Boston’s PILOT Revenue Grows Over Six Years

PILOTs increased by 114% since FY11, driven mostly by medical institutions

The City of Boston’s payment-in-lieu-of-taxes (PILOT) program for the largest private tax-exempt institutions resulted in total payments of $32.4M in FY17, an increase of $17.3M or 113.9% over the receipts in FY11, the last year of the previous program.  The new standardized plan involved an aggressive five-year ramp-up from FY12 to FY16 in the City’s request to reach 25% of what the institution would pay if taxable, with community services able to represent 50% of the goal.  In FY17, the sixth year, the City increased its request generally by 2.5%.  However, continuing annual increases have been met with less support in FY17 with the total PILOT increase of 1.0% over FY16.  Separate from this program is the Massport PILOT payment of $18.5M in FY17 bringing the total PILOT payment to $50.9 million.

Since FY12, the City’s PILOT program has applied to the largest 49 private tax-exempt institutions with property values of $15M or more.  As was expected for this voluntary program, receipts as a percent of requests were initially met with a good faith effort of 90.7% in FY12 but, in aggregate, have declined to 65.5% in FY17.  Even so, the City of Boston is credited with having the most successful PILOT program of any city in the country in terms of revenue generation.

 PILOT Payments FY11-FY17
$ in 000’s
Category FY11 FY17 Increase %
Medical $6,008 $18,626 $12,618 210.0%
Educational 8,836 13,341 4,505 51.0%
Cultural 151 282 131 86.4%
Other 152 152 1 0.5%
Total $15,147 $32,402 $17,255 113.9%

Economic BenefitsBoston’s tax-exempt institutions make a significant contribution to the City and region’s economy and play an important role in the quality of life in the metropolitan area.  From educating and employing a large workforce, attracting billions in research grants, and fostering start-up companies, these institutions are an integral component of the economic strength of Boston and the region.

Medical InstitutionsThe medical institutions have been most responsive to the City’s request with their total PILOT payments having increased by $12.6M, or 210% over FY11.  The payments from these institutions represent 73.1% of the total PILOT revenue growth over six years.  Nevertheless, the payment in FY17 was only 0.5% over the amount paid in FY16.

Educational InstitutionsThe aggregate payments from educational institutions have increased by $4.5M or 51% since FY11.  Over the six years, total payments have fallen from 88.3% of the request in FY12 to 49.0% in FY17.

Cultural InstitutionsThese institutions have less participation in the PILOT program, in part, due to their revenue structure based more on admissions and their active involvement in community services.

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