In January 1973, Harvard agreed to substantially increase in lieu of tax payments to $410,000 for 1972 and $500,000 for 1973. The agreement was signed by Corcoran--who remained as city manager despite CCA ouster efforts until this year--Moulton and Charles U. Daly, vice-president for government and community affairs.
At the same time the University also rejected the bill for about $400,000 that the city had submitted in October 1972 on the total square foot formula. Moulton said then that even though Harvard would now pay a figure comparable to the one arrived at by the square footage calculation, they would not make payments that were based on a specific formula.
Harvard objected to the formula for two reasons. First, any formula might jeopardize the tax-exempt status of the University's property; and, secondly, any precedent set by Harvard could be harmful or even fatal to other non-profit organizations that could not afford to make such high payments.
Moulton said then that the size of the increases over the next two years were a result of Harvard's desire to "clean up loose ends" and not of pressure applied by the city council.
Despite the large increases that the Harvard agreed to, three members of the council immediately condemned the new agreement as unsatisfactory and showed their dissatisfaction by convincing the council to defeat a Harvard petition for minor street repairs that had been before the council since October. Daniel J. Clinton, Saundra Graham, and Henry F. Owens III said in no uncertain terms that Harvard should be forced to make much higher payments to the city.
IN THE YEAR and a quarter since that blow-up, the in lieu of tax question has smoldered threateningly under the surface, but never quite exploded. Harvard continues to stand by its anti-formula policy and city councilors blast Harvard for low payments whenever the mood seizes them.
Harvard had cooperated with other institutions since 1972 in an attempt to re-evaluate tax exemptions for institutions on higher education and the basis for in lieu of tax payments. An October 1972 report to the Cambridge community from the Office of Government and Community Affairs assured the city that although Harvard will "work to protect the tax exemption of educational institutions, it will work with equal energy to see that the courts, legislature and executive branch officials devise ways to spread the burden of these exemptions more fairly."
To this end, Harvard joined other institutions in asking the Federal Reserve Bank of Boston to undertake a study entitled, "College and University Tax Exemption and the Need for Tax Structure Reform in Massachusetts." In its preliminary description of the problems, the FRB said that "we believe that the real villain is Massachusetts' extraordinary reliance on the local property tax. We hope to show that a general overhaul of the tax structure would be mutually advantageous to the universities and colleges, to their host communities, and to low and middle income citizens as well."
The rough draft of this report is now being reviewed by the bank, and the final report should be available in several months, Moulton said last week.
But report or no report, the present two year agreement on the level of in lieu of tax payments between the University and Cambridge comes up for renegotiation next December or January when a figure for 1974 payments must be agreed upon.
Cambridge has a new city manager and a few new faces on the city council. Harvard has taken an increasing responsibility to the community, in recent years. But basically, the city still adheres to its contention that Harvard should pay by the square foot and Harvard insists it will not pay according to any set formula. That basic difference in philosophy could lead to another round of heated negotiations and increased pressure from city politicos and residents who see at least some tax relief coming through higher payments made by Harvard.