PILOT Agreements Gain in Popularity, As Non-Profits are Asked to Pay the Piper

As recent debates in Pittsburgh and Providence, R.I. bring PILOT agreements to national attention, Kevin Kiley describes the confluence of factors leading property-tax-exempt nonprofits, "often under duress from local officials," to agree to such deals with local governments to help municipalities balance their budgets. The subject was the topic of a daylong series of panels hosted earlier this week by the Urban Institute.

"Over the course of the day, speakers said they believe municipalities, and potentially regional governments such as counties, will place increasing pressure on nonprofits to contribute more to local government budgets. Most of the speakers were supportive of PILOT agreements, recognizing that the size and role of nonprofits, particularly large colleges, universities and medical centers, have changed dramatically since states established the tax exemption. Such organizations also use up a significant amount of municipal resources, they argue. Colleges and universities, particularly those that own a significant amount of land and have considerable financial resources, are likely to be an easy target for government pressure."

"Daphne Kenyon, an economist at the Lincoln Institute of Land Policy, said there is growing support for taxing traditionally tax-exempt institutions, particularly colleges, hospitals and even religious institutions. Speakers at the Urban Institute meeting said it might be financially better for nonprofits to strike PILOT agreements now to mollify critics rather than face the revocation of their tax-exempt status in a few years."