One solution to the chronic income short fall in Brattleboro is a program that has been implemented around the US with considerable success that has benefited cash strapped communities a Payment in Lieu of Taxes or PILOT for businesses that are listed as not-for profit and yet generate revenue. While it would not be a legally binding, it is an agreement between the town and income generating business like the Brattleboro Hospital, Windham Land Trust, colleges, and not for profits that generate say more than $100,000 in revenues per annum to pay fixed percentage of revenues like the Brattleboro Housing Authority that pays 10% of their revenues as a PILOT. Why should multimillion dollar businesses like Windham Land Trust, the hospital, the Retreat not contribute equitably to the tax rolls in Brattleboro? Equally important the town of Brattleboro must also address the chronic ineffective town management and reevaluate its relationship to income generating not-for-profit businesses.
Though many not-for-profits may be worthwhile and provide music, housing, culture, arts, or houses of worship, these institutions do not contribute equitably to the tax rols. In some cases, to the extreme, the Retreat utilizes the police as their free defacto in-house security. This lack of in-kind payment for services and in particular with income generating not-for-profit business has become a grave
problem with the declining grand list. In a conversation with Brattleboro’s tax office staff, they suggested that upwards of 50% of downtown properties are listed as being not-for profit. For example, Windham Land
Trust (WLT) is an organization that has over five hundred housing units in Brattleboro and doesn’t pay a comparable contribution as would a for-profit business. WLT and their housing program are in part subsidized by the homeowners of Brattleboro. Brattleboro has the highest concentration of low income and subsidized housing in the region, and yet it doesn’t have the tax base to support it. Everyone deserves decent housing; the question is: Who will pay for it? For example, why should an elderly couple who are life-long residents of Brattleboro, and surviving on a fixed income, support those not-for-profits; especially not-for-profits that generate significant revenue? The PILOT Program may help to address these inequities.
In its February 2010 edition, the Journal Gazette reported the following:
Cambridge, Mass., started a PILOT program in 1973,
collecting $1 million that year alone from local non-profits, including the
richly endowed Harvard University. The university and town signed a
50-year agreement in 2005 that will require Harvard to eventually pay the city
nearly $10 million a year. ‘This is not a gift from Harvard,’ said
Cambridge vice Mayor Marjorie C. Decker at the time of the agreement.
‘Harvard students and employees benefit from the services the city
provides.’ Officials in Belmont, Mass., last year sent letters to 37
nonprofit organizations, asking for 4 cents for each square foot of land, which
amounts to about 20 percent of what a non-exempt property owner would pay in
taxes. The Lions Club of Belmont agreed to pay $500 instead of the
suggested $174.
Businesses like Brattleboro Hospital, Marlboro College, Windham Land Trust, the Co-op, Brattleboro Housing, The Retreat, World Learning, the Montessori School, the Jazz Festival, The Yellow Barn, and the dozens of others not-for-profits generate significant revenue, own property, have a client base from other than Brattleboro, and why shouldn’t they contribute a PILOT fee? Why should a taxpayer help to underwrite municipal services to a private school like Montessori, where the majority of students are from outside the town and, in some cases, outside the state? At some private colleges, like Marlboro College and World Learning, the tuition is over $40,000 per annum. Why can’t the town receive PILOT from that revenue? When the Holstein Association originally built their office (Marlboro Graduate Center), they received financial support from the town and the state, but when it was sold, the town didn’t receive a portion of that revenue. This kind of generosity on the part of the town, while noble (or foolish, depending on your perspective), undermines the tax base and the long term viability of the community.
It seems everyone has a sacred not-for-profit, and every organization can make an argument as to why they cannot be assessed a PILOT. Those arguments need to be weighed and considered carefully. For example, the Morningside largely depends on donations, and does not generate income, shouldn’t be assessed at the same rate as, for instance, the Brattleboro Hospital (BMH), has significant revenue streams but pays little direction contribution to the town. Yet, BMH, like many other businesses, legally shelters their income under the aegis of not-for-profit, or similar, tax designations. Even worse, the Hospital continues to buy up medical practices in town, and those buildings, once part of the tax roll are now under the Brattleboro Hospital. The Retreat, the hospital, Montessori, the Co-op, Brattleboro Housing, etc., and other profit-generating businesses should, as good corporate citizens, pay an equitable PILOT fee. This applies, in particular, to businesses like WLT. WLT’s study on their contribution to the tax roll was conducted with their own in-house consultant, but that report was flawed and erroneous, and Brattleboro never undertook its own independent study. Why shouldn’t the town collect a voluntary PILOT fee that truly reflects their revenue? In addition to the PILOT fee, Brattleboro desperately needs to resolve its chronic mismanagement. This mismanagement is vividly seen in the past and present mismanagement and loss of hundreds of thousands of
dollars with the River Garden. A glass house built in New England is a metaphor of the town’s finances. Whether it is with the golden handshakes given to past town managers, or the egregiously obscene financial settlements with the police of chief and related lawsuits, if Brattleboro were a private Brattleboro it would have been bankrupt a long time ago. The PILOT program can address some of the revenue issues, but it must be accompanied by a rare commodity – professional and responsible town management.
The PILOT program, along with dramatic improvement of town management, can provide the means to address the shrinking tax revenue and support the economy that generates jobs and attracts businesses. A PILOT is the only way to fairly distribute the tax burden at the local level
