Clare Kelly

Ald. Clare Kelly (1st) says she wants the city to create a task force to persuade Evanston’s major nonprofits to make payments in lieu of taxes to the city.

Speaking at the Finance and Budget Committee meeting Tuesday night, she said she’d like to develop a program similar to the one in Boston that seeks to have big nonprofits — schools, hospitals and cultural institutions — pay 25% of what they would be paying in property taxes if their property were on the tax rolls.

The Boston program, which has been in place for more than a decade, allows nonprofits to meet half of their PILOT goal through “community benefit credits” for programs they operate that benefit residents and asks them to pay the rest in cash.

A report on Boston’s PILOT program summarizes its 2021 results as follows:

CategoryInstitutions
Included
PILOT
Value Basis
Requested
PILOT
Community
Benefit Credits
Cash
Contribution
Remaining
PILOT Request
% of PILOT
Request Met
Educational21$7.7B$64.7M$29.1M$14.6M$21.1M67%
Medical16$6.0B$51.1M$24.5M$20.0M$6.5M87%
Cultural10$6.4M$4.3M$1.7M$459K$2.1M51%
Total47$14.4B$120.2M$55.4M$35.1M$29.8M75%

That $35.1 million in cash equals more than 60% of Evanston’s 2022 $55 million city property tax levy.

But Boston, with 675,647 residents, has more than eight times as many people as Evanston. And the value of the taxable property in Boston, $190 billion, is nearly 20 times the $10.4 billion value of taxable property in Evanston.

In 2017 Evanston’s then chief financial officer, Marty Lyons, prepared a memo estimating that if Northwestern University’s property could be added to the tax roles, it might yield as much as $5.9 million a year in additional property tax revenue and that if all other tax-exempt properties in the city could also be taxed, that might bring in an additional $4.4 million.

Using the 25% of tax rate “request” and 50% of that in “community benefit credits” used in the Boston formula, that would suggest a total hypothetical cash PILOT payment of $1.29 million a year in Evanston — an amount not far off from what Northwestern University alone has contributed to the city in recent years under its “Good Neighbor” program.

Ald. Devon Reid (8th) said that in Boston the schools are part of city government — so that a PILOT program here should include payments to Evanston’s two school districts.

Roughly two thirds of the property taxes paid by Evanston residents go to the school districts and about 20% is split between the city and the Evanston Public Library.

If the funding split with the other taxing bodies became part of the formula, then the city might realize just over $250,000 a year in new revenue from a PILOT — which would reduce the city property tax levy by less than a half a percentage point.

Kelly said she hopes the City Council will soon take up the question of forming a PILOT Task Force. Two other aldermen on the Finance and Budget Committee — Reid and Ald. Bobby Burns (5th) — said they agree that such a task force should be created.

Kelly suggests having as many as 21 people on the task force, ranging from council members and city staff to representatives of the tax exempt organizations and “grassroots” citizen groups.

Bill Smith is the editor and publisher of Evanston Now.

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2 Comments

  1. I think Alderman Kelly is looking at the tax loop hole issue from the right perspective. We need a steady flow of revenues that hold these non taxed entities accountable. Good neighbor program is optional, and that is the problem. Let’s use the brains of Boston’s city government, and learn something. Steady cash flow and accountability.

    1. Hi Blair — What you’re missing is that the PILOT program in Boston is also “optional.” Given the large number of NFPs Boston has to tap and that it attempts to apply a standardized formula to all of them, it probably does have some advantages in being able to shame “slackers” that Evanston would lack.

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