Colleges Try To Make Nice With Worcester | The ongoing issue over tax payments continues to be a balancing act for schools
Over the past three years, The College of the Holy Cross has purchased six houses along the edge of its South Worcester campus. But the college doesn’t need the space.
Land Grab
Chief Investment Officer William Durgin says there’s plenty of room to add any new buildings it needs on the main campus. It bought the homes, he said, to keep them out of the hands of absentee landlords — and to keep potentially disruptive Holy Cross students from living in them.
Faced with periodic Worcester City Council efforts to institute a payment-in-lieu-of-taxes program for colleges and other nonprofits, not to mention standard tensions between night-owl college students and their nine-to-five neighbors, Worcester’s colleges are seeking ways to play nice with their host city. And that sometimes leads to decisions about real estate and other matters that are driven as much by community relations motives as by educational strategy.
In 2001, colleges and universities in the city of Worcester employed 5,900 people, or 5.8 percent of the total workforce. By 2006, while total employment in the city dropped slightly, the number of jobs at the colleges rose to 7,900, or 8 percent of the city’s total. With that kind of growth, colleges are bound to be an increasing object of interest for Worcester residents concerned about the city’s economy.
More Money, Fewer Problems
The idea of payments in lieu of taxes, in which nonprofits that are legally exempt from local property taxes pay a smaller chunk of money to the city instead, is not a new one for the city. Boston and other cities with deep-pocketed institutions have negotiated such PILOTs for years, and the idea has always appealed to many in New England’s next-largest city.
The city has not yet implemented a formal PILOT program, but in 2002, in the face of a serious budget shortfall, then-city manager Tom Hoover sent a letter to the city’s colleges and other nonprofits requesting that they keep newly purchased property on the tax rolls.
“I think to a large extent most of the institutions have done that, or have tried to do that,” said Mark Billota, CEO of the Colleges of Worcester Consortium.
According to the consortium’s data, local colleges paid $549,818 in city real estate taxes last year. $311,000 of that came from the Worcester Polytechnic Institute.
But there is a question about the extent to which those payments were voluntary. Legally, colleges are only exempt from real estate taxes if they’re using a particular property for educational purposes. With many college buildings, including those WPI has a stake in at Gateway Park, there’s no clear line between education and other uses.
Jeffrey Solomon, WPI’s executive vice president and CEO, says the university could have made a solid argument against paying taxes there, but it decided not to out of a recognition that the city needs the money.
Solomon said the university has a similar attitude toward an old city school building at 37 Lee St. WPI recently purchased the building from the city and is now sprucing it up for use as the headquarters of the facilities department. As part of the purchase requirement, the city required whoever bought the building to pay taxes, and Solomon said the school is happy to oblige.
Timothy McGourthy, the city’s economic development director, said the city chose WPI’s bid for the school building over another developer who wanted to make the building into condominiums. The WPI proposal came out on top not just because it offered a higher sales price and more tax revenues, but also because the school’s vision seemed more in keeping with city priorities, McGourthy said.
For years, Clark University has been stretching its ownership stake into the Main South neighborhood around it, both literally and figuratively.
Jack Foley, Clark’s vice president for government and community affairs, said the college began a formal partnership with local community groups in the 1980s. The partnership has spurred Clark to take action, including buying up a block on Main Street, next door to campus, to get rid of absentee landlords and encourage businesses to set up shop.
“So much about what people view of a neighborhood is perceived image, versus reality,” Foley said. “If you drive down Main Street and you see empty storefronts and broken windows then they have this negative view of the neighborhood.”
Similarly, Holy Cross is working to redevelop a large site at the corner of Southbridge and College Streets into a mixed-use facility.
College leaders say that, beyond whatever tax payments they make, these kinds of contributions to the general well-being of the city should be enough to make the city happy to have them.
But both Foley and Durgin acknowledge that part of what makes neighborhood projects important is the image their campuses present to current and incoming students. And some advocates for PILOTs may question whether schools with nine-figure endowments should be able to shrug off the idea of paying into city coffers based on their participation in projects that may be in their best interests anyway.
City Councilor Phillip Palmieri, chairman of the Standing Committee on Economic Development, said he hopes to get college leaders to a meeting of his committee sometime this fall to discuss options for PILOTs. So far, he said, the conversations he’s had suggest that the schools may be willing to negotiate some kind of official payments, especially if they are earmarked for specific uses like supporting education in the city.
“I don’t think you’ll see colleges come up and say, ‘Gee, we want to fund the street and sidewalk program,’” he said.
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