A PILOT is one type of economic tax incentive, which are sometimes used by local governments to encourage private development projects that stimulate economic growth in a jurisdiction.2 In most PILOT agreements a public entity such as an industrial development board takes title to property in order to issue bonds, and leases the property back to the developer during the bond repayment period. Because the owner in title is a public entity, the property is exempt from property tax during the redevelopment period.3 However, developers may submit payments to local government entities to offset property tax losses and to pay for city services.4 These payments may equal the full value of the lost property taxes, or they may be lower, effectively providing a subsidy to the developer.

Inspector General Ed Michel stated:

“Transparent policies and procedures will reduce opportunities for fraud, waste, and abuse while ensuring efficient administration of the PILOT program and good stewardship of the City’s tax dollars.”