Exempt Island Non-Profits Don't Pay Property Taxes. But Should They Pay A Fee To The Town Anyway?

Some Select Board members want to explore whether the town should receive payments in lieu of taxes, also known as PILOTs, from island non-profits to raise revenue from the large swaths of land on Nantucket owned by conservation organizations and other non-profits exempt from traditional property taxes.

Many non-profits are exempt from property taxes because of the benefits they provide to local communities.  Often, those benefits relate to the use of the land itself, as is the case with conservation organizations. Other entities such as affordable housing groups, the hospital, and other non-profits are also not taxed on the land they own.

However, these non-profits still use town resources, such as water and town roads, but don’t contribute to their upkeep. With over half of Nantucket in conservation and a significant amount of the remaining land owned by other exempt non-profits, the lost tax revenue adds up fast.

That was a topic of discussion on Wednesday as the Select Board added the PILOT debate to its weekly agenda.

“They are providing a great public benefit,” Select Board member Jill Vieth said. “But they still rely on our town services. A lot of these non-profits, they have bought employee housing, they have people that live in employee housing, they have children that go to the school, and that costs money.”

The town estimates that roughly 60 percent of Nantucket’s land is tax-exempt: a total of 2,442 parcels worth nearly $5.9 billion.

However, PILOTs are voluntary, and the town can’t compel any non-profits to pay them. So far, unsurprisingly, no non-profits have expressed any interest in voluntary PILOTs.

“Nobody has come to me and asked to enter into a PILOT,” tax assessor Rob Ranney said.

Nantucket currently has one PILOT, covering the Nantucket Housing Authority’s Miacomet Village housing development. Ranney said they have attempted to get out of that arrangement in the past, but have been unable to do so.

“For the first non-profit that does [offer to enter into a PILOT], boy, I think they really have an opportunity to make a name for themselves,” Select Board member Jill Vieth said.

Any PILOTs the town did agree to with non-profits would be expected to be highly individualized and tailored to the specific organizations paying them.