Prove community value to avoid a PILOT

A growing number of city leaders have asked for and in some cases obtained new payments in lieu of taxes (PILOTs) from the colleges, universities, museums, and other large educational and cultural institutions based in their cities. With political pressure to seek income, if not strictly “taxes,” from tax-exempt nonprofit organizations, financial burdens on those organizations have yet another source.

To the question of why colleges, churches and charities have tax exemption in the first place, the solid answer is that they provide a public good, often more effectively and less expensively than is done by a taxpayer-funded entity.

We believe that acceding to requests for PILOTs is a bad idea. Higher education institutions should prove their community worth in various ways:
  • Establish and maintain excellent relationships within the cities and towns where your institution resides, reinforcing the belief within the municipality that the institution is an important citizen contributing to and supporting community well-being. Presidents should have good relationships with mayors, and senior officers should actively participate in Rotary Clubs, the chamber of commerce and other community groups.
  • Document the financial contribution your institution makes to the community.Economic impact statements, updated regularly and publicized thoroughly, remind the community of the economic benefit of the institution’s purchases, payroll and other contributions.
  • Remind city officials of the noneconomic value your institution brings. If your institution was somewhere else and thinking of moving into the city, wouldn’t the city make every effort to attract your college/university in exchange for the prestige and cultural enrichment your institution represents?
  • Be a good neighbor. Make certain that off-campus student housing is safe, unobtrusive and nonexploitative. Hold students accountable for bad behavior off campus. Offer services, such as access to day care centers, at reduced cost. Where feasible, provide access to courses at no cost or lower cost.

It is incumbent upon higher education leaders to keep their community apprised of the multiple benefits enjoyed because of the presence of the institution. By proving value, they may well stave off the imposition of a PILOT.

Back to The state of higher education in 2015