Springfield continues to work on payment in-lieu-of-tax policies
SPRINGFIELD — After 18 months of study, a three-member committee released its findings on payments in lieu of taxes to the City Council Monday night.
The committee, led by City Councilor Victor Davila and residents Karen Lee and Juan Latorre III, came up with multiple recommendations after studying the issue for at least 18 months. It is also asking for $40,000 to hire a think tank to assist with creating a policy and do other work to help the panel negotiate with nonprofits.
With far more discussions needed, the council voted to accept the study for now and continue to work on the effort.
"I think it is a great report and a great idea," City Councilor Zaida Govan said. "This is something we need."
Nonprofits, which include churches, colleges, medical buildings, the housing authority and the state and federal governments, own property in the city assessed at more than $2.7 billion but are not required to pay taxes. Still, they use services such as police and fire protection and public works.
While the city can ask them to make payments, there are only 14 active agreements that total about $300,000 a year and 12 are from the same entity, the Mental Health Association, Davila said.
"Just because they are not mandatory, it does not prevent us from asking," he said. "When they say no, what we do is go back again and ask again."
City officials have tried in the past but with no policy in place the effort has been haphazard at best. With a concerted effort, the committee figured they could bring in as much as $20 million a year in payments if nonprofits agree to contribute a small amount of the taxes they normally would pay, the study shows.
The committee doesn't want to play hardball, knowing the nonprofits do contribute a lot to the community but currently the city has had to raise taxes on struggling homeowners and small businesses every year. Those increases would be less if others would contribute more, Davila said.
"The nonprofits, they are our partners," he said.
As part of the effort, Lee said the committee also looked at different ways they could allocate any money earned from in-lieu-of-tax payments.
Ideas include putting a percentage into the tax levy to lower tax increases and offset rising costs of expenses such as health insurance and school bus transportation.
The group has also proposed putting money into a housing trust fund and creating a reserve to fund wish list expenses that the city needs but puts off because of the expense, she said.
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