The Memphis City Council voted to consider whether nonprofit and tax-exempt organizations should be asked to make voluntary payments in lieu of tax. At its Tuesday meeting, the council also moved along several items that could have a large impact on city finances if they receive final approval, including a 1-cent tax on a gallon of gasoline and an increase in the local sales tax rate. The council voted 9-1 to create a committee that would focus on whether to ask tax-exempt and nonprofit entities that gross $15 million or more annually to make PILOT payments. In Memphis, the existing PILOT program is an incentive to attract businesses. Under that system, businesses that secure a PILOT pay closing costs on land, pay taxes on what the land is worth at predevelopment levels and a portion of taxes on real and personal property. Once they exit the PILOT program, they pay full taxes on the developed property. Councilwoman Janis Fullilove, who sponsored the measure along with Lee Harris, said the committee would explore whether to ask tax-exempt and nonprofit entities to voluntarily pay a portion of what they would owe if their properties were not tax-exempt. Fullilove described it as a way for nonprofits to "be good stewards as we have asked the citizens of Memphis to be good stewards. "These tax exempt entities use the same city services all the residents of Memphis use," she said. Over the last decade, PILOTs have been used for tax-exempt entities in at least 117 municipalities in 18 states, according to a report from the Lincoln Institute of Land Policy in Cambridge, Mass. Large cities collecting such PILOTs include Baltimore, Boston, Philadelphia and Pittsburgh.
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