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� � SFCB - Project Plan for Development of PILOT for MW City of Springfield Page 3 Benefits of a PILOT Pro�ram __ _ __.. The reason local govermnents solicit PIIAT paym�s is simple — they generate revenue. The rationales jurisdictions cite when solicitingcontributions include the loss of revenue from taY-exempt property, the cost of providing municipal services to the organization, budget shortfalls, and a civic duty to be a"good neighbar" to the community. In certain jurisdictions, the large amount and high value of ta�c-exempt property eliminates a large share of the tax base, adding to the burden on other residents and businesses. PILOT proponents argue that it is not fair for residents to pay higher properiy taxes so that relatively wealthy organizations can pay no taxes whatsoever, especially when they receive costly services. The motivation for ta�c-exempt organizationsto pay PILOTs is more complicated. Some organizations recognize the value of services they receive from the local gQVemmest and are willing to pay their fair share of those costs. These organizations also �nay wish to generate good will in the community by contributing to local revenues. In i�nany cases, however, a nonprofit only negotiates a PILOT or some other voluntary contribution after being approached by the local jurisdiction, or even faced with the prospect of sazue other, mandatory taY or payment levied by the local government. In fact, a tension often exists between local jurisdictions and the nonprofit organizations based there — even among nonprofits already paying PlLOTs. Differences over what is the appropriate amount to contribute arise when PILOT agreements are renegotiated, when the jurisdictionis experiencingnew fiscal difficulties, or whenthe nonprofit organization purchases additional property that subsequently becomes taY-exempt. Cities such as Washington, D.C., Boston and Cambridge, Mass., have found it difficult to cope with the fact that over half of all property within their city limits is tax-exempt. And srnatler cities such as Worcester, Mass., and Urbana, Tl1., have faced the erosion of their ta�c bases when colleges and other nonprofits purchase additional property. Harvard University's recent 20-year PILOT ageement with the City of Boston was negotiated only after City officials were surprised and alarmed by the university's quiet purchase of 52 acres of property within the City. Harvazd University now owns morc land in Boston than in Cambridge. For their part, ta�� exempt entities generally resist calls to begin ar increase their contributions to local jurisdictions. They often respond by enumeratingthe positive beneficialimpactthey have on the locality, includingcreatingjobs, inakix�.g local purchases and paying uaiscellaneous ta�ces a��d fees. They also may cite their accomplishments in serving coinmunity needs ar�d wam that increased financial conh-ibutions to local govermnent will result in a reduction of whatever con�rr�unity services they may provide. J.F. Ryan Associates,Ine. September 16, 2405