Boston University and the city of Boston have finalized a new payment-in-lieu-of-taxes (PILOT) agreement that stands as the largest in the city’s history. Under the terms announced by Mayor Michelle Wu’s administration, the university will contribute approximately $152 million to the city over the next 10 years, marking a significant increase from its previous commitments.
Terms of the 10-Year Agreement
The agreement, which officially began on July 1, 2024, requires Boston University to pay the city $15.2 million annually. According to the City of Boston, this figure represents a substantial rise from the university’s prior annual contribution of roughly $7.5 million. The payments are designed to support municipal services such as public safety, road maintenance, and snow removal, which the university’s tax-exempt properties utilize.
The funds are structured to be paid in two ways: a cash payment to the city’s general fund and a "community benefit" credit. The university may fulfill up to 50% of its annual obligation through documented community benefits, including scholarships for Boston Public Schools graduates, local workforce development programs, and public access to university facilities.
Financial Context and Previous PILOT Programs
PILOT programs are voluntary agreements between tax-exempt institutions—such as universities and hospitals—and the municipalities where they operate. Because these institutions own significant real estate that is not subject to property taxes, these payments serve as a mechanism to offset the costs of city services.
The previous agreement with Boston University was established in 2011. That program set a goal for all of Boston’s tax-exempt institutions to increase their collective payments by 25% over five years. While many institutions met or exceeded their goals, the new 2024 agreement represents a shift toward higher, fixed-dollar expectations for the city’s largest private landowner.
Why the Agreement Matters
The deal is part of a broader push by Mayor Wu’s administration to stabilize city revenue streams. As Boston faces potential long-term shifts in commercial property tax values, the city has sought to renegotiate contributions from large non-profit entities.
University President Melissa Gilliam stated that the commitment reflects the school’s ongoing role as a partner in the city’s economic and social health. The agreement ensures that the university remains a primary contributor to Boston’s budget for the next decade, providing a predictable revenue stream for municipal planning.
Frequently Asked Questions
Are these payments mandatory?
No. PILOT agreements are voluntary. However, they are highly encouraged by the city as a way for non-profit entities to contribute to the maintenance of public infrastructure.
What counts as a "community benefit"?
Community benefits include direct financial support for local students, such as the Boston University Menino Scholars program, as well as investments in city infrastructure and public health initiatives that serve local residents.
How does this compare to property taxes?
This payment is not a property tax. Property taxes are legally required for taxable entities. PILOT payments are negotiated contributions that do not necessarily reflect the total market value of the institution’s tax-exempt real estate holdings.
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