Will a Softer Touch on PILOTs Work?

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January 2, 2011; Source: Scranton Times-Tribune | Scranton has been one of several Pennsylvania cities involved in a scrum with nonprofits around payments in lieu of taxes (PILOTs), which we have covered extensively in the NPQ Newswire, frequently contentiously. (See here, here, and here among others.) The school board in Scranton, though, wants to take a different approach.

The concept of the nonprofit tax exemption is that by definition nonprofits are exempted, notably, from municipal property taxes. Payments that cities have exacted from nonprofits, such as PILOTs, are supposedly voluntary, though in many cases their voluntary nature feels mandatory to the paying nonprofit property owners.

Although the Scranton City Council has spurred some tough dynamics with the University of Scranton, for example, the Scranton School Board plans to approach nonprofits with a softer touch. According to Board President Bob Lesh, the schools will take a "personal approach" with nonprofit organizations (universities, churches, hospitals) asking them to make voluntary contributions to help the public schools.

The Superintendent of the school district, William King, plans to invite nonprofits to a lunch to discuss the challenges facing the schools, looking for more than in-kind services and volunteers that the big nonprofits have offered in the past. Will the school district's honey work better than the city's vinegar? We'll keep an eye on this and report back.—Rick Cohen