Revenue-Hungry Cities Look to PILOTs

Budget-constrained cities are increasingly looking at PILOTs -- payments in lieu of taxes that some tax-exempt nonprofit organizations contribute to cities.

1 minute read

December 6, 2010, 5:00 AM PST

By Nate Berg


More than 100 cities across the country have PILOT projects in place, the most of which are in Massachusetts. Anthony Flint discusses the trend.

"The basic idea is that while these nonprofits are by law - and in several states mandated by state constitutions - tax-exempt, they might reasonably be asked to make a voluntary contribution that is a fraction of what they would pay if they paid property taxes. The payments typically constitute a very small percentage of overall revenues collected by municipalities; Boston's collection of $15.7 million in the 2009 fiscal year, for example, amounted to .66 percent of the total city budget that year.

Nevertheless, in recent years, other cities have been getting into the PILOTs business, primarily in the Northeast and Mid-Atlantic, but also in the Midwest, plus North Carolina, Georgia, Montana, and California. But the process has been uneven, ad-hoc and often contentious, according to Daphne Kenyon and Adam Langley, authors of a report, Payments in Lieu of Taxes: Balancing Municipal and Nonprofit Interests, published by the Lincoln Institute of Land Policy."

Sunday, December 5, 2010 in Citiwire

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