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The Framingham Board of Selectmen agreed in 1997 to spend $10,000 in a study of nonprofit agencies.
Tax idea angers charities
Framingham may ask for property payments
By Richard Higgins
The Boston Globe
July 6, 1997
The Framingham Board of Selectmen will step into a political minefield in two weeks when it takes up a draft version of a town plan to seek voluntary payments in lieu of taxes from nonprofit organizations.
While several communities in the West Weekly coverage area, including Framingham, Milford, Natick, Newton, Southborough, Waltham and Watertown, already informally collect some payments from tax-exempt groups with a minimum of debate, Framingham's proposal is unique in the region in that it would formalize and systematize them.
It also might effectively exempt some nonprofits from the requests, if they merit so-called "credits," based on the level of community service they provide, according to a proposal drafted by town officials.
Officials of Framingham's tax-exempt organizations, which own about $ 344 million of property, have reacted angrily to the plan and banded together to oppose it. "It's not a good idea," said Jeanne McAllister, president of the MetroWest YMCA on Old Connecticut Path.
Calling it "very much a charitable organization," McAllister said the YMCA provides a "tremendous service to the community," including $ 250,000 in program scholarships for low-income residents. "Our ability to provide that is the kind of thing that would be challenged if we had to pay taxes."
Last month, the leaders of about 25 nonprofits based in Framingham issued a statement calling the idea unfair and saying it would hobble their efforts. The head of the South Middlesex Opportunity Council, James Cuddy, went so far as to urge other nonprofits not to cooperate. "The consensus of everyone is not to participate, to just say no," Cuddy said.
Officials who oversee the town's finances have been undeterred in examining the positive aspects of the idea, which was pioneered by Boston and Cambridge.
Michael Flynn, the Framingham tax assessor, with help from two town officials, issued a report last month on how Framingham might adopt such a program.
The report, which the board will discuss in detail on July 21, proposed asking nonprofit groups to pay up to 25 percent of what they would pay in property taxes, noting that such organizations typically use about 25 percent of town services such as police, fire and public works.
After agreeing to an initial payment, donors would be asked to commit contractually to future annual payments, the report stated.
Framingham already receives $ 370,000 anually in payments from tax-exempt landholders, such as the Pelham Corp., a federally-subsidized low-income housing group, and the Massachusetts Water Resources Authority, but these payments are written into state law as an exception and are contractual.
Under state law going back two centuries, certified nonprofit organizations are exempt from paying property taxes so long as the property in question is used in accordance with its purpose. The largest holder of exempt property is the town, followed by the state, charitable institutions, churches, and schools.
Among the large holders of such property are the American Cancer Society, the Carmelite Sisters, which operates St. Patrick's Manor, the Framingham Community Recreation Center, the Boy Scouts Knox Trail Council, the Sons of Mary, a Catholic group that owns a Marian shrine off Route 9, the Sudbury Valley Trustees and the Learning Center for Deaf Children. Also on the list are hospitals, foundations and social service organizations.
"Some people have strong opinions on why some people are paying, why other groups do not," Flynn said. "This is an issue that's always going to be political, and not just in Framingham. It seems to resurface in cycles."
Flynn said his report was being unfairly characterized by critics. "Whatever we might do would be purely voluntary," he said. "If they want to give, they can give. But it's not a bill. It's a solicitation."
Flynn noted that he was asked to investigate the idea and that no action has been taken yet by the full Board of Selectmen. The board's chairwoman, lawyer Kathleen Pendergast, has long been a proponent of the idea.
"I realize that this is tricky, but it's worth exploring," Flynn said.
In Newton, Treasurer-Collector Stephen Cirillo said the city had a small number of agreements with nonprofit groups, including Boston College, which pays $ 100,000 annually. The college and Newton-Wellesley Hospital also provide in-kind services to the city, he said.
Cirillo scoffed at the idea of expanding such payments to include churches and synagogues. "It's extremely difficult to collect from religious organizations." Cirillo also said it might be political suicide to do so.
In Waltham, Town Assessor Joseph Malay said the town has some informal agreements with local nonprofits, such as Bentley College, which pays the full taxes on a parcel it owns adjacent to its campus, and the semi-autonomous Waltham Housing Authority.
Malay said compensation can take different forms, noting that Bentley and Brandeis University, also in Waltham, both provide scholarships to city residents.
While the total value of all real estate in Waltham is comparable to that of Framingham, Waltham has almost three times as much property held by nonprofits, according to figures provided by the state Deparment of Revenue.
Martin Walsh, Watertown's treasurer-collector, said the town has a few nonprofit organizations, including some religious groups, that make what he called "good will" payments of $ 90,000 annually.
Framingham Selectman John M. Kahn said he was growing more cautious about the idea. "I admire the amount of work Flynn has done, but I think this program is bad as a matter of public policy and bad even from a mechanical or administrative point of view," he said.
Kahn said that there was a problem in that assessments of tax-exempt properties were often out of date. He also said the proposal to give "credits" to institutions that provide exceptional community service was fraught with problems.
Under the Framingham proposal, credits would be decided by team made up of five or six officials involved in town finance.
"These are people whose primary job is to manage money or extract tax revenues," he said. "Not one of them would be qualified to evaluate the social worth or contribution of these organizations. Why should they be the judge of the value to the community?"
Kahn also disliked that, while the payments would be voluntary, there was discussion that donors would be asked to sign a contract committing them to making such payments in the future. "So it's voluntary on day one, but after that it seems to me that there is a coercive element."
Source: MetroWest Daily News, July 22, 1997.
Nine years later, in 2006, we are studying nonprofits and PILOT again.
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