Hartford Hospital, whose various exempt parcels in the city are assessed at approximately $481 million. Hartford Business Journal
Hartford Hospital, whose various exempt parcels in the city are assessed at approximately $481 million. Hartford Business Journal

There are fewer than a dozen U.S. cities that receive more than $1 million a year in voluntary payments from not-for-profit organizations — like hospitals and colleges — that are exempt from paying property taxes, according to the Lincoln Institute of Land Policy.

Boston receives the largest amount in so-called “payments in lieu of taxes” from its nonprofits — approximately $34 million in fiscal year 2018 — with some of the largest amounts coming from Harvard and Boston University.

New Haven’s also high on the list, having received over $100 million from Yale dating back to 1991.

Those PILOT payments, a portion of which are dedicated to city fire services, have varied in size over the years, but topped $14 million in 2018, according to city data.

This is the third story in a series examining various ways Hartford might reduce its high  property tax rates. Here are the first and the second.

There is little dispute that Yale is Connecticut’s most prestigious college, and one of the nation’s wealthiest, with an endowment of approximately $29 billion.

There have been efforts to convince Hartford’s “eds and meds” to pony up some cash, but they’ve resisted. Hartford has no voluntary PILOT payments on its books.

Somewhat ironically, it’s been the private sector that’s provided anything akin to voluntary payments. In 2017, Aetna, Travelers and The Hartford, publicly traded for-profit insurance giants that already rank among the city’s largest taxpayers, pledged to donate $50 million to the city over a five-year period to help it deal with its financial problems.

Mayor Luke Bronin said he’s tried to make inroads with nonprofits.

“I believe that our major institutions have a major stake in the strength of the city and I have pushed hard for our hospitals and other large nonprofits to pay voluntary PILOT, and I will continue to do that,” Bronin said.

Hartford Business Journal

The exempt property owned by Hartford Hospital, St. Francis Hospital and Medical Center, the University of Hartford and Trinity College, all combined, total over $1 billion in assessed value, according to city data. Throw that on the tax rolls and suddenly Hartford would be flush with tens of millions of dollars in additional annual revenue, money that could be used to lower the mill rate or reinvest in the city.

By comparison, Hartford’s taxable grand list — including real estate, personal property and motor vehicles — is only $4 billion; a slightly higher amount of property is tax exempt.

One complicating factor is that the state is already taxing hospitals for its own coffers — to the tune of hundreds of millions of dollars annually in recent years.

Another is that, while some colleges and hospitals do have endowment funds, all combined, they amount to well under 10 percent of Yale’s endowment.

In recent interviews, Hartford’s largest tax-exempt institutions (some of which own certain taxable, or partially taxable properties in Hartford) argued they simply can’t afford to pledge any significant revenue to the city’s operating budget. In addition, they all pointed to broader economic impacts the city gains from their presence, as well as charitable programs.

John Carson, a special adviser to University of Hartford President Greg Woodward, said the government’s policy of not taxing nonprofits dates back over a century and it doesn’t make sense to look to those institutions for payments now.

“The bulk of us are what you would call ‘thinly margined, undercapitalized.’ We don’t have very big endowments,” Carson said.

As the number of college-age students declines in the coming decade, the situation may only get worse, as higher-ed institutions struggle to find ways to make up projected losses in revenue, he said.

“It’s just not a model that is going to absorb any of these either voluntary or involuntary payments that some people call for,” Carson said.

The entrance to Trinity College in Hartford’s Frog Hollow neighborhood. Hartford Business Journal

State Rep. Jason Rojas (D-East Hartford), who by day is chief of staff to Trinity College President Joanne Berger-Sweeney, said colleges have limited revenue-raising options, just like the city.

Trinity would likely be forced to hike tuition and fees if it had to make a PILOT payment.

“We’re always willing to have a discussion with the mayor, but [a PILOT payment] is not something we’re looking to do,” Rojas said. “Like any other entity, it would come at the expense of something else.”

Earlier this year, state lawmakers proposed multiple bills that amounted to mandatory PILOT payments for hospitals. One required hospitals to pay a fee to the state equal to 25 percent of what they would pay in property taxes if they were not tax-exempt, and another called for a public safety and infrastructure “benefit charge.”

In response to those proposals, Hartford HealthCare laid out in written testimony the health system’s case against paying a mandatory PILOT payment.

Hartford Hospital provides over $126 million in so-called community benefits, through initiatives such as the Brownstone Clinic, which provides medical and dental care for the medically underserved and underinsured, and the Southside Institutions Alliance, a partnership with other large, local not-for-profits that focuses on improving the quality of life in south central Hartford.

