successful in obtaining PILOTs when nonprofits need something from the local government, such as building permits or zoning changes. The quid pro quo nature of these agreements is often viewed negatively—as a form of extortion or special treatment. However, accommodating these requests is often in a municipality’s own interest.

For major nonprofit development projects, a shortened approval process with less red tape can cut overall costs significantly, and such discussions can result in more creative arrangements. For example, as part of a 20-year PILOT agreement with Clark University, the City of Worcester, Massachusetts agreed to work with the university to convert a short section of a street into a pedestrian area.

In other words, since a non-profit doesn’t have to pay anything to the city, they would only make a PILOT agreement if they needed major community goodwill (which Clark already has in abundance) or if they wanted something that would otherwise be difficult.

Proponents of PILOT have made it sound as if there are trees growing money that we can get if we just shake the right non-profits hard enough.  On the contrary, no non-profit is going to give away millions of dollars without something in return.  That something could be as simple as the ability to direct where one’s donation goes, or something as complicated as shutting down streets and using matching funds for streetscaping grants.

Third, it can make neighbors second-class citizens.  Brendan raised the point that Downing Street was not the city’s to give away, but the neighbors’.   As someone who pays property tax that goes towards the repair of public streets like Downing Street (but not my own), I’ll have to respectfully disagree.  The street is the city’s, and the only way these kind of negotiations would work is if they happen with high-level administrators.

However, his point is a fair one: if Clark is paying more than $250,000 a year, while other neighbors are paying far less, that gives them an unfair advantage when it comes to neighborhood decisions.

I would, however, like to note that there was a touch of disingenuousness on the part of some folks who made it sound as if this was all a surprise.  There was an announcement about this last September, and there was a neighborhood meeting about this in April.  I wasn’t at the meeting, so there might have been a lot of railroading, but I don’t live in that neighborhood and I’ve been aware about this for some time.

Fourth, sometimes it doesn’t even pay.  And I’m not even talking about Boston and Providence, where PILOT pays for less than 1% of the city budget.

Take, for instance, the case of WPI.  In 2007, WPI paid $311,000 in property tax.  In 2009, their PILOT agreement was $270,000 – PILOT and $180,000 – property tax.  (The agreement in total would be an average of $360,000/year for the 25 year agreement.)  We’re getting $50,000 a year more from WPI, but now roughly $130,000 that would go to the general fund is now going to WPI earmarks.

The Clark deal is somewhat better, because they will not stop paying the $75,000 a year in property tax (to the general fund) they already pay.  (Though, of course, part of the Clark PILOT money is contingent on the Downing Street closure.  Since WPI’s already had a street closed, I guess we can call it a wash.)

4 thoughts on “PILOT, PILOT everywhere

  1. Mike says:

    The City Manager’s PILOT agreements were a very bad deal compared to what other college cities in the northeast pay. He gave away potentially millions of dollars.

    City Manager O’Brien doesn’t deserve accolades for PILOT, he bamboozled the citizens and the City Council rubber stamped it.

    The PILOT deals should have been setup by an outside legal firm competent and experienced in such matters, which the city legal dept. most definitely isn’t. I’m positive the City would have gotten millions more with an outside lawyer.

    As far as I know the only PILOT holdouts are Holy Cross and Becker College.
    Holy Cross has lots of money, but Becker is, relatively speaking, a poor college with $1 million in endowments – living from federal grant to federal grant. .

    My guess Holy Cross will pay what Clark and WPI have agreed to. Yet Becker can afford to build a $7 million dormitory in Leicester; they have $35 million in non-tax generating assets i.e., real estate. They are not cash poor, they have $30 million in annual revenues. They can easily pay a PILOT. But they won’t. They will plead poverty.

    So giving away Dewey St. is an affront to every taxpaying voting citizen in this city. Legally the City Manager and Council can do what they want – they always do. Haller and her cohorts will continue to ignore the input of the neighborhood, giving them lip service and deflecting criticism. Clark will eventually get Dewy St.

    Hopefully Main South will finally wake up to what Haller has perpetrated on them over the years and elect someone who shares theirs values and is above all – honest.

  2. Joel R. says:

    Please explain: We’re getting $50,000 a year more from WPI, but now roughly $130,000 that would go to the general fund is now going to WPI earmarks. What earmarks?

    Thought all that money was supposed to go to the library operating budget and the colleges would submit volunteer staff. That has not happened, the WPL balked at that.

    • Nicole says:

      Joel — What I meant was that when WPI was paying straight property tax, they didn’t have a say in what that money went to. It all went to the general fund. Now, they pay 130,000 less in property tax. That money instead goes where they want it to go.

      I have no familiarity with the library balking (or not) at volunteer staff or money. The library recently had WPI students who developed a class in video gaming that was taught to teenagers, so I’m not sure where the sense of hostility comes from.

      If you have more details, please let me know.

  3. Tim Hart says:

    I don’t understand why the PILOT talks always center around money. It seems to me like the colleges and the city would be better off if PILOT payments were non monetary. The minds the colleges attract have a lot to offer Worcester other than money. Not to mention the fact that college tuition is already prohibitively expensive for many and getting worse fast. As a society we would be wise to focus on cutting costs for colleges, not increasing them.

    Why can’t the colleges and city work together? Maybe education students and professors could help tutor at city schools, nursing students and professors could help at local clinics, criminal justice students and professors could help out around police stations, engineering students and professors could help plan city projects, business students and professors could help improve our budget… All of these things could help the city by saving it money and involving the students in the community and help the students by giving them some real experience. I think the sky is the limit when it comes to non-monetary PILOT, but it will require a lot more work of our city government then simply panhandling at non-profits.

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