Mayor and Council to Ask Citizens League to Convene Study of Payment in Lieu of Tax for Saint Paul

Blue Ribbon Committee will explore payment or services in lieu of tax (PILOT/SILOT) program to support key City services 

SAINT PAUL– Mayor Chris Coleman and the City Council today (April 12, 2017) announced that they will ask the Citizens League to convene a Blue Ribbon Committee to explore the opportunities surrounding a payment in lieu of taxes (PILOT) program for the City of Saint Paul. Approximately one third of Saint Paul properties are currently exempt from property taxes, by virtue of the fact that they are owned by colleges, hospitals, government entities or other large nonprofit organizations. A PILOT program would allow them to voluntarily contribute toward the cost of services – police, fire, street maintenance, parks and libraries – that average business or homeowner pays for via property taxes.

“This is a good time to ask the question about whether we could be a stronger city if the major nonprofit property owners and other stakeholders contributed financially to our ability to provide services that benefit everyone,” said Mayor Coleman. “Saint Paul’s colleges, hospitals and major nonprofits are part of the city’s DNA. They contribute in countless ways to our quality of life, bringing residents, businesses and visitors to our community. They recognize, however, that they in turn benefit from basic City services – services for which they do not pay for in property taxes. Since 1952, the Citizens League has been bringing people together around important policy and fiscal questions, and I am grateful that they are willing to help us have this conversation with our local nonprofits and explore pragmatic solutions.”

The Citizens League is a nonprofit, multi-partisan, citizen-based public policy organization whose mission it is to create common ground across parties and ideologies to address critical issues throughout Minnesota. They will be independently overseeing the Blue Ribbon Committee’s work as they engage leaders of tax-exempt organizations in a conversation about contributing to the cost of City services. A preliminary set of recommendations for a potential Saint Paul PILOT framework is anticipated in August. 

“Cities around the country have designed ways in which their nonprofit partners voluntarily contribute toward the cost of essential services,” said Council President Russ Stark. “I am confident that together we can shape a mechanism that is unique to Saint Paul – one that makes us an even more vibrant city.”

Other cities have implemented payment in lieu of tax programs. In Boston, major schools, hospitals and cultural institutions make a voluntary contribution to offset the cost of city services like police, fire protection and snow removal. In FY2016, the City of Boston received $32.1 million in voluntary contributions, which are based on an institution’s tax-exempt property value.

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