Thursday, August 27, 2015

Are PILOTs making a comeback?

Are PILOTs making a comeback?

Are PILOTs making a comeback?

Nicholas Cafardi, a charity-law expert at Duquesne University’s Law School. Photo courtesy of
Nicholas Cafardi, a charity-law expert at Duquesne University’s Law School. Photo courtesy of

Are PILOTs making a comeback?

Nicholas Cafardi, a charity-law expert at Duquesne University’s Law School, sure thinks so. He says that thanks to a new state Supreme Court ruling, "PILOTs are back."

PILOTs, for any non-wonks who are reading, are voluntary "payments in lieu of taxes" made by nonprofits to cities like Philadelphia. Long, long ago, in the nineties, local nonprofits contributed millions in PILOTs to the city. They likely did this to prevent the city from challenging their tax-exempt status.

But then a 1997 state law largely took away the city's hammer in these negotiations, and PILOTs dried up. Just a couple months ago, we wrote about how PILOTs have dwindled. Now, legal experts say that last week's court ruling changes all that. Check out our Daily News story on the ruling:

Watch out, Penn.

Armed with a new state Supreme Court ruling, the city is planning to review the tax-exempt status of nonprofits, in hopes of persuading them to voluntarily cough up some dough.

Several institutions, like the University of Pennsylvania, Thomas Jefferson University and Drexel University, pay little or nothing in property taxes because they’re nonprofits.

But before the state passed Act 55 in 1997, many nonprofits paid the city “payments in lieu of taxes,” or PILOTs. Christine Bak, an attorney in the city’s Law Department, says Act 55 stripped away the city’s power in negotiating PILOTs. The law spelled out what nonprofits must do to qualify as a charity, effectively making it easier to be qualified as tax-exempt. Since the city could no longer threaten to sue to take away their tax-exempt status, it couldn’t twist their arm into paying the voluntary PILOTs, either. 

Continue reading the article.

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