As Greece emerges from a decade-long financial crisis, the city of Athens is grappling with major challenges: E.U.-imposed austerity measures, a real estate collapse, ongoing security and migration issues, climate change, and now COVID-19. Kostas Bakoyannis, 41, was elected mayor in 2019, promising stability and reinvention. The son of two prominent Greek politicians, Bakoyannis is the city’s youngest elected chief executive but has had considerable experience. Holding undergraduate and graduate degrees from Brown University, Harvard University, and the University of Oxford, he was governor of Central Greece, mayor of Karpenissi, and served at the Greek Ministry of Foreign Affairs, the European Parliament, and the World Bank. He also holds positions with the Hellenic Agency for Local Development and Local Government, European Council on Foreign Relations, and United Nations Sustainable Development Solutions Network. On a recent visit to Cambridge, he spent time with Lincoln Institute Senior Fellow Anthony Flint.

Anthony Flint: You have said that you are focused not on grand projects, but on day-to-day quality of life in a city trying to make a comeback in a more incremental fashion. What are your reflections on your successful campaign and the experience thus far of being at the helm of local government?

Kostas Bakoyannis: I think in any campaign, it’s always about the message and not the messenger. Elections in the past in Greece have been about candidates higher up, talking down to the people. I took a different approach and started walking out in the neighborhoods. I listened with care and found that the people want a city to build its self-confidence and be optimistic again. Now we are reinventing city services and reinventing the city. Athens has three records: the least urban green per capita in Europe, the most asphalt, and our houses have the most square meters. We want to reclaim public space and especially reclaim space from the automobile. We have been studying traffic circulation, and are planning to close parts of the city center to cars. We will also create an archeological walkway around the city.

All in all, I’m living my dream. I’m giving it my all. I’ve been in local government for 10 years; higher office doesn’t compare. One day, when I first began my journey in local government, I was depressed and thinking we are a failure, and then I walked out and saw a playground we had just opened. It’s not about resolving the conflict between North and South Korea. It’s real, tangible, incremental change, improving the quality of life.

AF: Athens has been vexed over the years by the problem of vacant buildings and storefronts, graffiti, homelessness, and a general image of being dark and dirty. Can you tell us about your plans to clean things up?

KB: There was a very good article in an international magazine about the Greek economy, but at the top there was a photo of Athens, with two homeless people sleeping in front of closed stores that were full of graffiti. This is our challenge. Don’t forget that we are in a global race to attract talent, technology, and investment. And Athens is changing day by day. To mention a few examples: We have adopted the “broken windows” theory of social behavior [which suggests that visible signs of crime and decay invite more of the same] and are coordinating with the police. We have special equipment and run campaigns to clean up graffiti. We have a program called Adopt Your City, and public-private partnerships that are already bearing fruit. We are asking people who care and love the city to come help us. Regarding drugs, reforms have been made. The parliament recently passed a measure on supervised spaces for drug use—we haven’t operated one yet, but we are preparing to make it mobile, so it doesn’t stay too long in any one neighborhood. Local government will be able to operate such spaces. We are reclaiming public space, like Omonia Square, a city landmark—I think that’s going to be a symbol. There are elevated expectations about public space . . . it’s not just public works. We are producing more of a product, an experience.

AF: As part of that effort, you attracted controversy for clearing out squatters in the neighborhood of Exarchia, an effort that included dawn raids and relocating refugees and undocumented immigrants. How do you fulfill your campaign promise to restore law and order and curtail illegal immigration, while still being sensitive to the human lives at stake?

KB: Here is an example: An individual calling himself Fidel was running a hostel in a school, occupying it, and charging money. We securely moved the children to take advantage of social service provisions. Greek media have a thing about Exarchia. It becomes a political weapon for one side or the other. I don’t look at it that way. We have 129 neighborhoods, and Exarchia is a neighborhood with its own issues. Much of what we do has to do with persisting and insisting—it’s a question of who will get tired first. We will not get tired first.

