The Portland City Council on Monday will consider a new policy that’s meant to nudge larger non-profits with tax exempt property into providing payments to the city.
The program, which city councilors and staff have spent more than a year developing, is intended to provide more relief to taxpayers in Portland.
The “payment in lieu of taxes,” or PILOT, policy is modeled after one that’s been on the books in Boston for more than a decade.
Under PILOT, tax-exempt organizations that own property in Portland would be asked to pay a portion of their taxes to the city.
Payments would start in 2027 and gradually increase over the next three years until non-profits are contributing roughly 40% of their property’s assessed tax value.
Organizations could also receive credits for participating in certain local health or school initiatives, as just one example, which would reduce their payments to the city.
Participation would be voluntary. It would not apply to non-profits with less than $10 million of tax-exempt property value.
City officials say the amount of tax-exempt property in Portland grew to nearly $4 billion last year, as residents face increasing tax burdens to cover the costs of core city services.
“If this nearly $4 billion of property were taxable, it is estimated that the city’s property tax rate would be almost 20% lower due to spreading the property tax burden across a larger base,” city officials wrote in a proposed draft policy memo. “The rise in exempt valuation has put increasing pressure on the remaining property owners in Portland… to fully fund the broad spectrum of critical services offered to all residents and visitors to Portland.”
While city officials acknowledge there’s no guarantee of increased tax revenue, the policy is meant to “open the door to conversations” with non-profits about starting a PILOT partnership with Portland.
In a message to its members on Friday, the Portland Regional Chamber of Commerce said the proposed PILOT policy will put political pressure on tax-exempt non-profits to contribute.
