At its Sept. 4 meeting, the Rules Committee of the City Council continued its discussion about ways to obtain revenue from institutions in Evanston that are legally exempt from paying property taxes. About 45 percent of Evanston’s land is off the tax rolls: property owned by the City (including public parks, sidewalks, rights-of-way and City buildings), Northwestern University, St. Francis and Evanston hospitals, the two school districts, churches and other not-for-profit institutions. A subcommittee was formed to make recommendations.
The City is looking at two different avenues to obtain money from not-for-profits: a voluntary payment-in-lieu-of-taxes (PILOT) program and a fee for services.
City staff members Douglas Gaynor, director of operations; Gavin Morgan, assistant to the City Manager; and Melissa Burns, management analyst, prepared a memo citing successful PILOT programs in Cambridge and Boston in Mass. and in Providence, R.I. In these cases, major universities agreed to make substantial — but not equal to levied tax — payments in lieu of taxes. The memo also cited an unsuccessful attempt to do the same in Springfield, Mass. The proposal further recommended advocating for change at the state and federal levels regarding standards and qualification for receiving tax-exempt status. The memo cited a program in Hartford, Conn., as the model program for state reimbursement of revenue lost due to non-profit status.
Fee for Services
Other means of increasing City revenues were also considered. Fee for services provided by the City (ensuring security and safety for all residents) and a payment-in-lieu contingency on any special-use zoning requested by tax-exempt institutions were included in the discussion.
Alluding to the City’s $145 million pension-fund liability and possible shortfalls in next year’s budget, the aldermen appeared to agree in various degrees that payments from tax-exempt institutions would help the City of Evanston prepare a budget that does not require additional taxes.
Alderman Lionel Jean-Baptiste, 2nd Ward, said he sees budget deficits if some additional revenue is not realized.
Committee members suggested that data must be compiled and presented in a way that would encourage the tax-exempt institutions to participate in a payment program voluntarily.
They also advocated developing a fair methodology that includes City revenues lost, City costs for services provided and a plan to leverage these facts in negotiations for zoning changes where the mandatory fee might be imposed.
Alderman Delores Holmes, 5th Ward, emphasized the need to educate the community in order that community members will help provide leverage on tax-exempt institutions to pay the City voluntarily.
Alderman Edmund Moran, 6th Ward, said the City could “expect challenges,” but said he supported presenting a case (cost of services vs. property-tax revenues lost) and asking for payment.
Even though the PILOT program is voluntary, Alderman Steven Bernstein, 4th Ward, said he questioned the legality of imposing fees on tax-exempt entities.
Alderman Ann Rainey, 8th Ward, said the committee’s interest should be to help the taxpayers in each ward and the only way to do that would be to extract payments from tax-exempt institutions. She suggested that any kind of payment program would need to be de-politicized. She suggested that the tax-exempt institutions pay for services that the City provides.
Ald. Steven Bernstein said he favored putting a payment-in-lieu contingency on any special-use zoning requests from the City.
Mayor Lorraine Morton asked the Committee to “study the budget and make substantial recommendations” that do not require loss of jobs. She further stated that the tax-exempt institutions are an asset to the City and the City needs to bolster economic development.
A subcommittee composed of Ald. Rainey, Ald. Jean-Baptiste and Alderman Elizabeth Tisdahl, 7th Ward, was scheduled to meet on Sept. 10 for a “brainstorming session.” Ald. Holmes, who chairs the Rules Committee, said she might also attend the meetings. Finance Director Marty Lyons attended the Sept. 10 meeting, at which work was started to develop a program.