Feb 262014

With both the Town of Groton and the Groton-Dunstable Regional School District looking for ways to avoid dramatically increasing taxes or putting a Proposition 2 1/2 Override on an election ballot, Payments In Lieu of Taxes from Groton’s nonprofits are getting a hard look from town officials seeking more income. Groton’s nonprofits, if they were taxable, would contribute $3,080,931.03 to the town’s general fund. Anticipated PILOT payments for Fiscal Year 2014, which ends June 30, 2014, are $216,230.70, about 7% of theoretical tax payments, according to reports The Groton Line received from Patricia Dufresne, Groton’s Town Accountant, and Rena Swezey, the town’s Principal Assessor.

The small group of nonprofit entities that own property in Groton is exempt from paying property taxes, the main funding mechanism for both town services and the schools. Although they are not required to, all give the town an annual gift, a payment for the services they receive. In almost all cases, the gifts are a small fraction of the amount of cash the town and schools would receive from property taxes. The payments go into the town’s general fund, from which the schools are paid an assessment. There is no direct link between PILOT payments and the school district.

Groton School is the largest of the nonprofits, both in the amount of property it owns and in the gift — Groton School officials refuse to call it a PILOT — that it gives the town each year. Groton School owns property in town assessed at $93,317,600. If the school paid taxes on the real estate and buildings, it would pay $1,621,859.89 per year. The school gives the town $100,000 per year as part of a 20-year commitment to the town. That works out to about 1.7% of what would be the school’s tax payment, if the town were allowed to collect taxes from the school.

Lawrence Academy is in second place as far as the amount of property the prep school owns: $36,715,400 is the assessed value. Lawrence Academy also makes the second largest payment to the town and schools. Instead of a $638,113 tax payment, Lawrence makes a PILOT of around $40,000 each year, just over 6% of a theoretical tax payment.

Among schools in Groton, the Massachusetts Institute of Technology, MIT, comes in third. The university owns property assessed at $2,628,900 that would generate a tax payment of $45,690.28 if it were taxable. MIT’s PILOT for the current fiscal year should be $12,730.00, 2.8% of a theoretical tax payment.

The Seven Hills Foundation operates an extended care facility and a pediatric center in Groton, with assessments of $3,939,900. If taxed, the properties would generate $68,475.46. Seven Hills makes a PILOT of $15,000 per year.

The Groton Electric Light Department is an exception to the general PILOT rule of underpayments in comparison to tax assessments. The utility usually pays the town $30,000 per year, close to the $35,886 it would pay if it was taxed on its $2M worth of real estate. Last year, the utility cut its PILOT payment to the town in half, to $15,000, but it also made a $100,000 gift to the Groton-Dunstable Regional School District for new computers and technology in the classrooms. That gift is not shown in the PILOT calculations from the town because it didn’t go into the town’s general fund; instead it went directly to the school district.

There are a number of other caveats and exceptions to the numbers that show up on the spreadsheets. The nonprofits unquestionably contribute to the quality of life in Groton by preserving open space and attracting educated, affluent faculty and staff to enrich the community. Occasional special purpose gifts fall outside of the framework of PILOT. The Groton School just made a donation of $25,000 toward the new fire station for the purchase of fitness room equipment, Fire Chief Joe Bosselait reported. Last summer, Grotonwoods camp paid $10,000 to the town for maintenance of the Lost Lake dam.

On the debit side of the ledger, the school district paid $11,000 to Groton School for ice time for the district’s hockey teams this year, according to Jay Prager, chair of the Groton Finance Committee.

Members of the school district administration and school committee have mentioned in meetings that upward of 15 elementary and middle school students who live on the Groton School and Lawrence Academy campuses are attending Groton-Dunstable Regional schools. Because they live in houses that do not pay property taxes, the kids’ education is essentially unfunded because the private schools’ PILOTs go into the town’s general fund, and are not applied directly to tuition costs. The school district administration and school committee members have, so far, been unable to come up either with an exact number of students who live in the various non-profit’s campus housing or a per-pupil cost of what it costs to educate elementary and middle school students.

The PILOT issue is not local to Groton. In 2012, then Boston Mayor Menino asked the city’s institutions to voluntarily pay 25 percent of what they would be required to pay in taxes were they not tax-exempt. The appeal boosted the amount the city received significantly, according to published reports.

FY 2014 Valuations FY 2014 Tax Rate Taxes that would be assessed FY2012 PILOT FY2013 PILOT FY2014 Projected Receipts
Groton Electric Light $ 2,064,800.00 $ 17.38 $ 35,886.22 $ 30,000.00 $ 15,000.00 $ 30,000.00
Groton Housing Authority $ 3,828,900.00 $ 17.38 $ 66,546.28 $ 4,537.68 $ 4,553.64 $ 4,553.64
Groton School $ 93,317,600.00 $ 17.38 $ 1,621,859.89 $ 100,000.00 $ 100,000.00 $ 100,000.00
Groton Wood Baptist Camp $ 11,758,300.00 $ 17.38 $ 204,359.25 $ 13,549.66 $ 13,549.66 $ 13,549.66
Lawrence Academy $ 36,715,400.00 $ 17.38 $ 638,113.65 $ 39,973.70 $ 40,397.40 $ 40,397.40
MIT $ 2,628,900.00 $ 17.38 $ 45,690.28 $ 12,420.00 $ 12,730.00 $ 12,730.00
Seven Hills $ 3,939,900.00 $ 17.38 $ 68,475.46 $ 15,000.00 $ 15,000.00 $ 15,000.00
TOTAL $ 3,080,931.03 $ 215,481.04 $ 191,230.70 $ 216,230.70

Want to do your own numbers crunching?

You can see the PILOT Budget document provided by the town here: https://drive.google.com/file/d/0B-Gm8RLxE71BajE2UGZJUFdJeDZHX09KcW5aMFFOWGpMWWJN/edit?usp=sharing

And the assessed value of the tax-exempt properties, provided by the town assessor’s office: https://drive.google.com/file/d/0B-Gm8RLxE71BcnhQWGNkME9SamFmaFZzU01CeFFUS0xlZ2xZ/edit?usp=sharing