The Watershed Management PILOT amount is determined by multiplying the Department of Revenue (DOR) valuation of DCR Division of Water Supply Protection land by the local commercial tax rate.
DOR is responsible for setting the value of state-owned land every four years, pursuant to their guidelines on segmenting lands into prime lots (the requisite frontage and area needed to build a single family home in each community), rear acreage and unbuildable acreage, as well as discount adjustments for the total number of prime lots and total acreage.
There is a wide variation in the per-acre PILOT payment from community to community. This is due to varying real estate prices, which are a key factor in determining land valuation, and local tax rates.
DCR's permanently protected open space, therefore, is valued as if it is still potentially developable land and then the PILOT is calculated using the same tax rate structure as commercial or industrial property.
The latest DOR revaluation took place in the first half of the year 2017. The revaluation takes into account all lands purchased by the DCR over the previous four years as well as any changes in land values. These values will take effect in FY2018 PILOT.
Legislative provisions state that the Watershed Management PILOT payment can NEVER be less than that of the previous year, even if the value of the land or tax rates decrease.
Money for the PILOT program comes from the Massachusetts Water Resources Authority (MWRA) rate payers who use the reservoir waters. They pay their water bills to the MWRA, which provides the DCR with the funds needed to make the PILOT payment. The DCR makes an annual payment in full to each community in the program.
Watershed Management PILOT vs. other state Payments in Lieu of Taxes
Many towns also receive compensation for other State Owned Lands that are not used for water supply protection. The Watershed PILOT program differs from this program in several ways:
- MWRA ratepayers pay the bill. Funds for the Watershed Management PILOT payments come from Massachusetts Water Resources Authority (MWRA) rate payers who use the reservoir waters; the MWRA provides funding to the DCR to make PILOT payments to the watershed towns. Unlike other PILOT programs for state-owned lands, which are disbursed through the State's Local Aid program ("Cherry Sheets") and are subject to legislative appropriation (currently 68% of full value), the Watershed Management program is paid in full directly to each community. The DCR payment does not appear on the Cherry Sheet.
- DCR PILOT utilizes the local commercial tax rate. The PILOT which is distributed through the "Cherry Sheet" is based on a statewide average of residential tax rates calculated by the Department of Revenue Division of Local Services. Watershed Management PILOT is required to utilize each community's commercial tax rate in calculating the PILOT obligation.
- The payment can never be less than the previous year. MGL c. 59, s. 5G states that Watershed Management PILOT can never be less than the previous year's payment. This "hold harmless" clause provides the watershed communities the security of level funding even if a drop in valuation or tax rate combines to lower the calculated PILOT.
Watershed Management PILOT Program vs. Chapter 61 land
The Watershed Management PILOT program land is owned by the Commonwealth of Massachusetts. Chapter 61 land is privately owned with property taxes abated 95% in exchange for a commitment to keep the land in active forest use for 10 year intervals. The Chapter 61 program is managed by the Bureau of Forestry & Fire Control section of the DCR.
DCR Division of Water Supply Protection
251 Causeway St.
Boston, MA 02114