Collecting payments in lieu of property taxes

November 30, 2010 02:43PM

As interest in collecting payments in lieu of taxes — also known as PILOTs — from charitable non-profits is likely to increase, a new report is urging cities and towns to work with colleges, medical facilities and other non-profits that are exempt from paying property taxes, for greater consistency and transparency at the institutions. The Lincoln Institute of Land Policy evaluated 117 municipalities in 18 states and found that payments made in these programs are voluntary and are usually only a fraction of what the institutions would provide if they paid property taxes. Private universities, non-profit hospitals, museums, soup kitchens and churches are exempt from property taxes in all 50 states. In recent years, many cities have initiated and expanded PILOTs and some have considered the idea of a controversial “tuition tax” in an effort to make up the property tax revenues that are not paid by colleges. “PILOTs can provide crucial revenue for certain municipalities, and are one way to make non-profits pay for the public services they consume,” said the report’s authors, Daphne Kenyon and Adam Langley. “However, PILOTs are often haphazard, secretive, and calculated in an ad hoc manner that results in widely varying payments among similar non-profits.” TRD