City Council Supports Standardizing PILOT Payments Across Mass.

Payments in Lieu of Taxes (PILOTs) are payments made by property tax-exempt institutions, including hospitals, universities, and cultural institutions, to replace the loss of tax revenue resulting from property exempted from taxation.

In January 2009, the City of Boston created a task force to examine the relationship between the City and tax-exempt institutions, and in April 2021, the task force released a report with guidelines suggesting more standardization of PILOT agreements, specifically, that each agreement should represent, in cash or in-kind, 25% of the amount of taxation that would be due if properties were not tax exempt.

During this week’s Council meeting, the Council adopted a resolution in support of H.3080/S.1874, an Act relative to payments in lieu of taxation by organizations exempt from the property tax. This bill is modeled after Boston’s PILOT program and would create a local option for municipalities in the Commonwealth to require tax-exempt organizations with property valued over $15 million to contribute the equivalent of 25% of what the property tax would be were they not exempt, while allowing provisions for in-kind community benefit contributions in lieu of full payments.

The proposed bill would standardize PILOT payments across the Commonwealth to be equitable and consistent, while aiding in restoring public trust in the host communities of large institutions.