The time has come, the city leaders say, to ask BJC HealthCare, Washington University, St. Louis University and other large nonprofits for voluntary support to offset lost revenue. The growing institutions own considerable swaths of land in the city on which they don't pay property taxes.

"It's worth sitting down with nonprofits and figuring out how and where they can pitch in," St. Louis Board of Aldermen President Lewis Reed said. "We haven't had these conversations and have no idea how they would come out."

With municipal budget crunches across the country, nonprofits are increasingly being asked to pitch in for new fees or payments. In a program some cities have adopted — payments-in-lieu-of-taxes, or PILOT — nonprofits hand over money each year to help soften their property tax exemptions.

Municipal officials argue that nonprofits use city services and some have budgets that rival those of big business. They don't pay property taxes that would help city and school budgets.

But nonprofits fire back that they have long been exempted from paying taxes by IRS rules — largely in exchange for providing services that governments either don't or can't provide. Nonprofits encourage civic involvement, lure talent to the region, and provide jobs and, in many cases, charity.

All property in St. Louis is worth $18 billion, according to the city assessor's office. Tax-exempt properties account for 17 percent of that, or $3 billion. Nongovernmental nonprofits hold nearly 5 percent of all city property, valued at $842 million; some of the biggest chunks are owned by the universities and BJC.

Nonprofit property isn't assessed regularly, so it's difficult to get a hard figure on lost tax revenue on that nonprofit property, but it's an estimated $15 million a year, $9 million of which would go to public schools.

Mayor Francis Slay is not commenting, other than to say PILOTs are one of many revenue-generating options to consider.

PILOTs are "not out of the realm of possibility," said Kara Bowlin, a spokeswoman for Slay. "We're currently looking into hundreds of money-saving or revenue-generating ideas to see what's feasible and what's not."

St. Louis Alderman Stephen Conway said the mayor and comptroller would have to sign off on pursuing PILOTs. Nothing has happened yet, but he said once cuts to the 2011 budget are publicized later this month, there would likely be movement on the matter.

"I am sure in three weeks, once this budget comes forward, there will be a lot of talk," he said.

Henry Webber, executive vice chancellor for administration at Washington University, cautions against such a program. He was quick to point out a litany of mutual benefits with the city.

"Across the country, you'll find very large universities make contributions in different ways to their localities," he said. "To assume that PILOTs are the only way that folks add value is a real mistake."

primary targets

PILOT agreements are usually a fraction of what actual property taxes would be. With 93 percent of charitable nonprofits nationally generating revenue of less than $1 million a year, primary targets are large institutions, especially universities and hospitals — the "eds and meds."

Boston is one of the most extreme examples, with $32 million worth of PILOTs on its books in 2009, mainly with hospitals, universities and the Massachusetts Port Authority.

Meanwhile, Princeton University donates $1.2 million a year to its local authorities; another nearby foundation of Christian Scientists chips in $478,000, and an affordable housing development, Princeton Community Village, forks over $248,000, based on a municipal agreement signed in 1975.

Others include Detroit, which gets $5 million a year in service charges from investment groups that received tax breaks for building low-income housing exempt from property taxes. Indianapolis gets $4 million, mainly from a water company.

Closer to home, Lutheran Senior Services, a nonprofit, gives Webster Groves $28,000 a year; and Webster University has a 'scholarship agreement," allowing full-time city employees to take undergraduate and graduate courses for free. That amounts to some $60,000 a year.

"This is one opportunity for payment-in-kind because they don't pay for taxes," said Joan Jadali, Webster Groves' financial director.

Also, Fontbonne University and Concordia Seminary both have voluntary PILOT agreements with Clayton in exchange for emergency services. Last year, three apartment complexes exempt from property taxes paid Shrewsbury $29,000 to help pay for services.

potential

Conway wants to explore payment and service options with nonprofits, starting with the largest and excluding those with revenue of less than $3 million a year and churches.

"Institutions, hospitals, do put a burden on our capacity," he said. "We are prepared to respond to their fires, their emergencies."

He suggested negotiating deals with hospitals to underwrite, say, large hook-and-ladder firetrucks. He said universities could take over street and lighting maintenance near campus and expand security forces. "The benefit is if we don't have to do something, it is the same as paying money."

Alderman Jennifer Florida said the culture of large nonprofits has evolved from times when they "barely broke even" to competing with big businesses.

For instance, Washington University has an operating budget of $1.9 billion and an endowment of $4.1 billion. The city's 2010 general fund budget is $454 million.

"I think that we all understand that without a healthy core, we can't have a healthy region," she said of the city, adding, "We would never want to impose anything that wasn't equitable."

A citywide PILOT program could raise $5 million a year, according to a 2009 study by the PFM Group, a Philadelphia-based financial consultancy that looked at potential new revenue streams for St. Louis.

The study cites BJC, the city's largest employer, as an "excellent first candidate for an agreement" and Washington and St. Louis universities as "good" candidates.

"After the engagement of major city nonprofit institutions into the program, it would likely be easier to secure contributions from other smaller institutions throughout the city," said the study, paid for by the Missouri Council for a Better Economy. The council is a newly formed nonprofit, whose largest contributor is financier Rex Sinquefield, a proponent of repealing the St. Louis earnings tax.

contributions

Because there isn't a formal PILOT proposal on the table, Clayton Berry, a spokesman for St. Louis University, said it is premature to comment. But he added, "We're sure city officials know what a tremendous positive economic impact SLU has on the St. Louis economy."

"We employ more people than most other organizations in St. Louis," he said of its 7,100 employees. "We spend tens of millions of dollars annually on local goods and services. And, because more than half of our 13,000 students hail from outside the area, we attract thousands of new consumers to the city."

BJC, the behemoth with $3.2 billion in revenue and 23,000 employees in the St. Louis area, also said it's too soon to comment.

Webber, of Washington University, said the private university not only brings in talent, but it also provides its own security and trash pickup, and contracts for fire services.

"I understand that we constitute some burden financially, but we do everything we can to reduce it," Webber said. Washington University donates $90,000 a year to University City for extra police protection because many of its students live there.

"They are just being a good neighbor," said Janet Watson, deputy city manager.

Webber mentioned a list of blessings the university brings to the region, such as the addition of 3,000 jobs in the last decade, the majority of them in the city; neighborhood development; and partnerships with St. Louis public schools.

On top of that, he said, "Remember that the city of St. