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Last updated: 7/4/16

Payment in lieu of tax (PILOT) program

Many of Boston’s major schools, hospitals, and cultural institutions make a voluntary contribution to the City each year in the form of cash and community programs that uniquely benefit the City’s residents.

The property tax revenue collected by the City of Boston each year helps to fund important services such as police and fire protection, as well as snow removal. These City services are made available to both taxable property owners and those property owners who are exempt from the property tax. PILOT contributions help to offset the burden placed on Boston taxpayers to fund City services for all property owners.

In January 2011, the City adopted new guidelines for the PILOT program as recommended by the PILOT Task Force. The new guidelines call for voluntary payments based on an institution's tax-exempt property value. Participants in the program include institutions from the educational, medical, and cultural sectors that own property valued in excess of $15 million.

Each institution is eligible for a community benefits deduction generally limited to 50 percent of the PILOT contribution. The new guidelines also allow a deduction for any real estate taxes paid on property owned by the institution that is used for a tax-exempt purpose.

Fiscal year 2012 was the first year under the new PILOT guidelines.

FISCAL YEAR 2016 PILOT RESULTS

The City received $32.1 million in PILOT cash contributions in fiscal year 2016, $4.2 million (14.9%) more than the City received from PILOT contributors last year and $16.9 million (111.8%) more than in the year prior to the implementation of the new PILOT guidelines (fiscal year 2011). The fiscal year 2016 PILOT cash contributions represented 67.7% of the $47.4 million requested PILOT amount.

FY 2016 PILOT RECAP

In all, 49 private institutions from the educational, medical, and cultural sectors were identified as owning tax-exempt property valued in excess of the $15 million threshold established in the PILOT guidelines. In October 2015 and April 2016, these 49 institutions received a first and second half notice, respectively, by mail that included the calculation of their PILOT amount.

In sum, the institutions were asked to contribute approximately $47.4 million in cash and $50.2 million in community programming to the unique benefit of Boston residents for fiscal year 2016. Proof of community benefits spending consistent with the guidelines was due on March 1, 2016.

PILOT Contributions

PILOT Contributions

A summary of the fiscal year 2015 PILOT contributions - the fourth year of payments calculated according to the City's PILOT guidelines - is listed by institution:

FY 2015 PILOT Recap

The City received $27.9 million in PILOT contributions in fiscal year 2015, a 84.4 percent increase over what was previously paid under the prior PILOT program in fiscal year 2011. This amount represents 68.6 percent of the $40.7 million requested PILOT amount.

In all, 49 private institutions from the educational, medical, and cultural sectors were identified as owning tax-exempt property valued in excess of the $15 million threshold established in the PILOT guidelines. In October 2014 and April 2015, these 49 institutions received a first and second half notice, respectively, by mail that included the calculation of their PILOT amount.

In sum, the institutions were asked to contribute approximately $40.7 million in cash and $43.2 million in community programming to the unique benefit of Boston residents for fiscal year 2015. Proof of community benefits spending consistent with the guidelines was due on March 1, 2015.

By comparison, in fiscal year 2014 the City received $26.0 million in PILOT cash contributions and $35.5 million in community benefits.

A summary of the fiscal year 2014 PILOT contributions - the third year of payments calculated according to the City's PILOT guidelines - is listed by institution:

FY 2014 PILOT Recap

The City received $26 million in PILOT contributions in fiscal year 2014, a 71.6 percent increase over what was previously paid under the prior PILOT program in fiscal year 2011. This amount represents 75 percent of the $34.6 million requested PILOT amount.

In all, 49 private institutions from the educational, medical, and cultural sectors were identified as owning tax-exempt property valued in excess of the $15 million threshold established in the PILOT guidelines. In October 2013 and April 2014, these 49 institutions received a first and second half notice, respectively, by mail that included the calculation of their PILOT amount.

In sum, the institutions were asked to contribute approximately $34.6 million in cash and $35.5 million in community benefits that uniquely benefit Boston residents for fiscal year 2014. Proof of community benefits spending consistent with the guidelines established by the Task Force was due on March 1, 2014.

By comparison, in fiscal year 2013 the City received $23.2 million in PILOT cash contributions and $28.9 million in community benefits.

