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Situational Analysis: SOL PILOT (M.G.L. c. 58, § 13-17)

An overview of the history and current state of the state-owned land PILOT program in Massachusetts.

The SOL PILOT Program was established in 1910 and is the longest-running PILOT program in the Commonwealth.21 This program was created to provide reimbursements to cities and towns for tax-exempt land under state ownership within their borders, such as forests, beaches, and other public institutions. There is a recognized public value in the use of land for conservation and recreation purposes, so municipalities are reimbursed for their protected land under state control. Cities and towns are also reimbursed for the loss of potential revenue if land is used for other public purposes, such as universities or houses of correction. This program is crucial to rural municipalities that have a significant amount of land owned by the state, cities and towns that benefit from recreational tourism, and other communities that host large state facilities.

PILOT reimbursements to municipalities for SOL are dependent on four factors:22

  1. the value of SOL in each community as determined by the DOR;
  2. the change in property values in each community as adjusted every two years;
  3. the share of a municipality’s SOL value to the total value of SOL in the state; and
  4. the annual amount of money appropriated by the Legislature for the program.

The DOR determines the fair cash valuations of eligible SOL for which a community could receive a reimbursement in the program.23 PILOT reimbursements are then determined, where the shares of municipalities’ SOL values relative to the total SOL in the state are multiplied by the PILOT program’s legislative appropriation.24 The program’s formula is outlined below:

(Municipality’s SOL Value / Total Statewide SOL Value) * Legislative Appropriation25

Table of Contents

SOL Eligibility

In order for a municipality to receive PILOT reimbursements, the land has to fall into one of the following categories:

All land owned by the commonwealth as of January 1 and used for the purposes of a fish hatchery, game preserve or wild life sanctuary, a state military camp ground, the Soldiers' Home in Massachusetts, the Soldiers' Home in Holyoke, a state forest, the University of Massachusetts, or a public institution under the department of correction, the department of higher education, the department of mental health, the department of developmental services, the department of public health, the department of transitional assistance, or the department of youth services, land owned by the commonwealth known as the Wachusett Mountain State Reservation and the Mount Greylock State Reservation, Blue Hills Reservation, and the Middlesex Fells Reservation and of all land owned by the commonwealth and under the care and control of the department of conservation and recreation and used for recreational or conservation purposes; . . . and of all land held by the department of environmental protection for use as a solid waste disposal facility; . . . and of any land acquired by the low-level radioactive waste management board.26

Properties from other state agencies not listed in the statute are not eligible for PILOT reimbursements under the program. State laws governing the PILOT program dictate that buildings and other improvements on the land are not included in a municipality’s SOL valuation. For example, buildings belonging to a state hospital would not be eligible for a PILOT reimbursement, but the land on which the hospital is built is eligible. Properties that were already tax-exempt before state acquisition, such as lands that were previously owned by the federal government, are also not eligible for PILOT reimbursements under law.27

Valuing SOL

Before FY2019, SOL was revalued every four years based on information supplied by municipal assessors in each community.28 After changes contained in the Municipal Modernization Act of 2016 were implemented in FY2019, the valuation process shifted to using a base value for land holdings in each municipality that represented values as of January 1, 2017.29 Base values for each municipality were calculated by standardizing and equalizing their land schedules from FY2015, FY2016, and FY2017.30 Every two years subsequent to FY2017, the base value is adjusted by a ratio reflecting the change in the equalized value of all property in the municipality (see text box below). Any land additions or dispositions in a community are calculated as the product of the average value per acre of land in the community multiplied by the size of the land holding.31 The valuation of individual properties in the program can no longer be contested, although a community may appeal its equalized valuation of all taxable property to DOR.32

How SOL is reValued - FY2020

To determine a municipality's Equalized Valuation (EQV) Adjusted Ratio:

( [2018 EQV – 2016 EQV] / 2016 EQV )  + 1 = 2020 EQV Ratio

To determine a municipality’s SOL value:

FY2019 SOL Value * 2020 EQV Ratio = FY2020 SOL Value

Note: SOL is revalued in even-numbered fiscal years (FY2020, FY2022, etc.).

In FY2020, reimbursable SOL in the Commonwealth was valued at $3.15 billion, which represented 1.6% of the state’s total value of tax-exempt land and properties ($196 billion) and 0.21% of all property in the state ($1.5 trillion).33 As seen in Figure 1, the Commonwealth’s total SOL value is climbing back to its FY2010 levels after several years of decline due to the Great Recession and dispositions of land.

Figure 1Total SOL Value in Massachusetts34

FY

Total SOL Value

Net % Change

2009

$3,294,617,486

 

2010

$3,291,454,362

-0.10%

2011

$2,970,986,607

-9.74%

2012

$2,981,907,389

0.37%

2013

$2,980,948,319

-0.03%

2014

$2,968,818,475

-0.41%

2015

$2,688,626,816

-9.44%

2016

$2,601,428,108

-3.24%

2017

$2,721,004,524

4.60%

2018

$2,723,593,992

0.10%

2019

$2,877,592,333

5.65%

2020

$3,146,119,500

9.33%

2021

$3,168,553,800

0.71%

Due to their significant state land holdings, some municipalities are so heavily dependent on funds from the SOL PILOT Program that their SOL payments nearly equal their other state aid. Figure 2 shows that in FY2020, SOL represented one-fifth of all property value in Mount Washington and represented nearly one-tenth of all property value in municipalities such as Warwick, Hawley, Savoy, and Wendell. As a result, in FY2020 Warwick received $98,401 from the SOL program, compared to $135,051 in Unrestricted General Government Aid.35 Similarly, Wendell received $109,468 through the SOL program, compared to $185,063 in Unrestricted General Government Aid.36 The SOL for the remainder of the 297 municipalities that received SOL PILOT funds represents a smaller fraction of their communities’ assessed values, but remain an important source of revenue. 

Figure 2Municipalities with Significant SOL Holdings (FY2020)37

Municipality

County

Notable SOL

Total SOL Acreage

SOL % of Total Property Value

PILOT Reimbursement

Share of Total Appropriation ($30 Million)

Mount Washington

Berkshire

Mount Washington State Forest

8,409

20.00%

$239,492

0.80%

Warwick

Franklin

Erving State Forest

11,757

10.62%

$98,401

0.33%

Hawley

Franklin

Kenneth Dubuque Memorial State Forest

8,079

10.23%

$57,635

0.19%

Savoy

Berkshire

Savoy Mountain State Forest

11,924

9.82%

$79,254

0.26%

Wendell

Franklin

Wendell State Forest

8,075

9.26%

$109,468

0.36%

Total:

 

 

48,244 acres

 

$584,250

1.94%

 

Land Acquisitions and Dispositions

The Division of Capital Asset Management and Maintenance (DCAMM) oversees much of the state's capital facilities, land, and improvements.38 Under state law, the commissioner of DCAMM sets rules and regulations for state acquisition of real property that is held “in the name of the Commonwealth.”39 Land acquisitions can be the result of a “gift, purchase, devise, grant, eminent domain, rental, rental-purchase or otherwise.”40 DCAMM is also responsible for disposing of land and property that is no longer needed by the state.41

In addition, Article 97 of the State Constitution mandates the “protection of the people in their right to the conservation, development and utilization of the agricultural, mineral, forest, water, air and other natural resources.”42 The Executive Office of Energy and Environmental Affairs (EEA) oversees SOL that is protected under Article 97. The EEA also conducts “fee simple” land acquisitions, which are purchases or donations of a land parcel from an outside entity, as well as land dispositions upon consultation and approval by DCAMM officials.43 Because Article 97 land has strong protections, land under the EEA’s authority is only removed under “exceptional circumstances.”44

Finance

Like other local aid from the Commonwealth, SOL PILOT reimbursements are distributed to municipalities on a monthly basis. The level and extent of funding for the PILOT program changes each year, because the program is subject to legislative appropriation. In FY2020, the appropriation for the SOL PILOT Program was $30,000,000—the highest amount allocated to the program since FY2009.45 The FY2020 appropriation represented less than .07% of the state’s $43.321 billion budget.46 The median PILOT reimbursement for that fiscal year was $49,989.47

As seen in Figure 3, the SOL PILOT appropriation increased by 10%, or $2.73 million, between FY2010 and FY2020. Over $297 million in PILOT reimbursements were distributed to municipalities during this period.48 

Figure 3SOL PILOT Appropriation Trends49

FY

Appropriation

Dollar Change From Previous Year

Percent Change From Previous Year

2009

$30,300,000

n/a

n/a

2010

$27,270,000

($3,030,000)

-10.00%

2011

$25,270,000

($2,000,000)

-7.33%

2012

$26,270,000

$1,000,000

3.96%

2013

$26,270,000

$0

0%

2014

$26,770,000

$500,000

1.90%

2015

$26,770,000

$0

0%

2016

$26,770,000

$0

0%

2017

$26,770,000

$0

0%

2018

$26,770,000

$0

0%

2019

$28,478,131

$1,708,131

6.38%

2020

$30,000,000

$1,521,869

5.34%

The municipalities with the largest reimbursements have SOL holdings that are high in value but vary in size, as seen in Figure 4. The reimbursements to these 10 communities represented nearly 26% of the program’s legislative appropriation and, therefore, the state’s total SOL value.50

 

Figure 4Highest SOL PILOT Reimbursements (FY2020)51

Municipality

County

Notable SOL

Total SOL Acreage

PILOT Reimbursement

Share of Total Appropriation

($30 Million)

Edgartown

Dukes

Manuel F. Correllus State Forest

2,848

$1,465,372

4.88%

Bedford

Middlesex

Hanscom Field

683

$1,022,863

3.41%

Milton

Norfolk

Blue Hills Reservation

1,661

$892,080

2.97%

West Tisbury

Dukes

Manuel F. Correllus State Forest

2,475

$829,714

2.77%

Plymouth

Plymouth

Myles Standish State Forest

11,881

 

$698,033

2.33%

Westport

Bristol

Horseneck Beach State Reservation

485

$671,077

2.24%

Bourne

Barnstable

Camp Edwards

10,812

$600,691

2.00%

Sandwich

Barnstable

Camp Edwards

9,099

$579,153

1.93%

Concord

Middlesex

Walden Pond State Reservation

897

$570,619

1.90%

Framingham

Middlesex

Framingham State University

846

$465,122

1.55%

Total:

41,687 acres

$7,794,724

25.98%

Case Study: Land Acquisitions’ Impact on PILOTs

In 2020, the Governor signed legislation that will switch ownership of a parcel of land in the Town of Bridgewater from the Department of Correction (DOC) to the Department of Fire Services (DFS).52 This change is significant because, while DOC land is eligible for the SOL PILOT Program, DFS is not listed as an eligible agency, meaning that municipalities do not receive PILOT reimbursements for DFS-owned land in their communities.53 As a result, Bridgewater will lose some of its SOL PILOT reimbursements, even though a state agency will still own the parcel.

What happens when the state transfers a town’s SOL to another agency that doesn’t participate in the SOL PILOT Program? For example, Bridgewater had SOL valued at $37,847,000 in FY2020 and received a PILOT reimbursement of $360,892.54 If the Commonwealth transferred $2 million worth of land in Bridgewater to another agency not participating in the program, the town’s share of SOL value will go down. Because the SOL PILOT payments are a function of both the legislative appropriation and the community’s overall share of SOL, Bridgewater’s PILOT reimbursement will go down by 0.6%, or at least $18,854, as seen in Figure 5. The $18,854 will be redistributed to other municipalities in the program. The largest monetary redistributions will go to the cities and towns with the largest SOL values listed in Figure 4, such as Edgartown and Bedford.

Figure 5—Town of Bridgewater: SOL Scenarios in FY202055

 

FY2020 SOL Value

If SOL Decreased by

$2 Million

If SOL Increased by

$2 Million

SOL Value

$37,847,000

$35,847,000

$39,847,000

PILOT Reimbursement

$360,892

$342,039

$379,722

Share of PILOT Appropriation

1.20%

1.14%

1.27%

Increase/Decrease from FY2020 PILOT

-

($18,854)

$18,830

PILOT Redistribution to Other Municipalities

-

Over $18k redistributed to other municipalities’ reimbursements; increases from $1 to $932

Over $18k in reduced reimbursements to municipalities; reductions from ($1) to ($931)

 

If the state acquired an additional $2 million in eligible SOL in Bridgewater, the opposite would occur. Because Bridgewater’s share of SOL will increase, its PILOT reimbursement will increase at a similar rate (at least $18,830). Every other municipality in the program will see a reduction in its reimbursement to cover Bridgewater’s increases. In this case, the largest reductions in reimbursements will come from municipalities with the largest SOL values.

Outside of general year-to-year growth of land values, there will be some communities that will gain in value due to a land acquisition. There will also be communities that had some of their SOL sold or transferred to other entities. As a result, this shifting dynamic alters reimbursements to all municipalities each year.

Case Study: DCR Watershed PILOT Program (M.G.L. c. 59, § 5G)

The Commonwealth runs a parallel PILOT program for watershed land under the control of the DCR, which was enacted into law in 1984.56 This program was established as a result of actions to compensate communities for the protected watersheds within their borders that serve as the MWRA’s water supply.57 The MWRA provides water to 51 communities and has a service area that includes 40% of the population of the Commonwealth.58

The Watershed PILOT Program provides reimbursements to 29 communities that share boundaries with the Quabbin, Wachusett, Ware, and Sudbury watersheds. There are also payments to communities with annexed land of the former towns of Dana, Greenwich, Prescott, and Enfield that were flooded to establish the Quabbin Reservoir.59 In recent years, reimbursements to municipalities under the Watershed PILOT Program had a small increase, as seen in Figure 6:

Figure 6—Watershed PILOT Funding Trends60

FY

Total Reimbursements

2015

$7,966,612

2016

$8,128,726

2017

$8,190,986

2018

$8,249,177

2019

$8,255,642

2020

$8,355,687

 

The Watershed PILOT shares some other similarities with the SOL PILOT Program. Both programs rely on the DOR to assess and revalue their land, using protocols implemented by the Municipal Modernization Act.61

The most significant difference between the programs involves what happens to the watershed property values to calculate PILOT reimbursements, as identified in the formulas listed in Figure 7. Under the Watershed PILOT Program, the watershed land value in each community is multiplied by the community’s commercial tax rate in order to calculate that year’s reimbursement.62 In contrast, under the SOL PILOT Program, a community’s reimbursement is calculated by multiplying its percentage of total SOL value by the legislative appropriation. Moreover, the Watershed PILOT Program has a hold-harmless provision that prevents reimbursements from dropping year to year based on lower property values, while the SOL PILOT Program does not. As a result, reimbursements under the watershed program do not decrease except for the rare circumstance when land is removed from the program.63 Another difference is that the Watershed PILOT Program is not funded through a legislative appropriation. Instead, funding comes from the watershed management budget of the MWRA, which comes from user fees instead of the state budget.64

Figure 7—Reimbursement Formulas—SOL vs. Watershed PILOT

SOL PILOT

Watershed PILOT

(Municipality’s SOL Value / Total Statewide SOL Value) * Legislative Appropriation65

(Municipality’s DCR Watershed Land Values / 1,000) * Municipality’s Commercial Tax Rate66

21, M.G.L. c. 58, §§ 13-17; St. 1910, c. 607.

22, Massachusetts Department of Revenue, Division of Local Services. (2020, January 14). State-owned land program under M.G.L. c. 58, § 13-17: Frequently asked questions. https://www.mass.gov/files/‌documents/‌2020/01/14/SOLFAQ.pdf.

23. Note: Please refer to “SOL Eligibility” on p. 11, which defines what land is eligible for the SOL PILOT Program. See also Massachusetts Department of Revenue, Division of Local Services. (2020, January 14). State-owned land program under M.G.L. c. 58, § 13-17: Frequently asked questions.

24. Id.

25. Id.; M.G.L. c. 58, §§ 13-17

26. M.G.L. c. 58, § 13.

27. M.G.L. c. 58, § 13; Meeting with Department of Revenue Staff, 2/27/2020. On file with DLM.

28. Note: some municipalities’ SOL were revalued every three years instead of four, according to the Department of Revenue. See also Massachusetts Department of Revenue, Division of Local Services. (2017, July). 2017 state owned land base year trend analysis. On file with DLM; Meeting with Department of Revenue Staff, 2/27/2020. On file with DLM.

29. M.G.L. c. 58, §§ 13-14; Massachusetts Department of Revenue, Division of Local Services. (2020, January 14). State-owned land program under M.G.L. c. 58, § 13-17: Frequently asked questions.

30. Massachusetts Department of Revenue, Division of Local Services. (2017, July). 2017 state owned land base year trend analysis.

31. M.G.L. c. 58, § 13; Massachusetts Department of Revenue, Division of Local Services. (2020, January 14). State-owned land program under M.G.L. c. 58, § 13-17: Frequently asked questions.

32. Massachusetts Department of Revenue, Division of Local Services. (2020, January 14). State-owned land program under M.G.L. c. 58, § 13-17: Frequently asked questions; Meeting with Department of Revenue Staff, 2/27/2020. On file with DLM.

