MMA testifies in support of local-option PILOT bills

In late May, the MMA testified before the Joint Committee on Revenue in support of two bills that would allow municipalities to establish a payments-in-lieu-of-taxation program with local nonprofits.

The bills, which address one of the MMA’s legislative priorities this session, would allow a municipality, upon acceptance at local option, to implement a program through which nonprofits would make an annual PILOT payment to the municipality in which they are located. The payment would be equivalent to 25 percent of the amount that the organization would have been assessed on real and personal property if it were not exempt from taxation.

Upon local adoption, the municipality would craft an ordinance or bylaw to allow for PILOT agreements between the municipality and nonprofits. The local ordinance or bylaw could include exemptions or consideration of community benefits that reduce the amount of the PILOT paid to the municipality by the nonprofit.

In testimony submitted to the Revenue Committee, the MMA wrote: “This legislation offers an important mechanism to close a loophole created by the property tax exemption of nonprofits, in that those nonprofits with the highest-value property receive significant benefits from the municipality regardless of whether the organizations are providing the services that benefit the host community.

“Additionally, many cities and towns host nonprofits that provide services that do not primarily benefit residents of the host communities, but instead benefit residents of other communities, states or countries. All of the public service costs associated with the nonprofit, however, are borne by the host community alone.

“This legislation would allow for the consideration of the direct benefit that the nonprofit has within its host community, with a resulting PILOT that makes a direct community contribution and offsets the public service costs expended by the municipality.”

The bills, S. 1308 and H. 2642, were filed by Sen. William Brownsberger and Rep. Stephen Kulik, respectively.

Across Massachusetts, more than 23,000 nonprofits own $22 billion in tax-exempt property.