Worcester Business Journal

10 Worcester Business Journal • August 17, 2015 www.wbjournal.com Advocates of such programs argue that these organizations use community resources such as fire and police protec- tion. In communities with large bases of tax-exempt property, this can prove to be a strain on the city or town, Marlborough Mayor Arthur Vigeant said. "Police and fire still go down there even though (the organizations) are tax exempt," he said. "For some of the com- munities, like Worcester and Boston, it is a huge drain on the system and if (non- profits) don't contribute something, that burden for police and fire goes onto the taxpayers." The impact of exempt organizations can be even more profound when they remove properties from the tax rolls. In 2013, the University of Massachusetts Medical School purchased property adjacent to its Worcester campus. The property, which was paying $1.5 million in taxes to the city, has largely remained on the tax rolls due to its for-profit ten- ants, but the shock of potentially losing that tax revenue drew the concern of city officials. The two sides later reached an agreement in which the school agreed to pay $1.58 million to the city over five years in what was called an economic and educational support agreement. Marlborough receives $80,000 a year from the New Horizons assisted-living center. Vigeant noted that in addition to that PILOT agreement, the Cummings Foundation, which operates New Horizons, has gone "above and beyond" with $100,000 donations to nonprofits in the city each year for the past six years. The foundation views these payments as part of being a good citizen, said Dennis Clarke, president and CEO of Cummings Properties of Woburn, which helps manage the foundation. Representatives from the College of the Holy Cross, Worcester Polytechnic Institute, the University of Massachusetts Medical School and Clark University, all of which have PILOT agreements with Worcester, expressed similar sentiments. Clark's PILOT is the latest in a series of initiatives that have enhanced its rela- tionship with the local Main South neighborhood, said Jack Foley, the school's vice president for government and community affairs. When the neigh- borhood was struggling in the 1980s, the university put resources into local schools, nonprofits and neighborhood improvements, he said. In addition to a 20-year, $150,000 annual PILOT deal for the closing of part of Downing Street to connect the two sides of the school's campus, the university also has agreed to pay real estate taxes on new property it purchases as it expands. Those payments total $112,176 a year. "The realization is there that the suc- cess of Clark is inextricably linked to the success of this neighborhood and the success of the city," Foley said. "It's to our advantage to really work with the city." It's also vital that nonprofits ensure that their support of the city fits with their missions, said Jamie Hoag, director of government and community relations for Holy Cross. In addition to a five-year arrangement in which the college con- tributes $80,000 a year to support the city's mobile library, it hosts Worcester Bravehearts baseball games and regular- ly contributes to other city projects. "We all benefit from a strong Worcester … it's not just about writing that check and sending it to City Hall," Hoag said. Meanwhile, WPI has a 25-year, $157,403 PILOT program related to developing nearby Institute Park. These payments dovetailed with the school's expansion in the area and thus made sense for the organization, said Jeff Solomon, WPI's chief financial officer. Such long-term commitments allow the school to make a greater impact, he said. "It's a snowballing effect when we make this investment and partnerships with the city," Solomon noted. "Any time you do some long-range planning you end up with a better result." Some have called for more Despite the money coming from the nonprofits to Worcester's coffers, not everyone is pleased with the contribu- tions being made. In 2014, several city councilors called for the creation of a working group to push for more money from tax-exempt organizations. Getting financial contributions from these organizations is a balancing act, said City Manager Edward Augustus. While working for Holy Cross as director of government and community before he moved to City Hall, Augustus helped negotiate the college's arrangement to fund the mobile library. While this and other agreements with nonprofits have benefitted Worcester financially, they have to be approached delicately, he said: Take too much from a nonprofit and it will have to cut services that are vital. "We are always looking to bring addi- tional money in from these institutions or services for residents or businesses, but we always have to look at the big picture," Augustus said. "They're really important to us and our future and the vibrancy (of the city) and the ability to evolve and change with time. They are part of that process." The contributions tax-exempt organi- zations make cannot simply be mea- sured in dollars and cents, he said. Many of the city's nonprofits provide essential services that Worcester would otherwise have to offer out of its own budget. "I think to myself: Would we be a better community without UMass? Or a better community without Clark or Holy Cross or WPI in it? … I think the clear answer is no," Augustus said. "I think you can pretty clearly make the case we are better off because of these organizations." n >> Continued from Page 1 Christopher House 1994 30 years $75,000 annual * MCPHS University 2008 25 years $50,000 initial payment, plus other annual payments for Worcester Public Library Worcester Polytechnic Institute 2009 25 years $157,403 initial payment, plus other annual payments for Worcester Public Library and Institute Park Clark University 2010 20 years $112,176 initial payment, plus other annual payments for Worcester Public Library and University Park University of Massachusetts Medical School 2011 5 years 100 percent of real estate taxes on certain property, for city's public health division and schools College of the Holy Cross 2012 5-10 years $80,000 annual for LEARRN Mobile Library University of Massachusetts Medical School 2013 5 years $1.575 million annual, for Worcester Public Library and Worcester Technical High School New England Dream Center 2014 Annual payments of all real estate taxes on certain property dedicated to Worcester Common For as long as it owns 55 Pearl St. * - Minus payments of real property taxes ** - Amended in 2014 Source: Worcester Regional Research Bureau Agreement Organization Signed In … Duration Details Of Agreement In place of taxes What seven nonprofit organizations pay Worcester under arrangements with the city. Tax-exempt nonprofits? Not exactly Total value Percentage of Municipality of tax-exempt property tax-exempt property TOP 10 Worcester $4,920,225,173 30.85% Petersham $54,628,700 27.17% Hardwick $67,511,232 24.04% Fitchburg $561,530,400 21.37% New Braintree $28,823,200 20.72% Lancaster $194,384,300 19.79% Barre $95,165,400 19.76% Gardner $271,453,500 19.28% Southbridge $210,749,100 19.01% Groton $325,914,372 17.72% BOTTOM 10 Boxborough $36,160,600 3.7% Mendon $30,939,400 3.87% Lunenburg $59,892,000 5.04% Ashland $114,125,900 5.07% Bellingham $114,725,300 5.17% Sutton $66,535,500 5.42% Hopkinton $171,251,420 5.6% Northborough $149,319,600 5.65% Millis $66,434,500 6.18% Sudbury $261,538,040 6.19% Source: Mass. Department of Revenue Worcester had the highest percentage of tax-exempt property of any community in Central Massachusetts in 2014, followed by Petersham. The community with the lowest percentage? Boxborough Tax-exempt property **

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