New mandatory fees could put such programs in jeopardy, wrote Barry Kriesberg, Hartford Hospital’s regional vice president for operations.

Hartford HealthCare President Jeffrey Flaks says Hartford Hospital is both an economic generator and force for good. Hartford Business Journal

Hartford HealthCare President Jeffrey A. Flaks said Hartford Hospital increasingly aims to be an economic generator for the city and region.

He pointed to the hospital’s recent investment in a medical-technology accelerator at Constitution Plaza, its growing collaborations with medical-equipment makers at its Center for Education, Simulation and Innovation facility, and a recent investment in a startup company with an MIT professor.

“We feel strongly that health care is an economic engine and that it’s part of the solution for really moving our cities and state forward,” Flaks said.

In a statement, David Bittner, chief financial officer for Trinity Health of New England, which owns St. Francis Hospital, said the regional health system provided more than $171 million in community benefits last year, including financial assistance for the poor.

Boston’s PILOT formula

Community benefits are part of the equation in Boston’s PILOT program, which was revamped under the late former Mayor Tom Menino, according to Pam Kocher, president of the Boston Municipal Research Bureau.

The program targets nearly 50 of the largest not-for-profit institutions in Boston, including Harvard and MIT. The city determines what each institution would pay in property taxes if they were on the tax rolls, and requests a payment of 25 percent of that amount. Half of that 25 percent can be comprised of community benefits.

Pam Kocher, President, Boston Municipal Research Bureau Hartford Business Journal

Not all of the targeted institutions pay the fully requested amount from year to year, but the program still means real money ($34 million in fiscal 2018) for Boston.

“It’s definitely bringing significant revenue into the city’s general fund,” Kocher said. “There are some that will dig in their heels, or choose to not participate.”

A group of community activists known as the PILOT Action Group (PAG) has pushed the city in recent years, with some results, to better monitor the program and make it more transparent to the public, according to the group’s coordinator, Enid Eckstein.

PAG has also sought to publicize institutions that don’t pay the fully requested amounts.

“Obviously, because this is voluntary, the question is ‘what’s the political will on the part of your mayor and whatever your city structure is?’ ” Eckstein said. “A lot of it is community organizing. We’ve created political pressure here.”

The Cities Project, a collaboration between CT MirrorConnecticut Public RadioHearst Connecticut MediaHartford CourantRepublican-American of Waterbury, Hartford Business Journal, and Purple States, will publish periodic articles exploring challenges and solutions related to revitalizing Connecticut’s cities. Send comments or suggestions to ehamilton@ctmirror.org.

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  1. How much money would Hartford receive if the Boston plan were fully implemented here?
    The Boston plan requests 12.5% of taxes foregone in cash, producing $30+ million. But there are 50 non-profits which might make payments, some of which have significant endowments.
    Hartford has far fewer such organizations, and, as the article records, many don’t have much extra money.
    Still, there’s a chance for some revenue. If the hospitals receive enough $100’s of millions of dollars in unbudgeted money from the settlement with the state, they may be willing to share some of it. For a while at least.
    That’s likely the best hope.

  2. Since these major non-profits are very unlikely to change their position on this issue anytime soon, the governor and the state legislature should do what is right for Hartford and the other distressed cities in CT and properly fund the PILOT Program. This needs to be accomplished in the next three years. Lee Erdmann

  3. When a Non-Profit pays executives compensation that well exceeds $100,000.00 per year. Is it truly functioning as a lean, efficient non-profit organization, or is it using its so-called non-profit status to qualify for tax breaks that fund overly generous executive compensation packages and offices that exhibit palace like opulence? You decide.

  4. I have been a Hartford property owner and resident for more than 50 years. It has always struck me as disingenuous for the City’s large ‘charitable’ businesses – our hospitals, colleges and large social service agencies – to claim they cannot afford to pay their fair share of real and personal property taxes, while at the same time earning substantial revenues from their businesses (providing medical care, education and social services). And like the for-profit business owners that do pay taxes on their real estate and personal property, those ‘charitable’ spend their substantial revenues for the same purposes as for-profit businesses: building new structures, renovating and maintaining existing buildings, buying supplies, paying for electricity and heat, and most of all, paying salaries to their employees. By and large, those executive employees earn market-rate compensation and bonuses, while their line employees, often represented by unions, negotiate for market-rate salaries. And when revenues are inadequate to meet expenses, these charitable businesses do what for-profit business do: seek to increase their prices. There is no economic reason why real estate and personal property taxes should not appear in their budgets and be paid for like any other expense. William Breetz

    1. Hi William, we welcome your comments but please note that our guidelines require that comments be limited to 1,000 characters. We will not be able to approve comments that exceed that limit going forward.

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