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Harvard University has agreed to voluntarily pay the city of Cambridge $6 million without committing to a long-term amount for the Payment in Lieu of Taxes program, citing federal funding uncertainties.

The announcement eases pressure on the city and Harvard to reach an agreement before the current contract expires in June for a program that represents goodwill between two institutions whose interests and history are closely intertwined.

But the University’s reluctance to make even a small financial commitment to the city in the long term was also a sign of the anxiety driving its spending decisions.

In response to recent federal funding uncertainty, Harvard implemented a temporary freeze on all hiring and denied waitlisted students across all Graduate School of Arts and Sciences programs.

The $6 million payment represents a slight increase from what the University has been paying Cambridge annually as part of the PILOT, from around $4.7 million in the most recent year.

In a letter to the Cambridge City Council, City Manager Yi-An Huang ’05 stressed that federal funding uncertainty for Harvard and the short deadline contributed to the one-year agreement as opposed to a 20-year long-term agreement.

“As the Council is aware, we are seeing an unprecedented shift in federal policies that has created significant uncertainty for universities,” Huang wrote. “In this context, the City and Harvard have agreed that it would be difficult to finalize a long-term PILOT agreement in time for the upcoming fiscal year.”

PILOT programs are agreements by large nonprofit institutions to pay the city a fraction of what they would otherwise hand over in property taxes. Many cities depend on property taxes to fund their budgets, but the often significant landholdings of nonprofits like universities, hospitals, and museums are tax-exempt — eating into the city’s revenue.

The city began renegotiating its current PILOT contract with Harvard two years ago in hopes of a higher annual payment, citing the near-doubling of Harvard’s endowment since the contract was first signed in 2004. But negotiations have dragged on extensively since that time, most recently failing to reach a year-end deadline set for 2024.

In a letter to Huang confirming the agreement, Thomas J. Lucey, Harvard’s senior director of government and community relations, reiterated Harvard’s commitment to the city of Cambridge and their desire to reach a fuller agreement over the coming year.

“We look forward to working with City leaders to finalize a longer-term agreement which will further invigorate the University’s historic commitment to supporting Cambridge,” Lucey wrote.

Huang, in his letter, emphasized Harvard’s commitment to coming to a long-term agreement with the city.

“This represents the University’s commitment to the Cambridge community, even during this time of uncertainty, and an acknowledgement that an updated agreement is needed,” Huang said.

In a statement to The Crimson, City Councilor Paul F. Toner called the agreement a “reasonable compromise” given “all the uncertainty surrounding the economy and the policies of the current administration.”

The announcement also casts doubt on any potential agreement from a similar PILOT renegotiation underway with the city of Boston, where Harvard owns hundreds of acres of land.

Harvard does not have a formal PILOT contract with Boston and has instead voluntarily paid a portion of the $5 to $14 million that the city has requested from it since 2012.

Activists have called on the University to make its PILOT payments in full, and the city is hoping the program’s revamp — affecting all 21 participating institutions — will make that a reality. But their chance at success now appears uncertain after the University’s announcement that its PILOT commitments to Cambridge will hinge on the federal funding environment.

—Staff writer Jack B. Reardon can be reached at jack.reardon@thecrimson.com. Follow him on X @JackBReardon.

—Staff writer Shawn A. Boehmer can be reached at shawn.boehmer@thecrimson.com. Follow him on X @ShawnBoehmer.