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.

Economic Benefits – Boston’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 Institutions – The 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 Institutions – The 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 Institutions – These 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.