PILOT Program Could Ease Tax Burden

By Max Colice

Belmont’s annual budget for the 2025-2026 fiscal year, approved by Town Meeting in May, is $166.23 million. Of that, $138.85 M (83.5%) comes from property taxes and debt exclusions. The rest comes from state aid ($15.5 M), auto excise taxes, and a variety of lesser sources. Just over 95% of property taxes come from residents, the remainder from businesses. The 2022 Collins Center Report on municipal best practices recommends that Belmont should develop new sources of revenue to mitigate the burden of property taxes, including a program for payments in lieu of taxes (PILOT). How much revenue could a PILOT program generate for Belmont?

A PILOT is a payment by a tax-exempt entity in lieu of property tax. It is typically 25% of the full property tax, or roughly the percentage of the municipal budget devoted to police, fire, and public works together. PILOTs help to offset the burden placed on Belmont taxpayers to pay for services that benefit every property owner, including tax-exempt property owners.

Belmont receives PILOT from several tax-exempt public or quasi-public entities, including Belmont Light, the Belmont Housing Authority, Waverley Woods, and the City of Cambridge, which owns the Payson Reservoir. Some of the payments are required under state law, while others are required by contracts or memoranda with Belmont.

There are roughly 40 private tax-exempt entities that together own about $425 million of real estate in Belmont. If these entities paid property taxes at the full rate, they would provide roughly $4.8 million in revenue to Belmont. At the PILOT rate, this would be about $1.2 million. The top-10 private tax-exempt entities alone could provide almost $1 million in PILOT.

Belmont’s Top 10 Tax-Exempt Entities	Total Assessed Value	Nominal Property Tax	PILOT (25% of Property Tax)
Mass Audubon Society Inc.	$104,893,000	$1,194,617	$298,654
McLean Hospital Corp.	$88,106,000	$1,003,527	$250,88
Belmont Hill School	$58,434,000	$665,563	$166,391
Roman Catholic Archdiocese of Boston	$25,213,000	$287,176	$71,794
The Church of Jesus Christ of Latter-Day Saints	$22,656,000	$258,052	$64,513
Belmont Day School	$18,144,000	$206,660	$51,665
Belmont Methodist Church	$9,725,000	$110,768	$27,692
Holy Cross Church	$8,124,000	$92,532	$23,133
First Armenian Church	$7,243,000	$82,498	$20,624
Jewish Community Center	$6,875,000	$78,306	$19,577

To date, however, Belmont has not collected any significant PILOT from private tax-exempt property owners despite annual requests from the Belmont Assessor’s Office. The former chair of the Belmont Board of Assessors likened collecting PILOT to “pushing on string,” perhaps because PILOT is completely voluntary and most tax-exempt entities would rather devote their funds to other uses such as their primary missions.

This situation is not unusual. In 2003, when the state legislature considered eliminating property tax exemptions for some nonprofits, the Massachusetts Division of Local Services found that Massachusetts cities and towns received only about $17.9 million in PILOT from tax-exempt charities and private schools, with Boston and Cambridge receiving more than $13 million of that total. Had all of that property been fully taxable, it would have generated more than $505 million total in property tax revenue.

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McLean’s Taxes

Before 2000, McLean Hospital paid property taxes to Belmont per Massachusetts General Law Ch. 59, Section 5(c), which requires psychiatric hospitals to pay property tax, albeit at a reduced rate. In 2000, Belmont filed home rule legislation exempting McLean Hospital from these tax payments as part of the agreement that led to the development of Lone Tree Hill.

This was a good deal for Belmont. The new construction generates significantly more tax revenue than McLean would have ever paid in property tax.

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To increase PILOT, the 2022 Collins Center Report suggests that Belmont should strengthen relationships with local private tax-exempt entities and establish a task force to develop a PILOT program. This PILOT program should provide a consistent, equitable process for determining payment amounts. It could follow the process set in 2009 and 2010 by the PILOT Task Force that reviewed and updated Boston’s PILOT program.

One of the Boston PILOT Task Force’s main recommendations was to recognize community benefits as PILOT credits. Today, many of these community benefits take the form of services in lieu of taxes (SILOT). For example, Mass General Hospital provides free health programs, Berklee College provides free access to its facilities for community organizations, and the Museum of Science provides free programming for Boston high school students. In 2024, Boston requested $128 million in PILOT from tax-exempt charitable and educational institutions and received nearly $35 million in cash and more than $63 million in community benefits.

Belmont could do well to emulate Boston’s approach to PILOT. Additional cash would always be welcome, but services could be useful, too. For example, local churches could provide free parking for school buses during school days. The private schools could open their fields to community organizations such as the Belmont Soccer Association for free or at reduced prices on evenings and weekends. And McLean Hospital could provide free counseling or other mental health programming in the schools.

Belmont could also solicit cash to pay for capital projects or programs that align with the needs or missions of local tax-exempt entities. Belmont is already making strides in this direction, with the Select Board and town administrator arranging a contribution from the Belmont Hill School toward construction of the new ice rink in exchange for an option on ice time for some of its hockey teams.

Belmont could also solicit funds from local private schools to defray the expenses associated with providing publicly funded special education services to private schools students as required by 608 CMR 28.03(e). Asking the private schools in Belmont to cover the cost of these services for their students would be both reasonable and in line with the private schools’ needs and missions. Other local organizations might be willing to contribute funds to senior tax relief.

Belmont should also look to convert tax-exempt property into taxable property by partnering with tax-exempt organizations to return tax-exempt property to the tax rolls. In 2000, Belmont worked with McLean Hospital to develop Lone Tree Hill, resulting in substantial new–and fully taxable–growth. By 2020, the value of this new growth was over $159 million–nearly twice the assessed value of McLean–with more fully taxable development planned for the next few years.

Belmont could also look to converting tax-exempt land owned by the state or county to private ownership. For instance, consider the four-acre parcel at the northeastern corner of Belmont that is owned by the Commonwealth of Massachusetts. This parcel is bordered by Route 2 on one side and an exit ramp on the other side. It is assessed at nearly $8 million and is already zoned for commercial use. Developing this land for private use could generate substantial income for both Belmont and the state with little to no disruption to the rest of Belmont.

Max Colice is a Belmont resident.