Thursday, July 5, 2012

Memphis Considers New PILOT Program

The Memphis, Tenn. City Council voted 9-1 to approve a committee that would determine whether the city needs to form a new system to get nonprofits to make payments in lieu of taxes (PILOTs).

The Commercial Appeal first reported on the council's decision to take up the vote. The newly approved committee will focus its efforts on nonprofits that earn $15 million or more annually. They will then decide whether the city needs to adopt a new system to replace its current one.

As it stands now, the city's PILOT program is more of an incentive tool to get businesses to move to Memphis and Shelby County. Organizations that get a PILOT then pay taxes on what the land is worth at pre-development levels. If they choose to exit the program, they would then pay full taxes on the property.

Robert Lipscomb, director of Memphis's Division of Housing and Community Development, estimates that 30 percent of the properties in the city are tax-exempt.

Council member Janis Fullilove, who sponsored the resolution, said that she wanted to determine whether nonprofits should be made to enter the current program, or whether a new system should be developed like the one in Boston. In April, the Massachusetts city began demanding that nonprofits pay up to 25 percent of what they would owe if their property was not tax-exempt.

Boston isn't the only city to make nonprofits enter PILOT programs. The NonProfit Times reported that, in 2010, 63 percent of organizations paid some form of fees and taxes to local and state governments. And, over the last decade, PILOTs have been used in at least 117 cities in at least 18 states, according to a study from the Lincoln Institute of Land Policy in Cambridge, Mass.

You can read the full story in The Commercial Appeal.

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