As the Citizens League committee continued its work on June 15, representatives of tax exempt entities presented their concerns about any proposed payment in lieu of taxes (PILOT) program in St. Paul. Panelists for the meeting included a representative from a private higher education institution, a public higher education institution, a large nonprofit health care organization, and a nonprofit association.

The panelists reviewed their organizations’ missions and contributions to the city, some with specificity, some in more general terms. They demonstrated that they have in common a commitment to the health and wellbeing of the city and the neighborhoods in which they reside and serve. They noted that non-profits annually attest to their civic contributions as well as the validity of their status by filing the IRS Form 990. Other accountability measures include annual reports to donors and constituents.

The speakers covered a wide variety of issues. Following are only a few highlights:

  • The representative of a public higher education institution talked about how the institution has, since 1992, had a contentious but healthy relationship with the city, particularly regarding the shared responsibility for the community environment.
  • The private higher education institution panelist noted that his institution has been in St. Paul since 1885 and expects to be there as a top employer well into the future. As an employer, the school and administration pays other types of taxes (as do all non-profits). He acknowledged that institution logs a higher than average fire and police calls and is working on lessening that burden on the city.
  • The nonprofit health care organization panelist cited the community benefits, including uncompensated care, provided by the non-profit hospitals in the health system. She mentioned that the hospital system also supports the county and the city by providing detox services that law enforcement entities can’t provide.
  • The non-profit association representative said in return for their privileged property tax-exempt status, non-profits agree to alleviate some of the burden of governments providing desired services to citizens.

The committee asked the panelists to share their thoughts about a PILOT/SILOT program, if one is adopted in St. Paul. Each expressed a concern about the precedent such a program would set; if St. Paul takes this step, other cities will surely follow. Although the consensus on the panel was that it’s too soon to tell, they did offer some observations. Here are a few:

  • If multiple cities adopt such programs, non-profits serving in more than one location would have to cope with potentially inconsistent PILOT/SILOT requirements.
  • How voluntary would such programs be; would non-profits be “shamed” into participation?
  • The cost of complying with a PILOT/SILOT will exceed the payment/service commitment. Administrative costs could cut into the non-profit entity’s ability to provide services.
  • None of the speakers could say now how a PILOT/SILOT program could affect their fundraising efforts. They did acknowledge that donors don’t usually want to contribute toward operating expenses; they prefer to support the programs being offered.
  • The threat of mission-creep looms if non-profits are forced to provide new services just to comply with a PILOT/SILOT program.

For more information, including past meeting agendas and minutes, visit our project page: https://citizensleague.org/SaintPaulPILOT.