WPI and City of Worcester Announce New Voluntary PILOT Agreement

Media Contact
May 12, 2009

WORCESTER, Mass.– May 12, 2009 – Worcester Polytechnic Institute (WPI) and the city of Worcester announced today a new voluntary Payment in Lieu of Taxes (PILOT) agreement.  The university’s commitment to make voluntary annual payments will directly support Worcester Public Library and Institute Park.  The PILOT starts July 9, 2009 and will continue for 25 years.  

"Our world-class WPI is a tremendous asset and such an important component of our past, present, and future successes.  WPI’s willingness to forge this PILOT agreement with the city is one more affirmation of the university’s care for its community," said City Manager Michael V. O’Brien.  "I am very grateful to WPI’s Board of Trustees and to President Dennis Berkey for their desire to further WPI’s proud tradition of partnership with the city it calls home.  WPI understands our bright futures are tightly intertwined."

Through the new accord, WPI will increase its voluntary annual payment to the city to a total of approximately $270,000.  This voluntary payment, in addition to the $180,000 WPI currently pays in real estate taxes on properties that qualify for tax exemption, will bring the university’s total for voluntary payments made to the city to $450,000 in the first year of the new agreement.  WPI will further increase its voluntary payments by 2.5 percent annually over the next 25 years.  By 2034, these voluntary payments will amount to more than $9 million over the life of the agreement. 

WPI’s PILOT payments will be used in Year One by the city to restore hours of operation at Worcester Public Library on Wednesdays and Sundays and will be dedicated to the implementation of the Institute Park Master Plan.  To commemorate the signing of this agreement, WPI also made today an additional – and immediate – $50,000 contribution to the Friends of Institute Park Restoration Fund. 

"WPI and the city of Worcester have enjoyed a strong relationship since the university was founded in 1865. Even when put into the perspective of those 144 years, today stands out as a landmark, "said WPI President and CEO Dennis D. Berkey. "On our campus, we hold fast to the principle that what’s good for Worcester is good for WPI.’ I am pleased to have reached an agreement that reflects our strong relationship, and I wish to express my personal appreciation to the city manager for his thoughtful, respectful, and diplomatic handling of these negotiations.

"As glad as we are to increase our support of the city, it’s important to note that WPI does not intend for this agreement to serve as a model for any other tax-exempt institution’s financial relationship with the city,” Berkey noted. “Each of Worcester’s colleges, universities, and cultural and religious institutions enjoys a unique relationship with the city, which may or may not warrant new or increased voluntary payments. We are especially concerned about the financial fragility of our cultural and religious institutions.”

Under the terms of the new agreement, 28 WPI-owned properties that qualify for the statutory exemption for educational use will be transitioned.  Equally as important, the agreement outlines how properties that qualify for the statutory exemptions will be addressed in the future.   As a leading partner in the development of Gateway Park, among many other economic development projects, WPI has invested more than $54 million to revitalize the former brownfield into a vibrant 11-acre, mixed-use life sciences complex.  More recently, WPI bought and renovated the former Lee Street School.  Although these properties qualify for tax exemption, WPI currently pays $180,000 in annual property taxes on both, and has agreed to not pursue this exemption; this sum will continue to be paid into the city’s General Fund.