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Lebanon council weighs waiving PILOT payments for LEAP utilities as buildout balloons
Summary
Council members heard a detailed presentation from utilities staff asking the city to waive pilot payments (PILOT) for the LEAP water and wastewater districts until bonds funding LEAP infrastructure are repaid, arguing the scale of construction would otherwise force civil ratepayers to subsidize the LEAP buildout. Council made a language tweak and will take a second reading Dec. 8.
Utilities officials asked the Lebanon City Council on Nov. 24 to waive payment-in-lieu-of-taxes (PILOT) obligations for the city’s LEAP water and wastewater districts until bonds financing LEAP infrastructure are fully repaid. Jeff Jacob and Sandra (utilities staff) told the council that rapid LEAP construction has put hundreds of millions of dollars of utility plant into construction-in-progress, producing a theoretical PILOT obligation the LEAP district cannot pay at present and that would otherwise risk shifting costs to civil-rate customers.
Why it matters: If the LEAP PILOT were collected while large assets are being installed but before major LEAP customers begin paying operating charges, the utility would need to borrow or draw from the civil rate district to cover the payment. Staff presented a scenario showing multi‑million-dollar pilot obligations over the near term and said waiving the LEAP PILOT protects current ratepayers from subsidizing construction that primarily benefits future LEAP users.
Details of the request: Staff described the pilot calculation (net utility plant minus depreciation, multiplied by the city tax rate) and presented 2024 net-asset figures and projected 2025 additions. They asked the council to adopt ordinance 2025-40 to waive PILOT payments for LEAP water and wastewater districts ‘‘while the bonds are outstanding’’ and to continue all other PILOT collections from civil water/wastewater and other utility divisions. Officials said bond terms could be 20–25 years but that additional revenues could pay down debt faster and the council could revisit the waiver at any time.
Council action and next steps: Council amended draft language to change the post‑bond phrase from a discretionary ‘‘shall evaluate’’ to a definitive ‘‘shall be collected’’ upon full repayment of bonds, a change councilors said would codify the resumption of PILOTs when the bonds are paid. The ordinance remains in first reading and is scheduled for a second reading and consideration on Dec. 8.
What was said: Jeff Jacob explained the mechanics and rationale for the waiver; Sandra showed financial worksheets and projected LEAP PILOTs that staff characterized as infeasible in the near term. Council members asked about bond length, alternatives to a full waiver and how quickly revenues could change the calculus. No final vote was taken on the ordinance; councilors asked staff to provide further feedback before second reading.
The council will revisit ordinance 2025-40 at its Dec. 8 meeting.
