2007_0820_Packet - Laserfiche WebLink

Home

SFCB r project Plan for Development of PILOT for �IL� City of Springfield �age 3 Benefits of a PILOT Program The reason local govermnents sp�icit I�i�O� ;��r��r�*_s is simple —they generate revenue. The rationales jurisdictions cite when solicitingcontributions include the loss of revenue from tax-exempt property, the cost of �zovid.ing municipal services to the organization, budget shortfalls, and a civic duty to be a"good neighbor° to the corr�inunity. In certain jurisdictions, the large amount and high value of tax-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 propertytaxes so that relativelywealthy organizations can pay no taxes whatsoever, especially when they receive costly services. The motivation for tax-exempt organizationsto pay �'ILO'�s is more complicated. Some organizations recognize the value of services they receive from the local �;overnm�t and are willing to pay their fair share of those costs. These organizations also znay wish to generate good vc�ll in the community by contributing to local revenues. In inany cases, however, a non�rnfi� only negotiates a PILOT or some other voluntary contribution after being approachedby the local jurisdiction, or even faced with the prospect of so�zxe other, mandatory tax or payment levied by the local gover.r�ne�t. In fact, a tension often e�sts between local jurisdictions and the nonprofit organizations based there --- even among nonprofits already paying �'Z�.Q'�s. Differences over what is the appropriate amount to contribute arise when PILOT agreements are renegotiated, when the jurisdiction is experiencing new fiscal difficulties, or when the nonprofit organization purchases additional property that subsequently becomes tax-exempt. Cities such as Washiz�g,ion, D.C., Boston and Cambridge, Mass., haue found it difficult to cope with the fact that over half of all �z�n�e�-ty within their city limits is tax-exempt. And sY�a��ez� cities such as Worcester, Mass., and Urbana, ill., have faced the erosion of their tax bases when colleges and other nonprofits purchase additional property. Harvard University's recent 20-year PILOT agreementwith the City of Boston was negotiated only after City officials were surprised and alatmed by the university's quiet purchase of 52 acres of property within the City. I�arvazd University now owns inare land in Boston than in Cambridge. For their part, tax exempt entities generally resist calls to begin or increase their contributions to local jurisdictions. They often respond by enumeratingthe positive beneficialimpact they have on the locality, including creating jobs,1�a�c�x�� local purchases and paying miSCelLanet�rzs taxes and fees. They also inay cite their acco��p�ishments in serving coinmunity needs and warn that increased financial contributions to local govermnent will result in a reduction of whatever c4zn�r��nzty services they may provide. J.F. Ryan Associates, Ine. September 16, 200