33. Massachusetts Department of Revenue, Division of Local Services. (2020). Exempt values as percent of total value – FY2020 [Data set]. https://dlsgateway.dor.state.ma.us/reports/rdPage.aspx?rdReport=LA4.Totals; Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

34. Note: SOL values for FY2019-FY2021 were retrieved by the DLS Municipal Databank. We calculated values prior to FY2019 by dividing the estimated full reimbursement for that fiscal year by that fiscal year’s aggregate tax rate, and then multiplied by 1,000. A further explanation of this methodology is located in Appendix B. See also Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2019 [Data set]. https://dlsgateway.dor.state.ma.us/reports/rdPage.aspx?rdReport=BLA.StateOwnedLand; Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

35. Massachusetts Department of Revenue, Division of Local Services. (2019). Final municipal cherry sheet estimates - FY2020 [Data set]. https://dlsgateway.dor.state.ma.us/reports/rdPage.aspx?rdReport=CherrySheets.CSbyProgMunis.MuniBudgFinal

36. Id.

37. Commonwealth of Massachusetts, Executive Office of Administration and Finance. (2020, February 14). Report on the real property owned and leased by the Commonwealth of Massachusetts. Report prepared by the Division of Capital Asset Management & Maintenance. https://www.mass.gov/files/documents/2020/02/14/report-on-the-real-property-owned-and-leased-by-comm-of-ma.pdf; Massachusetts Department of Revenue, Division of Local Services. (2020). Exempt values as percent of total value – FY2020 [Data set]; Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

38. Commonwealth of Massachusetts, Executive Office of Administration and Finance. (2020, February 14). Report on the real property owned and leased by the Commonwealth of Massachusetts; M.G.L. c. 7C, § 40.

39. M.G.L. c. 7C, §§ 33, 40.

40. M.G.L. c. 7C, § 1.

41. M.G.L. c. 7C, § 33.

42. art. 97 of the Amendments to the Massachusetts Constitution.

43. 301 CMR 51.00; Massachusetts Executive Office of Energy and Environmental Affairs. (2020). How is land protected? https://www.mass.gov/service-details/how-is-land-protected

44. Massachusetts Executive Office of Energy and Environmental Affairs. (1998, February 19). EOEA Article 97 land disposition policy. https://www.mass.gov/files/dcsarticle97.pdf

45. Massachusetts Budget and Policy Center. (2020). Budget browser: State owned land (1233-2400).

46. Commonwealth of Massachusetts. (2019). Budget summary –FY2020 enacted. https://budget.digital.mass.gov/summary/fy20/enacted/

47. Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

48. Massachusetts Budget and Policy Center. (2020). Budget browser: State owned land (1233-2400).

49. Id. Note: At time of this report’s publishing the FY 2021 budget has not been signed into law. However, the Conference Committee budget (H.5164), the final recommendation of the Legislature to the Governor before possible gubernatorial approval or veto, funded the SOL line item at $31,000,000. This represents a $1,000,000 increase over the FY 2020 final budget appropriation.

50. Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

51. Commonwealth of Massachusetts, Executive Office of Administration and Finance. (2020, February 14). Report on the real property owned and leased by the Commonwealth of Massachusetts; Massachusetts Department of Revenue, Division of Local Services. (2020). Exempt values as percent of total value – FY2020 [Data set]; Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

52. St. 2020, c. 177.

53. Please note that Bridgewater, alongside other municipalities that host houses of correction, receive an additional state reimbursement from the Department of Corrections, under line item 8900-0001. See also Commonwealth of Massachusetts. (2019). Budget summary –FY2020 enacted. https://budget.digital.mass.gov/summary/fy20/enacted/

54. Massachusetts Department of Revenue, Division of Local Services. (2020). State-owned land values – FY2020 [Data set].

55. Id.

56. St. 1984, c. 372 § 40A; St. 1987 c. 564 § 52.

57. M.G.L. c. 59 § 5G.

58. Massachusetts Water Resources Authority. (2019, August 13). About MWRA. http://www.mwra.com/02org/html/whatis.htm

59. Massachusetts Department of Conservation and Recreation, Office of Watershed Management. (2020). Watershed payments in lieu of taxes (PILOT).

60. Massachusetts Department of Conservation and Recreation, Office of Watershed Management. (2020). Watershed payments in lieu of taxes (PILOT).

61. St. 2016 c. 218 § 108.

62. M.G.L. c. 59, § 5G.

63. Meeting with DCR Division of Water Supply Staff Members, 4/30/20. On file with DLM; Meeting with MWRA Staff Members; 8/7/20. On file with DLM.

64. Meeting with DCR Division of Water Supply Staff Members, 4/30/20; Massachusetts Department of Conservation and Recreation, Office of Watershed Management. (2020). Watershed payments in lieu of taxes (PILOT).

65. M.G.L. c. 58 § 13-17; Massachusetts Department of Revenue, Division of Local Services. (2020, January 14). State-owned land program under M.G.L. c. 58, § 13-17: Frequently asked questions.

66. Massachusetts Department of Conservation and Recreation, Office of Watershed Management. (2020). Watershed payments in lieu of taxes (PILOT).

Date published: December 10, 2020
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