10/23/12: Why Behave Like an Anchor? Part II: External Pressure, and Moving Beyond Eds and Meds—A Closer Look at Other Anchors

This class discussion centered mainly around the potential benefits and challenges of two types of agreements: community benefit agreements, and payments in lieu of taxes. Our main sources of information were two papers (see syllabus for full reading list):

Wolf-Power, L. (2010). “Community Benefits Agreements and Local Government: A Review of Recent Evidence.” Vol. 76, No. 2, Journal of the American Planning Association,
Pp. 1-18.

Kenyon, D. and A. Langley (2010). “Payments in Lieu of Taxes: Balancing Municipal and Nonprofit Interests.” Cambridge: Lincoln Institute of Land Policy, Pp. 1-48.


Lincoln Land Institute piece made it clear that it’s difficult to generalize programs because they vary so much from state-state. Boston’s program is seen as a model.

Rhode Island and Connecticut are the only two states that collect PILOTs on state level (called grants in lieu of taxes, or GILOTs). Interesting idea, why don’t more states do that? Will they be cut from budget? Easy to see why they would do it, but budget is a constraint.

PILOTs can be used as a way to lure businesses and anchors to a community, by offering entity to pay PILOT instead of taxes. This is fairly unusual, though property tax abatements are not unusual in many places This can be a catch-22: how much money is the community losing in tax revenue, and will it be made up for in benefits from the anchor that is coming in?

How political is the process of setting PILOTs and CBAs (community benefit agreements)? They can be fairly political—often, exchange and agreement take place behind closed doors, on a one on one basis. BIDs (business improvement districts) are different—they involve public meetings, have a board of directors, etc. In many places, it would be difficult in many places to figure out who even has a PILOT.

Because they don’t pay taxes, nonprofits have incentive to buy up land that would be particularly valuable for resale. This is given as argument for PILOTs, and there concern that different tax rates across municipality would skew nonprofits’ decisions about where to locate. Potentially less of an issue for anchors, which are, by definition, rooted, and not moving.
Good to finally see solid numbers—if NPs actually paid taxes, it would make up a QUARTER of Boston’s tax base! Huge case for incorporating anchors into neighborhood so they can have the maximum benefit. Tradeoff: job growth and security? Boston was not hit as hard by recession as other areas because of strong anchors.

Tricky questions: where do biotech companies come from? (Romney?) Also from hospitals, other anchors—MIT, Mass Gen, etc were vital in attracting them. How many companies stemmed from MIT innovation? Does tax-generating impact negate tax exemption? What would be tax-generating potential of the land where some anchors are sitting? What would be there if the anchors weren’t? How do anchors qualify their importance? What is the calculus for determining how much impact is enough? Politically inevitable and ethically loaded questions.

A Boston example: One big political priority is improving public schools in Boston, despite that the city has huge educational resources and capacity present. Mayor Menino called together presidents of 5 largest nonprofit institutions and called for each to partner with two low-performing public schools. Anchors formed an organization to pool resources, took on this additional project. Some positive benefit but not much. Difficult for lowest-performing schools to partner with anyone—but good intentions. Good way to leverage resources. But, did he ask them for enough? Many schools already have ongoing partnerships. Could he have asked for something more substantial, set standards for how much they should work with schools, require a comprehensive agreement? Why shouldn’t they have a responsibility for success of community education? There are connections between different types of claims and benefits.

Universities often present a problem because schools think in semesters or school years, but communities need longer-term help. Other anchors tend not to plan partnerships beyond the next year—can they put at it on scale of grants? Shaping this as research? The same people who teach also do research.

Boston’s Tobin School (very low-performing) had 27 AI partners PRIOR to losing great credibility. Anchors can’t just run around haphazardly, must create a comprehensive plan. Must be communication about what schools actually need.

Who calls the shots? Fundamental importance of effective communication with and among anchors and community partners. Underinvestment in coordination. Seems inevitable that starting point would be community outlining their needs.
Broad generalizations about community benefit agreements: local development climate can support a CBA. Good to see this acknowledged. Is there a way to prime your environment for a CBA, or to put community in position where CBA would work well/could be asked for? Again, who calls the shots? Enormously important, variable, and not always transparent.

Are the benefits flowing to the community as well as the developer, or just to the developer? CBA attempts mitigation while a community partnership agreement (like that between Tufts and surrounding communities) comes from institution already providing benefits. Can lessons from CBAs be used when there is no new development happening?
Often a zoning is part of a CBA. Transparency is key: what is the community giving up? Is everyone aware of what the community is giving up for services from CBA?

Level of transparency varies a lot. LILU report on PILOTs highlighted examples of secretive PILOTs. How visible/accessible is the agreement over time? Implementation can be a weak link—is some enforcement/accountability built into the agreement? Strong connection with literature surrounding negotiation. Remember not every negotiation is standard, which is why not every PILOT is the same.

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