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PILOT Payment In Lieu of Taxes

A Sense of Community

While they share in a full range of city services, tax exempt properties do not contribute to the operation of city government to the same extent that non-exempt properties do.

Wisconsin law defines properties eligible for tax exemption. Owners of properties that meet the legal criteria for exemption are not required to pay local property taxes.

Some exempt property owners, however, choose to make a “payment in lieu of taxes”, or PILOT. While they are not obligated to pay property taxes, they acknowledge the local government services they receive and agree to a voluntary payment.

PILOTs reflect an exempt owner’s sense of community. Those who make PILOTs recognize they benefit from the police and fire departments; they use city infrastructure; and they know city government requires resources to promote development and keep residents healthy.

The City of Milwaukee asks exempt property owners to consider making a “Fair Share” payment. A Fair Share PILOT is an agreed upon commitment by a tax exempt property owner to pay, annually, a portion of the amount that would be due in taxes if the property were not exempt.

Exempt property owners who provide community services benefitting the City and its residents could be eligible for a credit that decreases the amount that makes up a Fair Share payment.

Does Milwaukee have a need for PILOTS?

More than $4.5-billion of real estate is tax-exempt in the City of Milwaukee, comprising approximately 17-22% of the city’s total real estate value. Both the number of exempt properties and the total value of those properties continues to climb. At present there are over 9,800 exempt parcels in the City of Milwaukee,

While tax exempt properties owners are legally entitled to their exemptions, their properties are not counted in the city’s tax base. That means the tax rate paid by other property owners is higher than it would be if exempt properties were included in the tax base.

More than one dozen exempt properties have entered into agreements with the City of Milwaukee to make payments in lieu of taxes. This represents a small fraction of the thousands of exempt properties in the city, but it reflects an acknowledgment from these owners that they benefit from city services.

Are other cities using PILOT agreements?

What types of Milwaukee organizations are currently making payments and what types of agreements are used?

  • Private developers have used Private Development Agreements (used when properties are being newly constructed or redeveloped) – usually created by City Attorney’s office
  • Department of Transportation Municipal Services payments
  • Fair Share agreements are used by property tax exempt organizations
  • Housing Authority of the City of Milwaukee (Housing Authority City of Milwaukee - HACM) - payments are typically for public services and facilities furnished to the properties
  • Voluntary payments by residents of exempt properties – a form of Fair Share Agreement
  • Water Utility Payments - the City receives annual payments from this other government agency
  • University of Wisconsin – the City received state aid payments that are intended to cover a portion of the cost of providing city services to the University, formal PILOT agreements are in place

How can I or my organization apply?

See Step by Step Guide -not finished-
Sample Fair Share PILOT Agreement