Baltimore has reached an agreement with local nonprofit institutions to gradually increase the payments each gives the city annually in place of taxes to cover the cost of services.

The agreement, which the administration outlined this week for The Baltimore Banner, calls for 14 tax-exempt city institutions to make annual payments to the city starting at $6 million in 2027 and escalating to $12 million by 2030, for a total investment of $48 million.

The new deal would span five years, half the life of the 10-year agreement that preceded it. That agreement, which is set to expire in the middle of 2026, generated $6 million for Baltimore annually.

In a statement, Mayor Brandon Scott noted that the city’s higher learning institutions and hospitals, so-called “meds and eds,” drive the city’s economy.

“This agreement increases their shared investments in our city, while taking into account the financial strain that they are experiencing as this federal administration continues to target colleges, universities, and hospitals,” he said.

Baltimore uses the payments, also known as payments in lieu of taxes, or PILOTs, to supplement its city budget, which, with limited exceptions, does not receive property tax revenue from nonprofit organizations. Baltimore’s first PILOT, negotiated in 2010, directed $20.4 million to the city over a span of six years from 16 institutions.

The new deal, beginning July 1, initially holds the line at $6 million. The annual payment jumps to $8 million on July 1, 2027, to $10 million on July 1, 2028, and to $12 million starting July 1, 2029, and the following year.

The agreement falls well short of the drastic increase some advocates pleaded for: enough to cover the roughly $47 million annually that is used by Baltimore nonprofits in city services like police and fire protection. A study from the Department of Finance found the groups own a collective $5 billion in property that, if taxed, would amount to $120 million a year.

A 2024 report on PILOT agreements from Comptroller Bill Henry made recommendations based on a study of PILOTs in other cities, calling for future agreements to have at least a 10-year life to create more financial stability. He also recommended making the process more transparent to the public.

With Us For Us, a coalition of community advocates, union leaders and neighborhood groups who have largely been political backers of Scott, lobbied for a say in developing a funding formula for the organizations.

City leaders instead seemed poised to agree on a watered-down solution: creating a 17-member task force to offer recommendations on future PILOTs.

Councilwoman Phylicia Porter introduced legislation in March to create the task force. Her bill initially gave the task force the power to develop a formula, but that provision was amended out of the legislation.

The agreement reached this week with the institutions ensures a five-year wait before the next PILOT is negotiated.

Ricarra Jones, political director for SEIU 1199 and a representative of With Us For Us, said the coalition is disappointed the deal was negotiated behind closed doors.

The agreement falls well short of covering the cost the city pays for services to large institutions. It also falls short of deals in other cities, she said.

“It’s just not a great agreement for the city,” she said. “It doesn’t go far enough.”

Administration officials stressed that the agreement comes amid a period of financial uncertainty for the city’s nonprofit institutions, many of which are dependent upon federal grant funding. Since taking office in January, President Donald Trump has slashed federal spending, prompting hiring freezes and a pause on capital projects by some of the city’s biggest nonprofits.

At Johns Hopkins University, which along with its affiliated hospitals pays about half of Baltimore’s PILOT, at least 80 grants fueling research have been cut since January. Grant awards have also declined. Since last September, the university’s federal research grant portfolio declined by more than $500 million. That figure, provided by the university, excludes $800 million lost from the elimination of USAID grants, which led to 2,000 layoffs.

Even before Trump took office, Maryland’s hospitals were stretched by an aging patient population requiring more expensive care as hospital labor costs rise. The University of Maryland Medical System is also a substantial contributor to Baltimore’s PILOT, paying roughly a quarter of the sum.

Asked if Johns Hopkins University officials felt the deal accommodated their financial position, JHU President Ron Daniels said the university is “deeply committed to seeing Baltimore and its residents thrive.”

“Supporting opportunity for old and new residents, growing Baltimore’s tax base and driving economic activity in our city are the most important roles we can continue to play in our hometown in partnership with Baltimoreans, organizations, and city leaders,” he said.

A statement from University of Maryland Medical Center called the agreement “fair and equitable.”

“Caring for the sick is only part of our mission. We embrace our role as an anchor institution in West Baltimore and our investment in the health of the community goes far beyond the walls of our two hospitals,” the hospital said.

Johns Hopkins Medicine did not respond to a request for comment.

A statement from Scott’s office stressed that the agreement takes into account the ongoing impacts to health care and education, particularly at smaller institutions.

Lifebridge Health, the parent company of Grace Medical Center and Sinai Hospital, said the agreement “provides a roadmap” for future community support while acknowledging the “growing financial uncertainty, including narrow margins, workforce shortages and potential changes to federal funding.”

Henry, the comptroller, called the deal a compromise that can help to carry the city forward in future agreements.

“Is it everything we wanted? No. But we’re not going to get that deal during the Trump administration with the federal government destroying the business model of universities and hospitals. Is this better than what we’ve been getting? Yes.”

Porter, the councilwoman who championed legislation on the PILOT, said she had mixed feelings about the timing of the agreement, which was settled as her bill remains mired in committee.

A vote on the legislation was delayed at a hearing last month. A date for a future hearing on the bill has not been set.

Porter said she couldn’t speak to whether the city’s anchor institutions are paying their fair share in the agreement. That would require an analysis the task force was supposed to perform, she said.

“This could have been a very robust conversation where we would have the opportunity to share these issues but also have a collective agreement that we’re going to get through this together,” she said.

Jones, of With Us For Us, blamed the Scott administration for intentionally delaying the legislative process.

“We didn’t see any reason for them to not be supportive of a piece of legislation that promotes what the mayor’s office seems to also promote, which is fairness and transparency,” Jones said.

Both Porter and Jones pledged to move forward with the task force legislation.

“There has to be a more fair, transparent process going forward,” Jones said. “These deals can’t just continue to happen between the mayor and these institutions.”

This story has been updated to clarify that Baltimore does not receive property tax revenue on property owned by the nonprofits participating in the PILOT agreement.