PORTLAND — The City Council postponed a vote on a program that would request annual payments from the city’s larger tax-exempt property owners in order to separate the issue from a recent controversy over several Portland nonprofits losing tax-exempt status.
The council voted 8-1 Monday to postpone a vote on a proposed Payment-in-Lieu of Taxes (PILOT) program until after the current legislative session is over. Councilor Kate Sykes cast the lone vote in opposition.
Making the motion to postpone, Councilor April Fournier said the PILOT program coming up at the same time that officials have faced mounting questions over recent assessing office decisions has “created a lot of confusion,” and she’s hoping for “potential clarification” on that issue at the Legislature.
The Payment-in-Lieu of Taxes program, modeled after similar ones in Boston and other large cities, seeks to offset the cost of city services and residential tax burden by asking tax-exempt institutions like hospitals and churches for voluntary payments.
As of June 30, 2025, Portland had nearly $4 billion in tax-exempt property, and the city has long sought solutions to relying on residential taxpayers for the increased cost of services.
Nonprofit organizations, however, have argued that even a voluntary program can strain relationships with the city by putting public pressure on organizations to hand over vital resources, and that the work done by nonprofits ultimately saves the city money.
However, after several years of talks, the vote Monday came as Portland officials continue to field criticism and questions over assessing office decisions to revoke the tax-exempt status from more than a dozen nonprofits over the past year. The affected organizations include the Maine Irish Heritage Center, Avesta Housing and Maine Public.
Councilor Wes Pelletier said it’s been frustrating to try to have a dialogue over the PILOT program while having the assessing issue “torpedo the whole thing,” and that he’s hoping the postponement can allow officials “to separate these two things.”
With a lack of clear answers, some organizations that are now facing big property tax bills are pushing for legislation in order to update state laws on how exemptions are decided.
The city has maintained that the revocations are the result of a thorough review of all tax-exempt properties in Portland stemming from the 2025 revaluation, and that all decisions are in line with state statute.
Portland resident George Rheault said the public deserves an explanation from city officials regarding how specifically the assessor is interpreting state law, and that the lack of response from City Hall has allowed the assessor’s office to be cast in a negative light.
“It’s on the city’s leaders to get information out into the public realm. Right now we’re flying blind,” he said, adding that has protected the council “because they get to blame somebody else.”
A potential PILOT program has been debated for years by city officials, and has been altered several times in response to feedback from nonprofits. The proposed policy includes an exemption for organizations that have less than $10 million in property value in order to mitigate the impact on smaller nonprofits, and the latest version includes a 50% deduction, or “community benefit credit” in recognition of services provided by nonprofits.
The calculation for payments are based on the city’s mill rate and would be phased in over three years. As an example, a nonprofit with $20 million in tax-exempt property would be asked to provide $23,960 annually by the time the program is fully phased in.
An organization like MaineHealth, which has property values in the range of $1 billion, would be asked to pay about $1.7 million by the end of the rollout.
With the item postponed, no public comment was taken Monday and a large number of people left the council chambers without speaking.
In an op-ed in the Press Herald this past weekend, the leaders of Northern Light Mercy Hospital and Avesta Housing said the policy would negatively impact the work they do to provide services that the city can’t replicate.
“We strongly encourage the Portland City Council to consider policies that support, rather than limit, our ability to serve our community. Portland is strong when its nonprofit institutions are strong.”