Portland City Council to Review Tax-Exempt Payment Proposal

The Portland City Council is set to examine a proposal mandating voluntary payments from tax-exempt property owners. This idea has been a topic of debate within the committee for several years now.

The Tax Alternative Payment Program draws inspiration from similar initiatives in cities like Boston. The aim here is to alleviate the financial burden on residents by tapping into funds from tax-exempt entities like hospitals and churches.

As of mid-2025, Portland holds nearly $4 billion in tax-exempt assets. The city has been searching for solutions to lessen the reliance on local taxpayers for covering escalating service costs.

During a recent Finance Committee meeting, draft policy discussions highlighted that “nonprofits should contribute to the costs of essential services” they utilize, including police, fire, and road maintenance. It’s estimated that this program could generate around $3.6 million in revenue each year.

However, there are concerns from nonprofits. They worry that even voluntary initiatives might strain relationships with local governments, placing undue pressure on organizations to provide crucial resources. They argue that their services actually help save cities money in the long run.

Jennifer Hutchins, director of the Maine Association of Nonprofits, expressed her reservations. While acknowledging that the program is voluntary, she mentioned her discomfort with the proposal’s “tone,” especially concerning the public listing of participating organizations.

City Finance Director Brendan O’Connell stated that the proposal had been adjusted after hearing from nonprofits. An expanded exemption is now being considered for organizations with property values below $10 million, aiming to ease the burden on smaller nonprofits. The latest plan also introduces a “community benefits credit,” offering a 50% deduction for services provided by these organizations. Payments will be calculated based on the city’s milling rates and will be implemented over three years.

For instance, a nonprofit with $20 million in tax-exempt assets would need to contribute about $23,960 annually as the program rolls out. A larger entity like MaineHealth, with approximately $1 billion in assets, could face payments of around $1.7 million by the end of the implementation.

Brian Batson, community relations manager for MaineHealth, emphasized that nonprofits aren’t responsible for the city’s financial issues and that the proposed program won’t offer substantial solutions. He mentioned that the burden on nonprofits during tough financial times outweighs any benefit to local property taxes.

He pointed out that data from Boston suggests the program might result in an additional $80 burden on the average homeowner as full payments come into effect. Yet, O’Connell countered this, noting that even a slight decrease in property tax collections could lead to significant savings for homeowners, although predicting participation levels remains challenging.

As of now, Portland’s median property tax bill is $6,788, reflecting a 14% rise from last year. O’Connell believes a modest PIL levy could have a positive effect on these figures.

Mayor Mark Dion has expressed his opposition to the proposal, weighing the potential damage to relations against minimal revenue generation. He remarked that nonprofits form a crucial network of services that the city hasn’t fully integrated into its structure and suggested continued discussions with these organizations.

Regarding the public listing concerns, O’Connell mentioned that although the city has received pilot donations from several organizations over the years, it doesn’t publicize those that do not contribute.

Councilman Ben Grant, who along with Councilman Wes Pelletier voted to advance the proposal to the full City Council, emphasized that this isn’t about shaming anyone but rather spreading government costs more equitably across the city. He noted a lack of discussion on the potential tax burden facing resident taxpayers.

“I don’t think anyone sees this as a definitive solution,” he stated. “We need to find minimal support to help reduce the tax burden.”

Pelletier mentioned that he found it hard to accept the idea that larger nonprofits couldn’t manage PILOT payments, especially considering the compensation packages of some CEOs. He suggested an amendment to exempt organizations focused on affordable housing, given the current housing challenges.

Dion indicated that the council is likely to vote on this policy by mid-February.