On the subject of pluralism, we’re the canary in the coal mine. We survived the economic crisis, and we’re stronger today than in the past 10 years. We have more depth to our democracy, stronger institutions. We isolated extremists. We confronted the Fascist Nazi party Golden Dawn—we went to neighborhoods where they were doing well. We didn’t wag our fingers and tell people they were bad for voting for Golden Dawn. We said: we can provide better solutions to the problems you face.

Athens is a Greek city, a capital city, and a center for Greeks around the world. Having said that, Athens is changing and evolving. I remember seeing a young woman who was black in a parade, and she was proudly holding the flag—I think what she was saying was, ‘I’m as Greek as you are.’ We want to make sure everyone living in the city has the same rights and obligations.

AF: What are the most important elements of your plans to help Athens combat climate change—and prepare for its inevitable impacts in the years ahead?

KB: Think different! It is all about working bottom up. What’s happening that is most interesting in terms of public policy is in the cities, which are true laboratories of innovation. Nation-states are failing—there’s so much partisanship, and a toxic environment, and bureaucracies that cannot handle real problems; cities are closer to the citizen. We are proud to be a part of C40. Athens has developed a policy for sustainability and resilience. Among other things, we are working on ambitious but realistic interventions to liberate public space, multiplying green space, and creating car-free zones. For us, climate change is not a theory or an abstraction. It is a real and present danger that we can’t just sweep under the rug. It demands concrete responses.

AF: You recently had the opportunity to return to Cambridge and Harvard. What level of interest did you find in the future of Athens? Are there things you have learned from American cities, and what can the United States learn from you?

KB: I was enthused and heartened by the level of interest and am thankful for the engagement. I must admit that I was very proud to represent a city with a long and glorious past and a promising, bright future. We may live on different sides of the Atlantic, and in very different cities, but it is interesting that we face similar challenges as urban centers evolve and are transformed. And it is always great to share experiences and learning moments. Policies to further resilience are the most obvious example. And of course, battling social inequalities is at the top of all of our agendas. I am glad to have begun promising and fruitful conversations which will continue in the months and years to come.

Photograph: Athens Mayor Kostas Bakoyannis. Credit: City of Athens.

At a recent rally in front of Baltimore City Hall, activists sang, chanted, and otherwise voiced their view that the city’s major nonprofit institutions weren’t “paying their fair share” of property taxes.

The gathering came as the City Council explored renegotiating an agreement under which 14 nonprofit universities and hospital systems voluntarily pay the city a total of $6 million per year. Those payments are in lieu of the estimated $120 million they would owe if they were not exempt from taxes on their real estate holdings.

The voluntary agreement doesn’t expire until 2026. But with state lawmakers considering a plan to allocate $4 billion in new school spending in Maryland by 2030—including $329 million from the city of Baltimore—leaders in that city are eyeing nonprofits as a potential source of additional revenue. And they are not alone. Other cities, under various fiscal pressures, are also seeking to collect more revenue from payments in lieu of taxes (PILOTs), a tool used broadly in the Northeast and Midwest.

In Boston, home to the largest and most lucrative PILOT program in the country, incoming City Council President Kim Janey used her inaugural address to announce the formation of a committee that will reconsider the terms of the city’s decade-old PILOT guidelines. And newly elected New Haven, Connecticut, Mayor Justin Elicker campaigned on the promise of asking Yale University to increase its annual contributions from $11.5 million to $50 million on property worth roughly $6.6 billion within the city limits—a nearly fivefold increase, but still a fraction of the taxes a non-exempt property owner would owe. New Haven, which has one of the highest levels of tax-exempt property in Connecticut, has long struggled with finances and is facing a $50 million budget gap.

“I will be having very lively conversations with the university, because I think that the vast majority of New Haven residents feel like Yale can be doing much more to contribute to the city,” Elicker said upon taking office in January.

The relationship between nonprofits and cities is complex and occasionally contentious. Colleges, hospitals, and other organizations provide valuable services and benefits at little or no cost to cities, from health care to student housing. They are also often major economic engines. To acknowledge the fact that they rely on city services and infrastructure, many agree to make these voluntary payments. While it can be tempting to ask for more, experts caution against bringing nonprofits back to the table too frequently or too soon after an agreement has been reached.

“Cities should not be trying to renegotiate PILOTs on a regular basis,” says Adam Langley, associate director of tax policy and data initiatives at the Lincoln Institute of Land Policy. “It’s an issue of credibility and trust between the local governments and nonprofits.”

Langley cowrote a Policy Focus Report and Policy Brief on PILOTs with Lincoln Institute Resident Fellow Daphne Kenyon. The two say the long-term nature of most PILOT agreements, which typically cover a span of five to thirty years, helps provide a predictable revenue stream for cities and a known budget number for nonprofits. But there are some cases when it makes sense to revisit PILOTs before the specified renewal date. In 2011, for example, Providence, Rhode Island, was facing a $110 million budget deficit and possible bankruptcy. After Mayor Angel Taveras raised taxes, closed some public schools, reworked labor contracts, and suspended cost of living adjustments for public pensioners, he successfully negotiated PILOTs worth an additional $48 million over 11 years from the city’s seven largest nonprofits. “Everyone was taking a hit,” says Kenyon. “So within that context, revisiting a multiyear agreement would be more sensible.”

In Boston, the urge to revisit the current agreement is dictated less by a crisis and more by concerns about the role of “community benefits” in the funding formula. The city’s PILOT model asks nonprofits that own property worth more than $15 million to pay 25 percent of what they would have paid in real estate taxes. But it allows them to cover up to 50 percent of that payment with services that directly benefit residents of the city, such as scholarships, cultural events, preventive medical care, and the development of safe, affordable housing.

While giving credit for community benefits is considered a best practice because it acknowledges that nonprofits provide services that would otherwise not exist or would come out of city budgets, it’s also a primary target of Janey’s inquiry. “Some of our nonprofit partners use ‘community benefits’ in a loose way,” she recently told reporters.

Even if cities negotiate new agreements, there is no guarantee that nonprofits will pay. In fiscal year 2019, Boston requested a total of $109.1 million from nonprofits including schools, cultural institutions, and hospitals but received only $86.7 million—$34.2 million in cash and $52.5 million in community benefits. (In the first year after the guidelines were enacted, nonprofits contributed $21.9 million in cash and $21.9 million in community benefits.)

The difference in the amounts requested and received has to do with the voluntary nature of the payments. “This is not a tax assessment,” says David Thompson, vice president of public policy for the National Council of Nonprofits. “It’s not legally or constitutionally required. This is an ask.”

For her part, Janey sees the shortfall in collections as another reason to reexamine the structure of the program. “We’re leaving millions of dollars on the table that could be invested in our schools and housing and our roads,” she has said. “But we also need [local nonprofits] to do their fair share and contribute their full amount in terms of the PILOT.”

Kenyon and Langley suggest that it’s valid to ask whether the benefits counted as contributions are actually ones the community wants and needs. They also say a decade is a reasonable amount of time to go back and assess a PILOT program. But the process works best, they say, when officials approach it in a collaborative spirit.

“Public shaming is sometimes used to try to compel nonprofits to make contributions,” says Langley. “I don’t see a lot of evidence that’s an effective strategy.”

Instead, they recommend communicating respectfully, justifying the amount of a requested payment, and, when possible, earmarking PILOTS for public services consistent with a nonprofit’s mission.

Thompson agrees. He suggests officials approach nonprofits as partners and ask for contributions related to specific budget needs that directly affect the organizations. For example, an institution located in a high crime area might help pay for an increased police presence in the city. Or a city might put PILOT payments from a university toward improvements to public parks located near campus, as happened in Worcester, Mass.

“Nonprofits are problem solvers in our communities,” Thompson says. “It helps if you come with an approach of, ‘Can you help us? We propose increasing spending, but we also encourage you to solve this with a mission-based activity.’”

Liz Farmer is a fiscal policy expert and journalist whose areas of expertise include budgets, fiscal distress, and tax policy. She is currently a research fellow at the Rockefeller Institute’s Future of Labor Research Center. 

Photograph: Baltimore is one of several cities seeking higher contributions from tax-exempt nonprofits in the face of fiscal pressures. Credit: Opacity via Flickr CC BY 2.0.