Last Updated on January 12, 2025 7:21 am by Admin
Overview
The Town of Hardwick is home to, and welcomes a diverse mix of property owners: Farmers, residential home owners, commercial businesses, governmental entities, and charitable and educational non-profits. The vibrant and growing non-profit sector both contributes to and benefits the overall quality of life in our Town. Our Town provides a variety of critical services to all segments of the community, whether they are residents, businesses or non-profit organizations. While these services provide benefits to all, funding for Town departments and services relies heavily on property tax revenues. In order to maintain the high standard of municipal services that Hardwick has historically provided, the Select Board believes that all property owners should contribute a fair and reasonable share toward the cost of municipal services.
“Increasing the overall fiscal capacity of cities and towns turns out to be central to the future prosperity of the Commonwealth…providing communities with the resources to deliver the services and amenities is critical to the state’s future development and prosperity…(and) equally important is making sure that local municipalities have the ability to provide the economic and social environment that is attractive….”
Revenue Sharing and the Future of the Massachusetts Economy by the Northeastern University Center for Urban and Regional Policy (2006) (https://www.mma.org/wp-content/uploads/2018/07/revsharing_rpt_jan06_0.pdf)
The Town of Hardwick, through its various departments, provides a variety of services to its farmers, residential and commercial taxpayers, and non-profit organizations located or conducting business within the Town. While municipal service requirements vary among these diverse groups, all benefit from the overall enhanced quality of life enjoyed by the community. However, the cost of municipal services is substantial, and the Commonwealth of Massachusetts has limited the sources of revenue available to municipalities. Property taxes provide approximately 71% of municipal revenue used to support municipal services. Revenue generated from property taxes is determined by law (Proposition 2 ½), mix of land uses, and geography.
A taxable parcel that becomes tax-exempt does not reduce the Town’s total tax levy. Instead, it shifts the tax burden to all remaining taxable parcels. It is a primary goal of the Town to preserve its taxable land, while at the same time continuing to support its rich cultural diversity. It is also a primary goal of the Town to have the cost burden of municipal services borne by and shared equitably among all farmers, residents, taxpayers, commercial entities and non-profit institutions, to the extent possible and reasonable.
The Town of Hardwick seeks to establish a forward-thinking Payment In Lieu Of Taxes – Town Partnership Contribution (PILOT-TPC) policy that fosters a partnership between tax-exempt organizations and the Town. This policy aims to ensure that tax exempt nonprofits benefiting from municipal services contribute equitably, while also encouraging these nonprofits to invest in the growth and sustainability of our small, beautiful rural Town.
The Town of Hardwick’s central location in Massachusetts, and its easy access to major roadways, makes it attractive for non-profit institutions to locate in Hardwick. This demand for land and buildings to operate non-profit organizations has absorbed taxable property in Hardwick at an alarming rate (33.43 percent already owned by non-profits). The Town is concerned that a continuing shift in tax burden to a diminishing tax base will have a negative impact on farmers, residents, local businesses and the overall Hardwick community. In order to maintain a fair and equitable balance between the cost of Town services and payment for those services, the Town has developed a policy to address this goal through a Payment-In-Lieu-Of-Taxes-Town Partnership Contribution (PILOT-TPC) policy for tax exempt organizations.
PILOT-TPC Policy
The Town of Hardwick recognizes that non-profit organizations contribute directly to the quality of life within the community and welcomes them to the Town. In order to maintain the financial health of the community so as to continue to provide a range of quality services, the Town must preserve its existing tax base and expand its revenue sources to fund ever increasing costs where reasonably possible. It is the Town’s policy to distribute the cost burden in a fair and equitable manner among all users of services: farmers, citizens, taxpayers and non-profit institutions.
A “Payment-In-Lieu-Of-Taxes-Town Partnership Contribution” (PILOT-TPC) approach is a forward thinking, mutual benefit, that reinforces the nonprofit’s role as a partner in the community, linking its financial scale to its share of community responsibility and charitability, per its tax exempt status.
This policy shall apply to all nonprofits that are classified as exempt from taxation under G.L.c59,sec5, Claus 3. It should be noted not all nonprofits qualify for exemption from real estate taxes under Claus 3.
I. Policy Statement
Tax exempt nonprofit institutions benefit significantly from Hardwick’s public safety, infrastructure, and other municipal services. To ensure these services remain sustainable and equitable, the Town of Hardwick seeks voluntary contributions from tax exempt nonprofit organizations, structured as a Payment in Lieu of Taxes – Town Partnership Contribution (PILOT-TPC). The PILOT-TPC recognizes the critical role nonprofits play, while also acknowledging their financial responsibility to the community they serve.
