University Business - January 2011 - (Page 57)

business addresses. Doherty adds that MIT and Smith College are respectively the largest taxpayers in Cambridge and Northampton, in the western part of the state. Boston institutions also are taking stock of and quantifying their contributions to the surrounding community, since they can deduct a portion from the newly increased amount they will owe this year under the new PILOT agreement. In the case of Wentworth Institute of Technology, those off-campus contributions range from providing volunteer activities to clean up the surrounding streets to more involved service learning projects. “For one project,” points out Wentworth President Zorica Pantic, “our students designed a Wi-Fi network for a local depressed neighborhood and helped them get the funding to run it.” Pantic is hoping that those services will count against the $700,000 annual PILOT bill Wentworth is scheduled to pay, an order of magnitude greater than the $40,000 the school gave the city in 2010. “We can live with it,” she says of the increased contribution, “although it’s helpful that it’s going to be phased in over five years. We’ve already put it in our five-year budget plan.” What’s also helpful, Pantic adds, is the task force’s guarantee that any PILOT contributions will remain voluntary, which will protect local institutions from being tied to payment levels they cannot afford. Still, Pantic is looking ahead to modest tuition increases as well as revenue from new masters programs in Architecture and Construction Management and in Engineering to defray the coming PILOT expenses. Payments in Lieu of Taxes in the Future Interest In collectIng payments In lIeu of taxes (pIlots) from higher ed institutions and other nonprofits is likely to grow as cash-strapped municipalities seek additional revenue, according to a new report by the lincoln Institute of land policy. But the recommendation for cities and towns is to collaborate with colleges about the payments to ensure greater consistency and transparency. In some cities, case-by-case negotiation with one or several nonprofits is deemed best, such as the agreement between Yale University and new Haven. In cities with a large number of nonprofits, such as Boston, creating a systematic pIlot program can promote horizontal equity among tax-exempt nonprofits and raise more revenue than negotiating individual agreements, the report notes. another recommendation is to consider alternatives to pIlots, such as state governments providing grants to local governments that host tax-exempt nonprofits to compensate them for their loss of property tax base, as is done in connecticut. Increasing user fees is another alternative way for municipalities to raise revenue from tax-exempt nonprofits. more information on the report, which covers 117 municipalities across 18 states, can be found at www.lincolninst.edu /pubs/1853_payments-in-lieu-of-taxes. —Melissa Ezarik An Uneasy Peace In Pittsburgh and Providence—the most recent epicenters of the attempt to tax universities—the atmosphere is not so collaborative. Tax advocates in both cities reportedly dropped their campaigns when several schools privately agreed to increase PILOT payments. “Each institution prefers not to disclose its particular contribution,” says the Pittsburgh Council on Higher Education’s Kenneth Service, who adds that neither have local universities reached any comprehensive agreement with the city. “The idea of the tax is gone. The agreement was that the institutions and their leadership would stay in conversation with the mayor.” PILOT—the term loosely applied to the almost $5 million a year the city receives from its resident nonprofits—has become something of a four-letter word. “Our schools are convinced that what we do should not be considered PILOT,” Service insists. Officials at Brown, meanwhile, would not comment for this story. “We don’t feel like we’ve gotten to the other side of the process,” says spokesperson Sarah Kidwell, referring to the aftermath of the city’s nationally-publicized attempt to tax local colleges. There are other conflicts looming as the once inviolable taxexempt status of universities continues to come into question. A year ago, a majority of mayors in New Jersey supported a resolution to get authority from the state legislature to tax students. universitybusiness.com In Princeton, New Jersey, a borough councilman and a Princeton alumnus no less, has been advocating that the venerable university with the better than $12 billion endowment come up with much more than $1.2 million in annual PILOT payments. His argument: Princeton manages that hefty endowment no differently than any hedge fund handles its assets, and that even affluent communities need all the revenues they can find just to make ends meet. This past year, the Internal Revenue Service got into the act, requiring private universities to more accurately value tax-exempt perks, such as the market rental value for the president’s house, in reporting compensation packages on tax returns. The IRS audited more than 30 colleges and universities to detect inconsistencies in how they disclosed compensation for their executives. For all the recent attention and turmoil about what higher education institutions are paying in taxes and PILOTs, though, WPI’s Berkey suggests taking a more old-fashioned—and tried and true— approach of building long-term partnerships with their host communities. “We have a long tradition of service in Worcester, so the PILOT fits into a larger context,” he notes. “And what’s good for Worcester is good for us.” Ron Schachter is a Boston-based freelance writer. January 2011 | 55 http://www.lincolninst.edu/pubs/1859_Payments-in-Lieu-of-Taxes http://www.lincolninst.edu/pubs/1859_Payments-in-Lieu-of-Taxes http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - January 2011

University Business - January 2011
Contents
Editor’s Note
College Index
Company Index
Advisory Board
Behind the News
Sense of Place
Viewpoint
Money Matters
Guide to Financial Services
Human Resources
Community Colleges
Take Ii Tablets
Pilots Taking Off
Today’s Admission Office Budget
What’s New
End Note

University Business - January 2011