Rural communities say state-land PILOT is steering them in the wrong direction

  • Sen. Adam Hinds, left, and Reps. Natalie Blais, middle, and Susannah Whipps are working to implement Bump’s recommendations through legislation. “We feel how much we give is not recognized by the people in Boston,” Whipps said. Meg McIntyre/Special to SHNS

Special to the State HouseNews Service
Published: 8/15/2021 8:34:33 PM

Driving through the small town of Warwick, it’s not the quaint architecture that catches one’s eye — it’s the vast sea of trees. They rise from the road’s edge, sprouting behind stone walls and encircling everything, visible even among the cluster of buildings in the town center.

Home to both the Warwick State Forest and the Mount Grace State Forest, this Franklin County community has more than 10,000 acres of preserved state-owned land and fewer than 1,000 residents. But while the abundance of nature can be a huge draw for people looking for more elbow room and a quiet lifestyle, it’s not always an advantage for the town’s tax rolls.

“I’ve long been a proponent of limited development and conservation in general, so I don’t see preservation of open space as a bad thing,” Town Coordinator David Young told the News Service. “But when you get to 50 percent or more of the town being state-owned, it poses challenges.”

Where the state has acquired tax-exempt properties, such as forests, beaches and public institutions, municipalities are reimbursed for lost revenue through the State-Owned Land Payment In Lieu of Taxes (PILOT) program. How much money each community gets depends on the value of the land as determined by the Department of Revenue, along with changes in local property values, the land’s value as a share of the total value of all state-owned land, and how much funding the Legislature appropriates for the program.

But after a change in the state’s valuation process about three years ago, smaller, rural communities, especially in western and central Massachusetts, saw their PILOT reimbursements stagnate or even decrease, while some larger and more affluent municipalities in the eastern part of the state have seen their funding grow.

For example, Warwick’s PILOT allocation dropped 11.5% between fiscal years 2019 and 2020, even as the value of the land increased. But in Duxbury, which has state-owned land of similar value, PILOT funding rose more than 13%, according to a report from State Auditor Suzanne Bump.

And now local and state officials are increasing calls for changes to a program they say has long been flawed.

“We’ve learned there are other nuances to the program that also seem, frankly, rather arbitrary,” Bump told a crowd of local officials gathered at Mount Sugarloaf State Reservation in Deerfield a few weeks ago to discuss the PILOT program.

Her office’s 70-page report, which was released late last year, found that the PILOT program has been chronically underfunded, and that its allocation formula puts communities with slowly increasing or declining property values at a disadvantage.

The analysis recommends increasing funding to the program, updating the formula to use an aggregate tax rate method and creating a “hold harmless” provision to protect reimbursements for communities with reduced land values.

“These public lands, these scenic vistas, to stand on that hill there and have hawks fly by at eye level, to have these recreation opportunities – clearly they are a boon for the commonwealth,” Bump said at the Deerfield gathering, gesturing to the panoramic view from atop Mount Sugarloaf. “But there is a public cost for this public good, and the state has an obligation, as I see it as an agent for accountability in state government, to make communities whole when we protect them from development.”

Legislative push

The Legislature has started down that path by allocating an additional $4 million to the program in fiscal year 2022, bumping it from $31 million to $35 million. And Bump has joined forces with western Mass. legislators Sen. Adam Hinds of Pittsfield and Rep. Natalie Blais of Sunderland to file a bill (S 1875/H 2381) that would implement the recommendations from her report.

Rep. Susannah Whipps of Athol, an independent, has also filed a bill that would create a special commission to study PILOT reimbursements for towns with a high percentage of state-owned land.

Both pieces of legislation have been referred to the Joint Committee on Revenue.

“We feel how much we give is not recognized by the people in Boston,” Whipps said during the event at Mount Sugarloaf. She added, “We provide an awful lot more than I think Boston gives us credit for, and I think it’s time to start reminding people their water comes from us, your farmers and my farmers are providing their food.”

The Deerfield event was Bump’s first visit in a two-stop tour of state-owned properties in Franklin County, which also included the Dubuque State Forest in Hawley. For some communities in this part of the state, PILOT revenue accounts for almost as much of the local budget as unrestricted state aid, Bump said, making towns very reliant on those funds.

And allocating money based on a community’s overall property growth can mean that two municipalities with similar tracts of land can receive vastly different amounts for it, exacerbating existing disparities.

Take Plymouth and Warwick: Both communities have more than 10,000 acres of state-owned land, with the bulk of it in state forests. But in fiscal year 2020, Plymouth’s PILOT payment was nearly $700,000, while Warwick’s was nearly $100,000, according to Bump’s report.

Lack of growth

The program has its critics in other parts of the state as well. In Douglas, a town of about 8,500 in southeast Worcester County, concerns around PILOT aren’t necessarily related to the impact of plateauing local property values, since both population and development there are growing.

“That’s a really bad problem for (other communities) that needs to be fixed. On our end the storyline is different,” Town Administrator Matthew Wojcik said. “We’re stuck — we’re not growing the amount of PILOT that we get every year, even as the community is growing.”

The Douglas State Forest and Wallum Lake are used heavily for recreation, Wojcik said, and the town ends up shouldering costs to provide services in the area, including dispatching fire and police when hikers get lost. But even as the state has acquired more forestland, the town’s PILOT appropriation has remained steady or gone down.

As a result, the Select Board has decided not to sign off on further additions to the state forest, according to Wojcik.

Bump’s report identified resistance to additional land preservation as a negative side effect of the inequitable formula.

“Until probably three or four years ago, we were compensated very slightly better on PILOT than on Chapter 61 land for private use. And I can’t make that argument anymore,” Young, of Warwick, said. “And that’s unfortunate. It was really a linchpin in my arguments for land conservation.”

What’s more, from the perspective of local leaders, the state doesn’t appear to be slowing its pace with acquisitions.

“The commonwealth actually has been very aggressive in purchasing additional land in Montague — over 300 acres in the last few years. And they didn’t consult our open space plan,” Town Administrator Steve Ellis said at Mount Sugarloaf. “And so, some of that land that has been acquired is land that the town had actually viewed as appropriate areas for residential and commercial development.”

Lawmakers hope to continue increasing the state PILOT appropriation by $5 million each year until it reaches the level Bump’s report argues is sufficient, Hinds said in Deerfield, which would be about $45 million. And Hinds and Blais, along with the rest of the western Mass. delegation, are hopeful that structural changes will follow through the legislation they’ve filed.

“We were able to get this additional funding in the FY22 budget, but we also need to ensure that we get this formula changed,” Blais said. “I really view this as a one-two punch that is absolutely necessary.” 

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