Nonprofits keep making in-lieu-of-tax payments to Boston

Despite pandemic losses, collections from institutions rise

BOSTON’S MEDICAL, educational, and cultural nonprofit institutions have taken a huge financial hit during the COVID-19 pandemic, but most of them continued to make voluntary tax payments to the city this year.

Twenty-four of the 47 nonprofits assessed by the city as part of its payment-in-lieu-of-taxes program paid about the same amount as they did last year, 10 paid less, one paid more, and 12 continued to make no payments at all, according to city records.

MassGeneral Brigham paid $1.1 million of its requested payment, and deferred the remaining $5.7 million until next year. The hospital system informed the city that it needed to defer the payment because of costs it incurred setting up a 1,000-bed post-acute COVID-19 field hospital at the Boston Convention and Exhibition Center.

In total, the nonprofits paid the city $34.4 million in cash payments in lieu of taxes, an increase of $200,000 over last year. Another $53 million was provided in community benefits, including internships, scholarships, medical care, job training, and free admission to exhibitions.

More than half of Boston’s land is owned by either nonprofit institutions or government bodies, both of which are exempt from municipal property taxes.  With property taxes accounting for two-thirds of the city’s revenue, the payment-in-lieu-of-taxes program is a mechanism for Boston to help pay for the services it provides.

The program is the city’s sixth largest source of revenue. Nonprofits owning more than $15 million of tax-exempt property in Boston are billed a percentage of what would be the assessed value of their land holdings if they were taxable.

Those institutions giving the full cash amount requested by the city included Tufts Medical Center, the Beth Israel Deaconess Medical Center, the Dana-Farber Cancer Institute, the Massachusetts Eye and Ear Infirmary, the New England College of Optometry, the Massachusetts College of Pharmacy, the Boston Symphony Orchestra, WGBH, the Showa Institute, and the Medical Academic and Scientific Community Organization.

Boston Children’s Hospital went from paying 61 percent of its cash bill last year to 77 percent this year.

Some institutions scaled back, however. Simmons University did not make any cash payment to the city this year; last year it paid $200,000, or 38 percent of what it was billed by the city.

“No organization is immune from the impacts of this pandemic, including ours,” Simmons President Lynn Wooten said this summer.  “The COVID-19 crisis has resulted in a number of financial losses for our institution, while also impacting our budgeting process and forcing a number of difficult cost-saving decisions.”

Boston Medical Center also did not make a cash payment this year; last year it paid in 50 percent ($273,000) of the amount billed. The hospital lost more than $100 million in revenue through June due to the COVID-19 pandemic, although some of the loss will be offset by state and federal support, according to a spokesman.

One of the cash payments that went down this year was from the New England Baptist Hospital, which is part of Beth Israel Lahey.  The payment went from 76 percent of the requested amount last year to 55 percent this year. A spokeswoman for New England Baptist said the elimination of nonurgent and elective procedures between March and June caused revenues to plummet.

Mayor Marty Walsh hopes to see the PILOT program grow. “My administration is committed to working collaboratively with these nonprofit institutions, recognizing the value of what they do, and working to tailor the community benefits to the city’s priorities, while looking to grow future cash contributions,” he says.

Historically, it’s a tough sell to a number of the city’s major cultural institutions, including the Museum of Science, the New England Aquarium, the Children’s Museum, and the Institute of Contemporary Art., all of which have never made any cash payments to the city and contined that approach this year. The Museum of Fine Arts pays only 6 percent of its requested cash payment each year.