Thursday, April 22, 2010

Massachusetts Municipalities Join Others Seeking PILOTs

As previously blogged, cities and towns throughout the country are looking to local nonprofits for funds to cover continued operating deficits.  The Boston Globe reports that Concord, Massachusetts town officials issued letters to 34 local nonprofits in January requesting voluntary payments in lieu of property taxes (or PILOTs).  In the letters, the officials delineated the town's fiscal challenges, how nonprofits benefit from the town's services, and how residents bear nearly the entire tax burden.  Essentially, the letters asked the nonprofits to contribute their "fair share" to the town's operational budget.  Only one nonprofit has responded to date with a modest payment.  Other nonprofits responded with demonstrations of other contributions they make to the town's finances and operations.  The town is separately negotiating an agreement with its largest nonprofit landowner, Harvard University.  The nonprofits located in Concord own property worth $935 million, from which the town would otherwise generate $12.2 million in property taxes. 

The article also mentions that other Massachusetts communities, including Boston and Belmont, are considering or requesting PILOTs from nonprofits located in their communities.  Specifically, a Boston mayoral task force recently recommended a "uniform payment formula" to be applied to nonprofit organizations, gradually attaining 25 percent of what would be the organizaton's property tax assessment.  As municipalities continue to battle decreasing tax revenues and increasing operational costs, the necessity and propriety of PILOTs will continue to be discussed by such municipalities across the nation.


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