Published in The Lowell Sun March 23, 2017
BOSTON — Large nonprofit organizations with top-earning employees could be required to pay their share of property taxes to the communities where they operate under terms of proposed new legislation.
State Rep. David Nangle, a Lowell Democrat, filed a bill expected to reach the clerk’s office Thursday to get nonprofits that are generally tax-exempt to help ease a burden on cities and towns.
“Cities and towns are always looking for additional assistance to help them meet their budgetary needs,” said Nangle, who serves as assistant majority leader in the House. “The largest nonprofits could and should be the perfect partner to accomplish this.”
There are thousands of nonprofit organizations in the state, including hospitals, higher-education and cultural organizations and churches. Under Nangle’s proposal, a nonprofit would need to pay property taxes if the combined compensation of its top five highest-paid employees surpasses $2.5 million. Nangle said his bill would affect a few hundred nonprofits.
Cities and towns can decide whether they want to participate.
The property tax payments could generate up to $1 billion, he said. That money could go to education and infrastructure and help keep property taxes down for residents.
Nonprofits would pay property taxes on a scale within four years. In the first year, they would pay 100 percent of property tax, 75 percent the next year, 50 percent the third year and 25 percent in the years after.
Jim Klocke, CEO of the Massachusetts Nonprofit Network, expressed concern over the proposal, saying it is important to preserve tax-exempt status for nonprofits because of their contribution to communities.
“It’s a position this whole sector holds,” he said. “It’s a fundamental part of the nonprofit world that they have these charitable missions and part of supporting those missions is tax-exemption status and doing whatever we can do enable nonprofits to do as much as they can — large, medium, or small — to deliver services is really critical.”
Nangle emphasized that smaller organizations such as the YMCA, Boys & Girls Clubs and shelters would not have to pay unless they meet the compensation requirements. Places of worship and religious organizations would also exempt.
In his last push to get nonprofits to pay property taxes, Nangle said some legislators worried that these groups would be hurt.
“It is not the case,” he said. “I wouldn’t do that to my local Y club, sober houses or other small nonprofits.”
Organizations can set up agreements with cities or towns to make an alternative payment, a program known as payment in lieu of taxes, or PILOT.
Nangle credited UMass Lowell and the city for working together on a tax agreement after the university purchased the Perkins Park residential development last year.
Last session Nangle offered a bill focusing on getting nonprofit hospitals to pay property taxes. The legislation had a hearing, but it did not make out of committee.
The Massachusetts Health and Hospital Association, which includes nonprofits like Massachusetts General Hospital and Lowell General Hospital, said they do not support the legislation.
“Massachusetts has a vibrant not-for-profit sector that offers innumerable services and benefits to the citizens and communities of the state,” the association said in a statement. “MHA and our non-profit member facilities are working collaboratively with other not-for-profit organizations to educate policy makers about the benefits offered by tax-exempt organizations and the expectations and requirements that accompany nonprofit status.”
Nangle said the bill will help start conversation with the nonprofit community that he says is long overdue.
“If some of these nonprofits have compensation like Fortune 500 companies, they should have tax obligations of Fortune 500 companies,” he said. “It’s about participating in and helping the communities they’re a part of.”