A summary of the fiscal year 2013 PILOT contributions - the second year of payments calculated according to the Mayor's PILOT guidelines is listed by institution:

FY 2013 PILOT Recap

The City received $23.2 million in PILOT contributions in fiscal year 2013, a 53.1 percent increase over what was previously paid under the prior PILOT program in fiscal year 2011. This amount represents 82.3 percent of the $28.2 million requested PILOT amount.

In all, 49 private institutions from the educational, medical, and cultural sectors were identified as owning tax-exempt property valued in excess of the $15 million threshold established in the PILOT guidelines. In September 2012 and April 2013, these 49 institutions received a first and second half notice, respectively, by mail that included the calculation of their PILOT amount.

In sum, the institutions were asked to contribute approximately $28.2 million in cash and $28.9 million in community benefits that uniquely benefit Boston residents for fiscal year 2013. Proof of community benefits spending consistent with the guidelines established by the Task Force was due on March 1, 2013.

By comparison, in fiscal year 2012 the City received $19.5 million in PILOT cash contributions and $21.9 million in community benefits.

The following institutions submitted proof of qualifying community benefits:

The fiscal year 2012 PILOT contributions - the first year of payments calculated according to the Mayor's new PILOT guidelines - are completed.

FY 2012 PILOT Recap

The City received $19.5 million in PILOT contributions in fiscal year 2012, a 28.4 percent increase over what would have been paid under the prior PILOT program. This amount represents 90.7 percent of the $21.5 million requested amount.

In all, 45 private institutions from the educational, medical, and cultural sectors were identified as owning tax-exempt property valued in excess of the $15 million threshold established in the PILOT guidelines. In September 2011 and April 2012, these 45 institutions received a first and second half notice, respectively, by mail that included the calculation of their PILOT amount.

In sum, the institutions were asked to contribute approximately $21.5 million in cash and $21.9 million in community benefits that uniquely benefit Boston residents for fiscal year 2012. Proof of community benefits spending consistent with the guidelines established by the Task Force was due on March 1, 2012.

By comparison, in fiscal year 2011, these institutions paid PILOTs under the prior program of $15.1 million in cash and $2.3 million in community benefits.

The following institutions submitted proof of qualifying community benefits:

The following institutions contributed a PILOT at the requested amount and submitted proof of qualifying community benefits:

About the PILOT Task Force

In January 2009, the City of Boston created a Task Force to examine the relationship between the City and tax-exempt institutions, specifically the major educational and medical institutions in Boston.

At that time, most of these tax-exempt, land-owning institutions were making a voluntary PILOT contribution to the City to help cover the cost of providing the institutions with essential City services (i.e. police, fire, snow removal).

However, the PILOT contributions varied considerably between the institutions. The Task Force was responsible for reviewing the PILOT Program, as well as the institutions' community benefits, and ultimately made recommendations to strengthen the partnership between Boston and its tax-exempt institutions.

OBJECTIVES

The PILOT Task Force's primary objectives were:

  • Set a standard level of contributions - in programs and payments - to be met by all major tax-exempt land owners in Boston.
  • Develop a methodology for valuing community partnerships made by tax-exempt institutions.
  • Propose a structure for a consolidation program and payment negotiation system, which will allow the City and its tax-exempt institutions to structure longer term, sustainable partnerships focused on improving services for Boston's residents.
  • Clarify the costs associated with providing City services to tax-exempt institutions.
  • Provide recommendations on legislative changes needed at the City or state level, if necessary.
PILOT GUIDELINES

The City adopted the following PILOT Program guidelines as recommended by the Task Force and in effect beginning in Fiscal Year 2012:

  • Participation in the PILOT Program is voluntary
  • All institutions that own tax-exempt property valued in excess of $15 million should be asked to participate
  • PILOT contributions should be 25% of what the institution might expect to pay in real estate taxes if the exempt property were taxable
  • Institutions should receive up to a 50% PILOT deduction for qualifying community programs that uniquely benefit Boston residents. In the case of exceptional opportunities for partnership, the 50% cap may be exceeded.
  • The new PILOT formula should be phased in over a 5-year period starting in Fiscal Year 2012
  • If an institution pays standard real estate taxes on a property that it uses for its charitable purpose, the institution may receive a PILOT credit

Who's Involved: