Boston University will pay more than $104.3 million to the city of Boston over the next five years, the largest Payment-in-Lieu-of-Taxes agreement in the city’s history, Mayor Michelle Wu’s Office announced Tuesday.

Boston relies heavily on property taxes to fund a large part of its budget, but nearly half the city’s land is tax-exempt, including universities and hospitals, according to an article from Axios Boston. This tax gap has left city officials asking universities and hospitals for voluntary PILOT contributions of cash or community benefits to help fund municipal services, including snow removal.

The PILOT agreement is the first written payment commitment between the city and BU in more than 25 years, according to Wu’s office. 

“This new five-year agreement reflects the priority we place on service and partnership with Boston,” BU President Melissa Gilliam said in a press release. 

As per the agreement, BU will pay the city $37.5 million in cash and $66.8 million in community benefits, such as scholarships and financial aid for Boston residents.

The arrangement comes a month after the city agreed to tap into its emergency reserve fund to cover its nearly $70 million budget shortfall, plugging the deficits in the city’s operating and Boston Public Schools budgets.

BU contributed $6.3 million in cash and $12.4 million in community benefits in 2025, fulfilling 77% of its PILOT request.

The University has agreed to contribute approximately $10.8 million more than it would have contributed if its cash and community-benefit payments remained unchanged for the next five years.

Instead, cash payments will increase by $400,00 each year under the five-year agreement, according to the memorandum of understanding. Community benefit funds will also grow by approximately 2.5% annually. 

Hospitals have historically paid closer to the amount of what the city requests, while universities lag behind, according to data from the City of Boston website. 

“I frequently hear from residents asking our non-profit partners to step up, and I believe Boston University is doing exactly that with this renewed commitment,” said Sharon Durkan, City Councilor and Chair of the Boston City Council’s PILOT Agreements Committee.

Durkan named BU as one of the city’s strongest and most consistent contributors to the PILOT program. 

“This agreement reflects Boston University’s continued investment not only in innovation and education, but in the communities we call home,” Wu said, according to the press release.

Over the past five years, the university has fulfilled 79% of the city’s requests on average. 

In 2025, Tufts University fulfilled 84%, Harvard University contributed 79%, Northeastern University fulfilled 66% and Boston College fulfilled 23% of its PILOT requests. 

BU joins two other universities with this PILOT agreement. Northeastern committed more than $49 million in cash and community benefits over the next five years starting November 2025, and Wentworth Institute of Technology committed $5.6 million in February. 

“We thank President Gilliam and Boston University for this commitment to invest in our city, learn from one another, and collectively strengthen the foundation that allows our residents, neighborhoods, and institutions to thrive,” Wu said, according to the press release.

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