Philadelphia’s major colleges, including Temple, choose not to contribute PILOTs to the city.
A popular saying about Philadelphia is “the eds and meds keep the city alive” – that is, the city’s myriad medical and educational institutions. Those institutions may need to do more, however, in keeping the city financially viable through renewed payments in lieu of taxes, or PILOTs.
Though the city has not made any public push for nonprofit organizations to increase existing PILOT agreements or begin new ones, university officials around Philadelphia have met with city officials about their payments.
“All the presidents met with the mayor several weeks ago,” Charles Duncan, manager of government relations for Temple, said. “There is no plan to restart PILOTs.”
As nonprofits, universities and health care systems do not pay property taxes. Their reputation as economic engines comes from the large number of city residents employed by the institutions. Of the top five employers in the city, two are nonprofits (the University of Pennsylvania and the Jefferson Health System are No. 4 and No. 5, respectively). The first three employers are the federal government, the city government and the city school district.
PILOTs are not mandatory, as nonprofits like Temple University and the Temple University Health System are not required to pay taxes to the city. However, some nonprofits contribute to the city budget through PILOT agreements. These agreements were spurred in part by a fear that the city could remove nonprofits’ tax-exempt status if they did not contribute to PILOT agreements. This led to the city being promised almost $10 million per year in 1995, to extend for several-year contracts, by various nonprofits
Currently, though, the city brings in less than $700,000 per year from nonprofits in PILOT agreements, and neither Penn, St. Joseph’s University, Drexel University nor Temple University are in an agreement with the city. TUHS, a separate entity from Temple University, does contribute $15,000, split evenly between three hospitals. A law passed in the late 1990s made the requirements for nonprofit status clearer, and PILOT money began to dry up, as institutions declined to renew their agreements.
The city may soon have agreements with some of the institutions, though.
“The city and the Chamber of Commerce and the Presidents’ Council have been meeting to discuss standardizing [contributions],” Philadelphia Chief Education Officer Lori Schorr said. She added that the city is conducting a study on how to best incorporate higher education and nonprofit contributions to Philadelphia. “The city is always looking to maximize it’s revenues, but we don’t know how the colleges and universities will fit into that process until we complete this study.
The nonprofit PILOT contribution in Philadelphia pales in comparison to that of other cities. Boston receives $8.4 million from various nonprofits, chiefly Boston University. Lancaster City, with a population that is a mere 4 percent of Philadelphia’s population, receives about $100,000 more than Philadelphia in PILOT payments, mainly through Lancaster General Hospital.
Those who do pay in Philadelphia are far from the usual suspects. Cathedral Village retirement community in Roxborough, with a $275,000 yearly payment, is the city’s biggest contributor. Thomas Jefferson University College of Health Professions and its hospital are the No. 2 and 3 contributors, and the American College of Physicians follows, with a $32,600 payment. Only Jefferson and Cathedral Village pay more than $100,000 yearly
Duncan said Temple and other higher education institutions contribute through other means than PILOTs. He cited Temple’s police force, which offsets the area covered by Philadelphia police. PILOTs, he said, are unlikely to be increased or renewed soon.
“I don’t foresee any PILOT programs anytime soon in the future,” Duncan said.
Stephen Zook can be reached at stephen.zook@temple.edu.
Be the first to comment