Monday, October 8, 2012

PILOTs - Is the Revenue Worth the Hassle?

This Reuters piece from Sept. 28th highlights a recent report prepared by the Lincoln Institute of Land Policy, which finds that local PILOT programs do raise some revenue, but not a significant amount.   The report (free but registration required) contains a significant amount of statistical information on the distribution of PILOT programs by region and by nonprofit sector, with hospitals and universities in the Northeast bearing the heaviest burden.  The authors believe that this may be, at least in part, because the Northeast is “substantially more reliant on the property tax as a revenue source for funding local governments than other parts of the country.”  (Page 2)

The report is an interesting read, although it notes its own limitations.  There is no good collection point for data from PILOT programs, so the collection was, by necessity, somewhat ad hoc.  As a result, the authors can only point to this information as a floor.  Moreover, although the data shows an increase in PILOT programs and revenues over time, it is difficult to know whether this increase is due to the increase in the number of programs or simply due to better data collection methodologies.   Finally, data collection is hampered by the lack of a consistent definition of a “PILOT” program.

In any event, what is striking is the relatively small amount of money raised if you aren’t in a jurisdiction like the Boston metro area, which has many large organizations making substantial payments. It makes one wonder whether the administrative costs and the poisoning of the relationship with large institutional citizens is worth the effort.  Given the status of state and local governmental budgets these days, I’m sure they’d say that every penny is needed.

EWW

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