II. Overview and Goals
The Town of Hardwick’s PILOT-TPC policy aims to:
- Promote Fiscal Responsibility: Distribute the cost of municipal services fairly and equitably among all beneficiaries, including tax-exempt institutions.
- Support Community Sustainability: Establish a consistent funding mechanism for public safety, infrastructure, and community development.
- Foster Positive Partnerships: Encourage collaborative relationships with nonprofits that align with the Town’s values, benefiting both the organizations and the Town’s residents.
III. Contribution Structure
For tax exempt nonprofits that participate in this program, the PILOT-TPC will be calculated as a percentage of each tax exempt nonprofit’s annual gross revenue, including tuition, donations, grants, and other income sources, as follows:
- Base Rate: A set contribution of 3-5% of gross revenue to cover current service costs.
- Catch-Up Surcharge: An additional 2% surcharge applied for six years (e.g., six years) to address the cumulative impact on Town resources from years when no contributions were made. This surcharge duration will match the number of prior years the tax exempt nonprofit has owned real property and operated in Hardwick without a PILOT-TPC agreement.
- Example Calculation: For a nonprofit that has owned real property and operated in Town for five years with $1,000,000 in annual revenue:
- Base Rate ( 3%): $30,000 annually
- Surcharge (2%): $20,000 annually, over five years, resulting in a total annual TPC of $50,000.
- Example Calculation: For a nonprofit that has owned real property and operated in Town for five years with $1,000,000 in annual revenue:
- Annual Adjustment for Expansion: If a tax exempt nonprofit expands its operations or facilities, resulting in increased service demands, the PILOT-TPC rate shall be adjusted upward to reflect these additional impacts on Town resources.
IV. Annual Reporting and Accountability
To maintain transparency and accuracy in PILOT-TPC calculations, each tax exempt nonprofit will:
- Submit audited financial statements and IRS Form 990 annually.
- Provide an annual report on their usage of Town services to support the PILOT-TPC rate review.
V. Review and Adjustment Period
- Semi-Annual Review: The PILOT-TPC rate and contribution structure will be reviewed semi-annually by the Select Board, taking into account:
- Changes in the Town’s costs for public services.
- Economic conditions affecting nonprofit operations.
- Regular Updates: A full policy review will occur every five years to ensure alignment with community needs and fiscal goals.
VI. In-Kind Contributions and Community Benefits
Tax exempt nonprofits may propose in-kind contributions as part of their PILOT-TPC agreement, including:
- Scholarships for local students, volunteer hours, or infrastructure improvements.
- Any proposed in-kind contributions must be documented in a formal agreement and be quantifiable and trackable.
VII. Small Nonprofit Exemption
Community-focused tax exempt nonprofits with properties assessed below $500,000 (in FY 2024 dollars) may qualify for partial PILOT-TPC reductions or exemptions, provided they demonstrate community service contributions equivalent to their proposed reduction or exemption from this program.
VIII. Partnership Criteria
Hardwick will prioritize partnerships with nonprofits that:
- Create local jobs and stimulate the Town’s economy.
- Preserve the Town’s rural character while supporting sustainable development.
- Directly benefit Town residents through services such as education, healthcare, or social programs.
IX. Public Reporting
The Select Board will provide an annual report on PILOT-TPC funds collected and their allocation to essential Town services, ensuring accountability and transparency. Tax exempt nonprofits that participate in this program are also encouraged to report publicly on their community contributions.
X. PILOT-TPC Agreement Terms
- Duration and Renewal: Agreements will typically span five years, with reviews at the end of each term to accommodate any shifts in service needs, property values, or nonprofit contributions.
- Flexibility: Tax exempt nonprofits demonstrating significant investment in Hardwick may be eligible for longer term agreements based on their projected community service contributions.
XI. Use of PILOT Funds
PILOT-TPC funds will be allocated to Town priorities, including:
- Public safety (police, fire, EMS)
- Infrastructure (roads, water, sewer)
- Educational support and community development projects
XII. Community Engagement and Transparency
Public input will be solicited on PILOT-TPC agreements, with public meetings and discussions to ensure the community has a voice in these non profit partnerships.
XIII. Attracting Aligned Nonprofits
The Town will promote this PILOT-TPC policy as part of its economic development efforts, aiming to attract mission-driven organizations that align with Hardwick’s commitment to community development, sustainability, and rural preservation.
Policy Adoption and Review
This policy will take effect upon approval by a vote of the Select Board. It will be subject to review every five years to adapt to changing community and fiscal needs.
This revised policy establishes a structured, collaborative approach that balances the financial needs of the Town with the valuable contributions of nonprofit organizations, creating a sustainable partnership model for the future of Hardwick and all who are fortunate to call it home.
Respectfully Submitted,
William Tinker