Worcester Business Journal

26 Worcester Business Journal | November 3, 2025 | wbjournal.com Taxes in Worcester Businesses are the largest contributors to the City's tax rolls, but nonprofit exemptions and the dual tax rate are leading to calls for reform BY LAURA FINALDI Special to WBJ T he largest taxpayers in Worcester represent a di- verse group of industries. "We've historically had a healthy mix of property taxpayers, which is really important for cities and municipalities. We need to make sure one type of taxpayer is not carrying the burden," said Peter Dunn, City of Worcester chief development officer. Yet, in a city with high-profile indus- tries like higher education and health care, the biggest businesses tend to be tax-exempt. Organizations like UMass Memorial Health, the largest employer in the region, and the 182-year-old College of the Holy Cross contribute to public coffers through payments in-lieu of taxes agreements, but they do not have to pay the fluctuating property tax rate for-profit businesses do each year. "You hear Worcester characterized as having an educational and medical tax base, which has historically been resil- ient through recessionary cycles," Dunn said. "But we also have a good mix of commercial taxpaying entities and a lot of residential growth as well." Worcester PILOT agreements For six large nonprofits who don't typically pay property taxes, the City of Worcester has payment in lieu of taxation deals with them to fed the City's coffers, earmarked for specific projects. Amount Expected Nonprofit Start date Length Project(s) funded received FY2025 FY2026 payment MCPHS University FY09 27 years Worcester Public Library $268,994 $275,719 Worcester Polytechnic Institute FY09 25 years Institute Park & Worcester Public Library $815,606 $835,996 Clark University FY11 20 years University Park & Worcester Public Library $350,139 $367,864 College of the Holy Cross FY12 16 years WPL Bookmobile $80,000 $80,000 UMass Memorial Health FY22 5 years Health Equity Fund N/A* N/A* WPI FY24 10 years General Fund Full property taxes** Full property taxes** Notes: *UMass Memorial Health's agreement called for a one-time payment of $1.15 million. **For two Gateway Park hotels it purchased in 2024, WPI has agreed to pay the full property tax on the hotels. Source: City of Worcester Meanwhile, e City of Worcester's commercial tax code remains a source of controversy. e dual tax rate, imple- mented in the 1980s, charges business property owners a higher rate than resi- dential property owners. e City's 2025 residential tax rate is $13.19 per $1,000 of valuation for residential properties and $28.61 per $1,000 for commercial and industrial properties. Business organizations like the Worcester Regional Chamber of Com- merce are pushing city council to change the code to a single rate, saying this lessened burden on businesses will spur economic growth. Building improve- ments increase the value of a property, meaning there's not a lot of incentive for businesses to invest in upgrades in fear of a higher tax bill. Still, Dunn said taxes are just one piece of the economic development puzzle. e city has advantages other communities don't, like a large talent pool, tons of educational opportuni- ties, and urban amenities like bars and restaurants. "[e tax is] one decision-making factor in a number of factors taken into account when a business decides to locate somewhere," he said. The top taxpayers Utility companies are the largest contributors to the City's commercial tax collections. National Grid and NSTAR Gas contributed $16.7 million and $10.3 million in real estate and personal prop- erty taxes to the City budget in fiscal year 2025. New England Power paid $2.2 million in taxes in 2025, and Verizon paid $1.9 million. Although utility providers were four of the City's top 10 commercial taxpay- ers, some of Worcester's most notable businesses are exempt from paying taxes, as nearly all colleges and hospitals are typically run as nonprofits. One notable exception is Saint Vin- cent Hospital, a for-profit institution owned by Tenet Healthcare in Texas, which paid $4.1 million in taxes to the City in fiscal year 2025 and was the City's third-highest taxpayer. To make up for the property they own and don't pay taxes on, large nonprofits contribute to the City coffers through PILOT agreements. e City has six ac- tive agreements, with Holy Cross, UMa- ss Memorial, Clark University, MCPHS University, and two with Worcester Polytechnic Institute. rough a PILOT agreement initi- ated in 2009, for example, WPI paid $815,606.31 in fiscal 2025. e money Continued on next page The owner of the property housing the for-profit Saint Vincent Hospital is the third-highest property taxpayer in Worcester, contributing $4.1 million in fiscal 2025. PHOTO | WBJ FILE INSIGHTS: City of Worcester

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