A discussion held during Monday’s town council meeting weighed opening up a discussion with Washington College about the possibility of a new financial relationship between the two entities: Payment In Lieu of Taxes (PILOT).
By definition a PILOT program seeks to “compensate a local government for some or all of the tax revenue that it losses because of the nature of the ownership or use of a particular piece of real property.”
Ward 2 Councilman Marty Stetson presented the idea, citing the College’s large property ownership and the inherent costs of supplying services to a non-proft: fire and police departments, road maintenance, for example. Since non-profit entities are exempt from real estate taxes, taxes that would otherwise be paid by private property owners go uncollected.
Ward 1 Councilwomn Liz Gross said that she had been doing research for precedents set for PILOT town/gown programs, and while they have certainly existed for a while with other non-profit colleges and universities (Yale, etc), each college/community relationship is unique and that she would look for more definitive information to set up a comparative analysis for how this mechanism could work.
Mayor Cerino said that he would like to see this discussion take place.
Dr. Richard Norton says
Very timely subject that was timely introduced and debated during a town meeting.
A larger issue is to understand the process any the path of money flow of non-profits for the acquisition of taxpaying town properties to avoid a fair tax bill that others pay, where the town losses revenue when converted to non-taxable ownership. Is that growth for the town when taxpaying businesses are denied tax breaks anywhere near what a non-profit gets. How much is the yearly tax saving for each non-taxable entity in town? Recent college purchases of taxable property need to be combined with purchases of downtown commercially taxable properties. [Alger oil yearly taxes].How much tax income is lost with new capital construction becomes tax free. What were the town taxes lost on the Property purchased by Sultana. Washington College should not be singled out and uniquely targeted.
How large a percentage of taxable property in Chestertown can be converted to non-taxable uses before the town has insufficient cash income to survive.
Administrative costs to the town increase yearly, regardless of non taxable percentage of property in town.
Can the town survive if an additional 5%; 10% or 20% of existing taxable income becomes non-taxable. What happens if 50% of town property becomes exempt. Can the college and other non-profit expansions be projected into calculations for the inevitable lose of property based income. I would like to see the $$$ numbers for the decrease in tax revenue due property being converted to nontaxable use. Compare the commercial property rate for losses. Conversion of taxable property on the Waterfront from a taxable property is a recurring yearly cost directly to the town via lost revenues upon completion of the proposed waterfront. [Town purchase of a taxpaying entity into a drain of monies. Get State money to alter the outcome and bring non taxable life back.
IS there a limit to non-taxable property conversions?
What is the actual $ loss of tax revenue for each and every conversion. Only that $ value can tell us if there is a problem or it is minuscule tax effect for the future. Should every conversion be approved. What are the laws of Maryland on conversion of taxable to non-taxable. We can live with Washington College as it exists. Do we subsidize its business plan. They may be non-taxable, but they are positive cash flow for themselves and their salaries.
IS loss of tax income coupled to increasing tax assessments for we who still pay taxes. Taxable property owners are subsidizing each and every non-taxable organization to offset losses in Chestertown income. For instance, what will the cost of additional parking to service these new facilities? Were zoning requirements for parking waived during any conversions to non-taxable property?
Please evaluate the true cost of town supplied capital expenditures that serve these heavily oriented people oriented properties. Create a budget and publish a line item. Identify all town incurred costs for any expenditures related to any benefits received by non-profit entities. What is the monthly town cash flow cost for all activities related to support of non-profit entities. Include administrative costs for permit processing.
Is this a significant financial financial issue for the town? The town should generate verifiable cost $$$$ reports before any council actions are taken.
i would like the town council to look at the particularly high financial burden for partially used commercial property.