Johns Hopkins Hospital anchors an expanding network of medical facilities on Baltimore’s east side. To the north, the Johns Hopkins University campus covers some 140 acres. Nearby, the grounds of Loyola University Maryland stretch out over 80 acres. In all directions of the city, a large roster of governments, universities and nonprofits own parcels of land. Yet the one place where most of these plots are noticeably absent is on the city’s property tax rolls.
In all, the value of property owned by governments, nonprofits and other tax-exempt organizations totals $15.1 billion -- 30 percent of Baltimore’s entire assessed value. Six years ago, exempt properties accounted for only 25 percent of the total value. But since Baltimore relies on property taxes for half its revenue, the increase is a significant hit to the city’s pocketbook. In 2007, Baltimore’s tax bill for all exempt properties would have totaled $202.4 million if they were taxable at the current rate. This year, the city would have collected $343.2 million. “It’s a long-term issue that we can’t ignore,” says Mayor Stephanie Rawlings-Blake. “Doing nothing isn’t an option.”
Baltimore is hardly alone. A pattern of property disappearing from tax rolls has developed across many of the nation’s urban cores as cities grapple with dwindling tax bases. In
16 of the 20 most populous cities with available data, tax-exempt properties today account for a higher share of the total assessed value then they did five years ago, according to a
Governing analysis of assessment rolls. Nearly 29 percent of Jacksonville, Fla., property, for instance, was not taxable in 2011, up from 21 percent of the assessed value in 2006. Similarly, the assessed value of exempt Phoenix properties swelled from $2.5 billion in fiscal year 2007 to $3.8 billion in fiscal 2012, even as the city’s total taxable assessed value remained about the same.
Many cities respond by negotiating PILOT agreements with nonprofits, typically taking the form of long-term contracts. In a recent survey of jurisdictions throughout the country, the Lincoln Institute of Land Policy found at least 218 localities in 28 states initiating PILOTs since 2000. The
survey also reported educational and medical institutions fund 90 percent of all PILOT revenue, with much of the total from hospitals and universities in the Northeast.
However, PILOT revenue hardly registers on most city budgets, generating only 0.13 percent of a typical locality’s general revenue, according to the study. “It just isn’t really a game changer for most municipalities,” says Adam Langley, a research analyst who co-authored the report. For instance, Boston’s PILOT program is the nation’s largest -- collecting $19.4 million from 34 educational, medical and cultural institutions last fiscal year. Still, the total only accounts for 1.5 percent of its property taxes
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