Tuesday, December 10, 2013
PORTLAND - Hundreds of nonprofits in Portland could soon be asked to pay to help support city services that typically are funded through property taxes.
Under Maine law, nonprofits that meet certain criteria are exempt from paying property taxes.
Fourteen nonprofit groups now make voluntary payments in lieu of taxes, totaling more than $600,000 a year -- a tiny fraction of the $140 million that the city collects in property taxes.
More than half of those payments -- $357,000 -- come from ecomaine, the nonprofit waste management company that's owned and operated by 21 municipalities in southern Maine. Its incinerator is off outer Congress Street.
"It's pretty common for waste-to-energy plants and landfills" to make payments to their host communities, said Kevin Roche, ecomaine's general manager.
The Portland City Council's Finance Committee will begin reviewing the city's so-called PILOT program Thursday night. It will focus on the city's approach and the program's activity.
"I don't think we have a program," said City Councilor John Anton, the committee chairman. "To me, this is just the beginning of the conversation."
The issue arose in 2008 when the city was negotiating the sale of land in Bayside. The council's Community Development Committee said that any buyer -- including nonprofits -- should pay full property taxes.
The land is now under contract to be bought by the Federated Cos., a for-profit developer.
The number of tax-exempt properties in Portland has long been a concern, said City Councilor Jill Duson, vice chairwoman of the Finance Committee. Nearly 1,300 of Portland's 22,400 real estate accounts are exempt, according to the city.
About 200 of those properties are owned by non-municipal groups, ranging from the small -- Casco Bay Health Care's 3,650 square feet of land on Peaks Island, valued at $1,400 -- to the large -- Maine Medical Center's 47 accounts valued at about $250 million.
The goal of the review, Duson said, is for the city to take a more proactive approach to negotiating payments with tax-exempt entities, which rely on city services like public safety and snow plowing.
"To the best of our ability, we should be trying to get a contribution to the tax base from nonprofits that benefit from services paid for by the tax base," she said. "It's an attempt to strike a reasonable balance."
Elsewhere, Biddeford decided to renegotiate payments in lieu of taxes with the University of New England after a previous agreement lapsed in 2008.
Portland last asked nonprofits to make payments in 2003, according to a memo to the Finance Committee from City Finance Director Ellen Sanborn, who could not be reached Wednesday afternoon to provide more details.
Duson and Anton said they are not aware of the city sending a letter since then.
Simply sending letters to nonprofits, without having discussions with them, "doesn't strike me as a very sound strategy," Anton said.
Portland benefits by having nonprofits, he said, and nonprofits benefit from having a safe and well-served community.
"I have no interest in an adversarial dialogue," he said.
Sanborn's memo includes a study done by the Lincoln Institute in 2010 and a report from a task force formed by the city of Boston.
Elements explored in each study, she wrote, included voluntary payments, the size and purpose of the nonprofit entity, the community benefit the organization provides, and a predictable and systematic approach.
Sanborn wrote that when Portland has calculated payments in lieu of taxes in the past, it has based them on the portion of the tax rate that goes to public safety, snow removal and county taxes, and the value of the nonprofits' real estate holdings.
The issue has languished in recent years, but the council made it a priority during a goal-setting session earlier this year. Duson said the review is coming now so it won't get pushed aside when the committee begins taking up the next city budget.
Anton said he hopes the city will be able to engage nonprofits in a discussion about common interests, such as talking to hospitals about helping to fund EMS services and preventive efforts such as the city's HOME team, which does outreach with the homeless.
While Maine Medical Center has $250 million worth of tax-exempt property in Portland, spokesman John Lamb noted that the hospital paid $430,000 in property taxes last year, provided $18 million worth of free care and assumed $16.3 million in debt from patients who couldn't pay.
Duson said she doesn't expect the city's effort to produce a major windfall, or address any impending budget crunch.
"It's not a crisis attempt to rattle the cages and shake out pennies," she said.
Staff Writer Randy Billings can be contacted at 791-6346 or at: