Organizations Should Pay In Lieu of Taxes

Tony Mealy

To the Editors: Oberlin Schools and the city of Oberlin, like many other communities throughout Ohio, are experiencing budget shortfalls due to bad economic times. Payments in Lieu of Taxes is negotiated payments made by tax-exempt nonprofit organizations to the local government to help pay for local education and city services.

Are we faced with the erosion of our local tax base when Oberlin College and Kendal purchase additional property? The rationale jurisdictions cite when soliciting contributions includes the loss of revenue from tax-exempt property, the cost of local services to the organization, budget shortfalls and a civic duty to be a “good neighbor” to the community. It is not fair to Oberlin residents to pay higher property taxes so that these organizations can pay no taxes whatsoever, especially when they receive costly services.

Similarly, if the local jurisdiction is forced to cut vital services because of a fiscal crisis, relatively wealthy nonprofit organizations may be willing to contribute to a PILOT in order to burnish their image in the community. Reluctant organizations may bear reminding that in times of economic hardship, a community’s needy population needs services, not reminders of the positive benefits the nonprofit has made in the past.

Some organizations recognize the value of services they receive from the local government and are willing to pay their fair share. Known educational PILOTs are Harvard’s payment to Cambridge and Boston, and Yale’s payment to New Haven. Other cities that collect PILOT payments are Detroit, Pittsburg, Philadelphia, Baltimore, Minneapolis, Indianapolis and Palo Alto. Under the Ohio Revised Code, we cannot collect a Transient (Bed) Tax on these institutions, but we should negotiate a PILOT based on a similar formula of 3 percent of the annual charge of room and board. Oberlin College has close to 3,000 students and Kendal has over 300 residents who all vote on local taxes in a community of fewer than 8,300 people.

If I were on the Board of Trustees of these organizations, I would want to ensure that the city of Oberlin continued to maintain our excellent police and fire protection, our park and recreation programs, our utility services such electric, water, sewer and rubbish collection along with the maintenance of our streets — and the list goes on. City Council needs to show leadership in this matter and direct the administration to start negotiations to alleviate more burdens on the local tax payers.

Sincerely, Tony Mealy,
Former City Council Member