Payments in Lieu of Taxes: Balancing Municipal and Nonprofit Interests

Payments in Lieu of Taxes (PILOTs) encourage property tax-exempt institutions like nonprofits to make voluntary payments to support their municipalities. This report outlines effective strategies for PILOT programs and highlights successful local case studies. Best practices include emphasizing the importance of PILOT payments for public services, leveraging fees or taxes to encourage payments, and implementing adjusting payments to account for the community benefits an institution provides. It also recommends setting contribution targets, implementing property value thresholds to exempt smaller nonprofits without adequate financial resources, and establishing multi-year payment agreements.