Massachusetts Lawmakers Examine PILOT Options

Massachusetts lawmakers are aiming to empower local officials with the authority to require nonprofits to make payments in lieu of taxes (PILOTs), the Eagle Tribune reports.

For years, cities and towns in Massachusetts have pleaded with local nonprofit organizations to make payments in lieu of taxes as a way to bolster their coffers, but those efforts have failed to gain traction. A proposal currently before the state's legislature would require nonprofits to send annual payments to cities and towns under a formula yet to be determined, while another provision would require nonprofit hospitals to pay taxes on at least 75 percent of the assessed value of their property. Government buildings and facilities, churches, and other houses of worship in the state would remain exempt.

Nonprofit officials argue that taxing nonprofits is shortsighted. "Nonprofits are a huge part of the Massachusetts economy, but they also provide a lot of social services and work with local governments on the biggest societal challenges," said Jim Klocke, CEO of the Massachusetts Nonprofit Network.

While some agencies pay fees to communities for the use of state-owned schools or facilities, communities have long complained that property value assessments on those facilities underestimate actual property values. Total fees received by cities and towns north of Boston, for example, range from 6 percent to nearly 20 percent of overall assessed value.

But even if more nonprofits agree to go along with local PILOT schemes, municipal governments in the state aren't likely to be happy with the amounts they receive. "There's a lot of people who think this is the pot of gold at the end of the rainbow," said Garrett Boles, tax assessor for North Andover. "But the bottom line is that if tax-exempt organizations don’t want to give local governments money, they simply don't have to — unless state law is changed."

"Nonprofits Feeling Tax Pressure." Eagle Tribune 03/07/2016.