Guest columnist Terence Masterson: An appeal for PILOT parity

Smith College in Northampton has contributed to both Cooley Dickinson Hospital and Smith Vocatiuonal High School.

Smith College in Northampton has contributed to both Cooley Dickinson Hospital and Smith Vocatiuonal High School. GAZETTE FILE PHOTO

By TERENCE MASTERSON

Published: 08-15-2024 6:36 PM

 

Recently, there have been several letters on the question of what colleges and nonprofits could contribute to their local communities through payments 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 nonprofits and colleges to contribute a modest 25% of their full tax value toward 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 cap on property tax increases of 2.5%.

Since 2020, there have been six new college PILOT agreements that are noteworthy due to their substantial financial value and recurring annual payments. Note as follows:

■In 2023, Providence and its four colleges agreed on a $442 million 20-year PILOT ($22M yearly).

■In 2021, New Haven and Yale agreed on a $141 million 6-year PILOT ($23M yearly).

■In 2024, Princeton University announced a $71 million 5-year PILOT ($14M annually).

■In 2020, UPenn agreed to a $100 million 10-year PILOT ($10M annually).

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■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, UMass 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 by Smith College or Amherst College.

In 2024, Amherst College agreed to a one-time $1 million donation for the Amherst 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 in 2024.

In 2023, UMass 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 the 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 that 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, Connecticut received $10.5 million in PILOT reimbursements, New London received $7.7 million and Middletown obtained $14.4 million.

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 reframe the local conversation about PILOTs, and that on the 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. He also formerly served as deputy mayor and trustee in Irvington, N.Y.