PILOT's Promise
Earlier this month, Worcester Polytechnic Institute followed the Massachusetts College of Pharmacy and Health Sciences’ lead and agreed to make voluntary payments in lieu of taxes to the City of Worcester.
This is the right move for WPI, one of the city’s most prestigious universities. At $9 million over the next 25 years, the contribution from the much larger WPI dwarfs the Mass. College of Pharmacy’s $1.25 million to $1.5 million payment over the same period of time. Like the pharmacy college’s payments, it will help keep one of the city’s most important social and educational resources, the public library, running.
WPI’s payments will also go toward improvements to Institute Park, a public park adjacent to campus.
The payments are relatively affordable for the colleges and they go a long way to foster good will in the community. If other colleges are to follow, as the chairman of the city council’s economic development committee Philip P. Palmieri promised during WPI’s announcement, it would be welcome news during such difficult times.
The payments may do a lot to further strengthen the relationships the colleges have with the community as a whole. Private colleges like WPI are tax exempt. In the absence of a formalized payment in lieu of taxes program, they are under no legal obligation to pay property taxes.
Now, as the beneficiaries of WPI and the College of Pharmacy’s largess, city council members bent on making nonprofit universities pay their “fair share” must turn their attention to making the city’s actual tax policy fair to all property owners.
On The Backs Of Business
While members of the city council continue to push the foolhardy notion that the colleges and universities owe Worcester something they legally do not, they also stubbornly refuse to seriously consider a single tax rate for the city.
Currently, residential property owners pay $13.50 per $1,000 of assessed value in property taxes. Commercial and industrial property owners pay $28.72 per $1,000. This is inequitable on its face and undeniably a factor in the erosion of the city’s commercial tax base.
Between 2004 and 2008, Worcester’s commercial and industrial property values decreased from 20 percent to 17.8 percent of the total value of property in the city – a downward trend that has been going on for too many years. As a result, residents assessed an artificially low tax rate make up more than 80 percent of the city’s tax base. This trend can only be reversed with a more fair tax policy.
In these trying times, when the colleges realize that they can do something for the greater good by voluntarily contributing to the city’s coffers, the council must also realize that city residents have been the beneficiaries of an artificially low tax rate for far too long. If the idea of a PILOT program is to spread the city tax burden more equitably, then the massive inequity of the current tax system can no longer be ignored.
The process of phasing in a single tax rate must begin now.
The colleges can’t simply fold up their tents and leave. They’ve been here for generations, they’ve got hundreds of millions of dollars invested in their campuses and they’ve shown tremendous dedication to, and investment in their neighborhoods. How would downtown Worcester look without the more-than $50 million in investment made by the Massachusetts College of Pharmacy? What would the Main South neighborhood be without Clark University’s long-term commitment? How many people can now point to Worcester on a map thanks to the work being done at the UMass Medical School?
Unfortunately, the colleges are large, stationary targets for the politicians on the city council who would rather attempt to guilt these institutions into making payments in lieu of taxes than confront the city’s real tax problem.
WPI and the College of Pharmacy have shown that they are willing to contribute to the greater good. We anticipate that other colleges will, too. And we hope their contributions prompt the city and its residents to show the same kind of commitment to the city’s future by agreeing to a single tax rate that’s fair and equitable for all property owners. If the city can make itself more attractive to businesses and investors in this way, it will have turned an important corner.
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