Hartford Business Journal

16 Hartford Business Journal • July 8, 2019 • www.HartfordBusiness.com SPECIAL REPORT: CITIES PROJECT Solution: Fully fund the state's PILOT program By Matt Pilon M unicipal leaders in Con- necticut are intimately familiar with the state's own PILOT program, which reimburses cities and towns, at least partially, for state-owned and other tax-exempt properties. The program, which is part of the overall state aid cities and towns receive, has become the subject of much griping over the years as state lawmakers have significantly under- funded it. By law, the state is supposed to reimburse municipalities 45 per- cent of lost tax revenues from state- owned property and 77 percent of lost revenues from properties owned by colleges and hospitals. However, local officials have learned that the state's PILOT program is also voluntary, in a sense, with lawmakers able to override it when finances are tight. In Hartford, where 59 percent of as- sessed real estate is tax exempt due to government or nonprofit ownership, the impact of that shortchanging has been outsized. In fiscal 2018, the city received $30 million in state PILOT payments, about $60 million short of what it was supposed to get. While the state doesn't publicize, or in some years even appear to track what's technically owed vs. what it pays, Hartford's assessor, John Philip, has kept records. From 2011 to 2018, Hartford was shorted by more than $376 million in state PILOT payments, according to his math. When viewed in context of Hartford's recent debt bailout, the state is now effectively reimbursing Hartford on the back end for years of PILOT program underfunding. What if the state had just paid Hart- ford the full PILOT amounts over the years? Would the city still have been driven to the brink of bankruptcy? Democratic House Majority Leader Matt Ritter, who was previously Hart- ford city councilor for three years, said it's tough to know. "Maybe the city would have been fine with all that PILOT," Ritter said. "I don't know what they would have done with that money." Hartford isn't alone, he added. The state has underreimbused municipalities across the board. And Hartford isn't the only city with significant untax- able property. The exempt portion of New Haven's grand list is very similar, largely thanks to Yale-owned properties. However, according to Mark Fitch, an investigative reporter for the free- market think tank Yankee Institute, Yale is also a key economic driver and difference maker between the two cities, which have a similar geographic foot- print, though New Haven's grand list is more valuable, it has a higher homeown- ership rate and the region it anchors is doing better retaining population. "New Haven's got plenty of problems, but because they have that major asset there, they're kind of able to squeak by," Fitch said. "Of course [Yale] is going to be a major asset for the city." State Rep. Jason Rojas, an East Hartford Democrat who co-chairs the powerful Finance, Revenue and Bond- ing Committee, noted the state-level PILOT program is a rarity in the U.S. For example, Massachusetts doesn't have a similar program. "No, [the state] hasn't always fulfilled its [PILOT] obligation, but it's certainly doing more than many others are do- ing," Rojas said. former Mayor Tom Menino, according to Pam Kocher, president of the Bos- ton Municipal Research Bureau. The program targets nearly 50 of the largest not-for-profit institutions in Boston, including Harvard and MIT. The city determines what each institu- tion would pay in property taxes if they were on the tax rolls, and re- quests a payment of 25 percent of that amount. Half of that 25 percent can be comprised of community benefits. Not all of the targeted institutions pay the fully requested amount from year to year, but the program still means real money ($34 million in fiscal 2018) for Boston. "It's definitely bringing significant rev- enue into the city's general fund," Kocher said. "There are some that will dig in their heels, or choose to not participate." A group of community activists known as the PILOT Action Group (PAG) has pushed the city in recent years, with some results, to better monitor the program and make it more transparent to the public, according to the group's coordinator, Enid Eckstein. PAG has also sought to publicize institutions that don't pay the fully requested amounts. "Obviously, because this is vol- untary, the question is 'what's the political will on the part of your mayor and whatever your city structure is?' " Eckstein said. "A lot of it is community organizing. We've created political pressure here." >> Solution Oriented continued Rep. Matt Ritter (D-Hartford) addresses the media just before the close of the 2019 legislative session. State Rep. Jason Rojas, (D-East Hartford) Hartford's annual total PILOT deficit The state in recent years has shortchanged Hartford on its Payment in Lieu of Taxes contributions to the tune of tens of millions of dollars annually. Here's a breakdown of the annual shortfall in state PILOT funding to Hartford, according to the city. Source: Hartford assessor's office 2011 2012 2013 2014 2015 2016 2017 2018 $0 $10 $20 $30 $40 $50 $60 $70 $80 In millions of dollars HBJ PHOTO | MATT PILON

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