2007_0820_Packet - Laserfiche WebLink

Home

$�'C�i.. Project Plan for Beveinpnnent of PILOT for the City of Springfield Page 4 Loca1 officialssometimes force the issue with nonprofits that ha�e not contributed by halting or slowingbuilding permits or zoning approvals (however, this can raise significantlegalliabilities),by proposingto levy some altematetax on nonprofits or even by challenging the organization's tax-exempt status. The result is usually a negotiated settlement that allows the jurisdiction to collect some revenue, while at the same tir�e letting the tax-exempt organization proj ect a positive image in the community and a�oid a less desirable alternative. This r�vas the case in Baltimore, Maryland three years ago, where 16 of the City's largest nonprofit organizations agreed to contribute $20 million to the city over 4 years, after the mayor dropped a proposed energy use taY on nonprofit organizations in the City. Several Pennsylvania cities and counties mounted legal challenges to local nonprofit organizations' tax-exempt status in the early 1990s. The result was that some were successful in collecting PII,OT payments even after they lost initial challenges in court. Loca1 governments are not universally successful in collectingPII,OT payments fr�m nonprofits, however. The City of Evanston, Tl�inois has been unable to get Northwestern University to agree to a PII,OT arrangement, despite years and years of effort includ�g a prior threat to enact a tax on student tuition. Nevertheless, �'II.OTs remain a popular tool in communities with significant concentrations of large tax e�ei�,pt institutions. It is importantto note that virtually every �uecess�l PII,OT program focuses exclusively on only the large, private, tax exempt institutions — primarily hospitals and universities. Churches, social service agencies, social clubs, etc. are generally excluded from these efforts due to social and political opposition. New England Cities with PILOT Programs While national examples are useful in understanding the challenges in establishing a PII,OT program, variances in ta�c and revenue bases, as well as demographic differences make effective comparisons difficult in the design of a PII,OT program that may work for Springfield. However, there are four cities and two towns in New England that ha�e very successful �rrag�•�ns, and one �nare s�zrniciga2ity that is currently starting an effort. Boston, Massachusetts Boston has the most proactive PII,OT Program in the country. Started m 1985 it has primarily focused on those tax-exezz�pt institutions that are e�panding—either through new construction, rehabilitation, or acquisition. The rationale is that if they can afford to build or e�pand they can afford to financially contribute for the many municipal services that they receive. The program is mu by the Assessing Department but there is very close coordination with the city's planning, permitting, and public safety agencies. The City initiates PII,OT requests based on a formulaily�� includes the cost of a proposed development proj ect, the assessed value of the properry, and a comparison with comparable buildings. In most cases though, the �orm�la is used only as a basis for beginning discussions, and PII,OT �ay�nents are arrived at through negotiations with the individual nonprofit institution. J.R Ryan Assae[Afos, Inc. September 16,2005