Increasingly Popular PILOTs No Panacea for City Budgets

A new report documents the rise of payments in lieu of taxes (PILOTs) made by non-profits to cities desperate for new revenue. Although they've gained notice by cash-strapped cities, the report indicates PILOTs typically generate little revenue.

As we noted previously, the use of PILOTs to help fill city coffers is on the rise across America. A new report published by the Lincoln Institute of Land Policy, "Payments in Lieu of Taxes by Nonprofits: Which Nonprofits Make PILOTs and Which Localities Receive Them", and authored by Daphne A. Kenyon, Adam H. Langley and Patricia C. Bailin, "provides far more detail on these voluntary payments than was previously available in any single source."

"Although many more municipalities are considering PILOTs," notes the Lincoln Institute, "the report provides a reality-check for anyone expecting them to be a panacea for cash-strapped cities and towns. For the typical locality receiving PILOTs, these voluntary payments account for only 0.13 percent of general revenue. That's the same amount that local governments raise from charges for parking meters and parking lots."    

"Sometimes the debate surrounding PILOTs can seem a lot bigger than the dollars involved," said Adam H. Langley. "PILOTs simply don't generate enough revenue to be a panacea for cash strapped cities and towns, and concerns that these payments will seriously undermine nonprofits' financial health seem exaggerated since these payments are voluntary-nonprofits can say ‘no'-and are typically much less than what nonprofits would pay if taxable."

Full Story: Top cash-strapped cities turning to PILOTs


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