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Finance Committee revives PILOT (payment‑in‑lieu) draft; staff proposes $4 million property exemption and phased contributions
Summary
Committee members reviewed a working draft of a voluntary PILOT (payment in lieu of taxes) pilot policy for nonprofit properties that would exempt the first $4 million of assessed value and calculate contributions as a share of municipal service costs, phasing in payments over multiple years.
The Finance Committee on June 18 returned to a draft voluntary pilot policy (payment in lieu of taxes, PILOT) aimed at creating a uniform framework for voluntary contributions by nonprofit property owners.
Staff presented a working draft that would apply equally to current and future nonprofit institutions and would exempt the first $4,000,000 of assessed value for each property. The draft recommends calculating a pilot payment by first determining the taxable value above the exemption, applying the current municipal mill rate and then taking a percentage intended to offset the city’s cost for core services (police, fire, 9‑1‑1 dispatch and basic public‑works services). The working draft referenced a 25% baseline share for those services and also proposes a standard services‑credit—recognized community benefits could reduce the pilot payment by up to 50%.
Brendan O’Connell, the city’s finance director, described how the calculation would work and noted the policy could be phased in over several years (for example, 10% in year one, then 20%, 30%, 40% and full contribution in year five) to reduce immediate fiscal impacts on nonprofit institutions. O’Connell said the mechanism is intended to be voluntary and to encourage partnerships where nonprofit community benefits can offset part of the payment.
Why it matters: a formal PILOT program would create a predictable method for nonprofits to contribute toward municipal service costs and could affect city service funding if major institutions participate or decline. The committee discussed the percentage assumptions, the size of the exemption, and how to account for service‑credit valuation.
Next steps: staff said they will prepare responses to outstanding questions from council members and bring the topic back to a workshop at the next Finance Committee meeting (the committee planned a July 17 session). Materials in the backup included a letter from Councilor Sykes supporting a pilot policy and references to similar programs in other cities, including Boston, as background.
