Mayor Joshua Garcia discusses a proposed PILOT policy for Holyoke during the Development and Governmental Relations Committee on March 11.
Photo credit: Holyoke Media
HOLYOKE — During the Development and Governmental Relations Committee on March 11, a policy designed to gain revenue from tax-exempt property owners was presented by Mayor Joshua Garcia and Collins Center associate Stephen E. Cirillo.
The purpose of a PILOT, or payment in lieu of taxes, is to bring in a portion of money that a tax-exempt property would pay if it was not tax-exempt, to help pay for critical municipal services that benefit everyone. This includes properties owned by nonprofit organizations and quasi-public institutions. It helps local governments offset losses in property taxes due to the existence of nontaxable federal lands within their boundaries.
Garcia and City Solicitor Lisa Ball have been approaching tax-exempt organizations about paying PILOTs, and have learned that the city needed a better, more systematic approach to these conversations so that the process is fair, equitable and less of a “shake-down” situation.
Garcia said over the years, the city has arrived at PILOT payments from a handful of tax-exempt property owners, but that those agreements lacked formality and are in several cases, “handshake” arrangements.
The policy presented calls for written contracts that include established percentage amounts.
“We are committed to creating a sustainable financial future for Holyoke while ensuring that all community stakeholders contribute to the essential services that we all rely on,” Garcia said.
Beginning July 1, the policy will be adopted, and the city will seek voluntary PILOT agreements with all tax-exempt institutions within the community that own real property.
Garcia explained that these written PILOT agreements will be based on fair market value and a tax levy.
PILOT agreements will be established based on a percentage of the amount that the tax-exempt property would pay if not exempt. The percentage is determined based on the tax levy amount that supports the critical services of the city’s police, fire and public works operations.
Holyoke has determined that this share is equal to at least 25% of the full levy and Garcia said, “For smaller, community-based tax-exempt organizations with controlling interests in properties assessed at less than $2 million in [fiscal year 2025], that the share will be equal to at least 15% of the full levy.”
The mayor’s Government Restructuring Advisory Council, one of several advisory panels Garcia created when taking office in 2021, took up the issue of nonprofits acquiring properties in Holyoke and taking them off the tax rolls.
The Advisory Council researched consultants the city could contract with to help explore the issue and help draft a policy.
A discussion with the Collins Center for Public Management was initiated in early 2024 which later led to a $13,000 contract, which was supported by the City Council.
The draft PILOT policy and analysis presented was developed by the Collins Center and can be found at tinyurl.com/3nxaeh26.
Cirillo, who specializes in PILOT strategies, financial forecasting, capital improvement planning and financial policies, presented the policy designed for Holyoke.
He described the data-gathering involved in the first phase of the project including assessor’s records, classification forms, existing PILOT agreements, interviews with Garcia and other city officials, and an inventory of Holyoke’s tax-exempt parcels — 940 of them, in all — which is about 16% of the total assessed value.
In FY25, the primary property class in Holyoke is residential, accounting for nearly 66% of the total assessed value. The commercial, industrial and personal property classes make up 18%, while the exempt class constitutes 16%.
Cirillo recommended establishing 25% of the assessed valuation as the PILOT target. He said the city might consider setting a lower percentage target for low-value, tax-exempt properties.
The 25% figure, Cirillo said, represents the approximate share of the city budget that goes to provide police, fire and public works coverage, emergency and security services, plus road maintenance.
He explained, “It’s based on methodology and when you consider it, it takes the pressure off of the residents who are paying property tax because your generating additional money.”
These three, he said, are services all property owners receive, whether taxpaying or tax-exempt.
Garcia acknowledged that this is not a final report because “it’s a working document and as things evolve, it will continue to be updated.”
