ITEM PHOTO BY OWEN O’ROURKE
A sweeping view of Lynn.
By THOMAS GRILLO
LYNN — When it comes to the contentious issue of whether nonprofits should contribute cash in lieu of taxes, many of the city’s power brokers are silent.
“The issue is not on our front burner,” said Leslie Gould, president and CEO of the Lynn Area Chamber of Commerce, before she announced the interview “off the record.”
Lori Abrams Berry, executive director of the Lynn Community Health Center, a nonprofit that operates five facilities in the city, also shut down the conversation.
“I do not want to participate in that story,” she said. “It’s controversial, and I don’t particularly want to comment on it.
Deb Ansourlian, executive director of Girls Incorporated, was also reluctant to talk, saying she didn’t want to be quoted in a story about that issue.
Robert Norton, president and CEO of North Shore Medical Center, which includes Union Hospital, was unavailable for comment.
Mayor Judith Flanagan Kennedy did not return calls and through a spokeswoman referred questions to Peter Caron, the city’s chief financial officer.
Taso Nikolakopoulos, owner of John’s Roast Beef and a former chairman of the Lynn Area Chamber of Commerce, said he’s not surprised that no one wants to talk about it. “That issue is like the third rail in Lynn,” he said. “On one hand, nonprofits are struggling financially and it would be a hardship for them to come up with a payment to the city and any contribution would reduce services for residents.”
But others say Lynn has a limited amount of commercial real estate and some of it is being occupied by nonprofits who pay nothing in real estate taxes.
“If a PILOT is implemented, that’s a big chunk of revenue the city can receive, ”Nikolakopoulos said.
At issue is legislation on Beacon Hill that would give cities and towns the option to negotiate Payment in Lieu of Taxes (PILOT) agreements with landowning tax-exempt organizations. Under the terms of the bill, charities can make cash or in-kind contributions to communities instead of property taxes. Typically, communities like Boston, who have used PILOTs since 2012, ask for about 25 percent of what the tax bill would be.
In Lynn, the total assessed value of all real estate is $6.39 billion. Of that number, charities – excluding city and state buildings, schools and churches – comprise $108.7 million of it. If the charities were taxed at the commercial rate, it would provide $3.5 million in tax dollars. Should Lynn adopt a PILOT that asks for 25 percent of the assessed value, it would add $864,000 to the city’s $290 million budget.
The revenue-raising plan is based on the estimated cost of providing city services, including police and fire protection, snow removal, and emergency medical treatment, which account for about 25 percent of the city’s budget.
For example, Union Hospital’s property on Lynnfield Street is assessed at $18 million and would be taxed at $577,656 annually if it was a for-profit business. Under an agreement to pay 25 percent of that, the hospital’s contribution would be $144,414.
Boston, one of the first cities to launch a PILOT, has raised nearly $100 million since 2012. The initiative was launched by former City Councilor Stephen Murphy, who insisted that nonprofits pay their fair share. Former Mayor Thomas M. Menino convinced 49 nonprofits, which own property valued at $15 million or more, to contribute.
“I certainly think it warrants a conversation,” said James Cowdell, executive director of the Economic Development & Industrial Corp. of Lynn. “A model with nonprofits of a certain size, that own their buildings, volunteering a sum that reflects the police, fire, and DPW portion of a standard commercial rate, at least merits consideration
But Lynn City Council President Dan Cahill said unlike Boston, Lynn lacks giant institutions with billion-dollar endowments such as Harvard University, Boston College and Boston University.
Cahill said targeted PILOTs work, such as the agreement that was struck with the Visiting Nurse Association when it built a new facility at 210 Market St. that is assessed at $4.4 million. In addition, deals were made with the Abbott House Nursing Home, which owns the property at 28 Essex St. that is assessed at $1.2 million; and the Raw Arts Works building in Central Square that is valued at $642,000. In total, they donate about $50,000 annually.
As far as implementing a broader program that would impact some or all of the city’s five dozen nonprofits, Cahill said that’s part a very large discussion that has not yet happened in the city.
“It makes sense for Boston’s nonprofits to pay because they have massive colleges and universities with billion-dollar endowments,” he said. “But in Lynn, our charities are considerably smaller and run on a shoestring budget.”
Mark Kennard, executive director of Project Cope, an affiliate of Bridgewell, a nonprofit that provides assistance to individuals with developmental and psychiatric disabilities at 22 Lynn locations, said the nonprofits are a vibrant sector of the city and make a huge contribution to the economy. But he is ambivalent about whether charities should be required to make payments.
“I have operated a nonprofit for many years and we certainly use city services, and in that respect paying some kind of PILOT makes absolute sense,” said Kennard, a founding member of the Lynn Nonprofit Business Association.
“But some nonprofits are vehemently opposed to it and fear it opens a can of worms because it would take money away from core services of their mission. And if some groups contribute, then there will be pressure on others to do the same.”
When asked if any nonprofits have stepped forward to pay, he said “no.”
Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, an advocacy group on behalf of cities and towns, said PILOTs are a matter of fairness.
“The basic premise behind PILOTs is equity, especially for communities that have a concentration of nonprofits,” he said. “Communities provide police, fire, public works and emergency response. Many communities lose a substantial portion of their tax base because of the nonprofits and that burdens all taxpayers.”
Caron, the city’s CFO, said he lacks the statutory authority to make any nonprofit pay.
“It’s really a question of the political will from the council and the mayor to put pressure on these entities,” he said. “I’ve heard talk about this issue, but there’s been no follow up. No one wants to jump on it.”
There’s at least one elected official who thinks it’s a good idea.
City Councilor Wayne Lozzi said he supports the concept, but wants to make sure the threshold is set high enough so that smaller nonprofits are not hit with a big bill.
“Whoever drafted the tax-exempt rules years ago missed the fact that the city provides police and fire safety services,” he said. “They should kick in something.”
Thomas Grillo can be reached at email@example.com