Lack of payments in lieu of taxes frustrates council, city officials

Jeff Horvath, The Times-Tribune, Scranton, Pa.
·3 min read

Oct. 17—SCRANTON — The city asked about 176 tax-exempt entities to consider making payments in lieu of taxes this year.

Only seven had as of late September, contributing a combined $173,527 to the city as of Sept. 25 — about $106,500 less than Scranton collected in 2022 PILOT payments.

"We've been sending out the PILOT requests each year of our administration and we continue to do it," Mayor Paige Gebhardt Cognetti said. "It's not the yield that we'd like to see but we think it's important to continue to send out and make that case."

The lack of PILOTs is frustrating to city council members, who recently received the 2023 figures and a list of tax-exempt organizations contacted about potential payments. Members said after Tuesday's meeting that nonprofits and other untaxed groups benefiting from city services should contribute.

"It's disturbing," Councilman Mark McAndrew said of the low numbers, echoing a resident's suggestion that Scranton make additional attempts to prompt PILOT payments. "They need to chip in."

Councilwoman Jessica Rothchild made a similar case.

"We knew that it was low in comparison to the number of nonprofit or tax-exempt organizations within the city," she said. "We certainly should be sending those letters, but we need to do more on top of that. We need to have increased efforts to ... get more money in lieu of taxes."

The Cognetti administration will soon send council legislation authorizing a contract with the law firm Rudolph Clarke LLC to review and verify the tax-exempt status of nonprofit and government-owned properties.

Officials usually refer to that forthcoming project as a "HUP test," a reference to the five-prong test used in assessing whether certain tax-exempt properties warrant that designation. It gets its name from the 1985 state Supreme Court decision in Hospital Utilization Project v. Commonwealth, which established the criteria.

The review will take a harder look at organizations exempt from property taxes, Cognetti said, noting most of the 176 or so entities contacted about PILOTs probably qualify for exempt status.

"But ... there are tax-exempt properties and that does impact our budget, and we would be in better shape if more of the nonprofits did give a little bit," she said.

Council members and administration officials look forward to the HUP test project, which also will explore whether agreements exist where for-profit entities may be operating on tax-exempt properties.

The city should expect more from nonprofits "that enjoy our city to bring in revenue for themselves," Councilman Tom Schuster said.

Many organizations can contribute a lot more, Councilman Gerald Smurl said.

"We need to get the (HUP) test all completed and then find out really who is eligible to be tax exempt," he said.

Organizations that have made 2023 PILOT payments include: University of Scranton, $150,000; Midtown Apartments, $13,000; Goodwill at North — Gerald T. Langan Apartments, $4,524; DCNR, $3,752.92; Boys and Girls Clubs of NEPA, $2,000; the Society for the Preservation of the Tripp Family Homestead, $200; and NEPA Youth Shelter, $50.

A list of organizations Scranton sent PILOT requests to is available online at thetimes-tribune.com.

Contact the writer: jhorvath@scrantontimes.com; 570-348-9141; @jhorvathTT on Twitter.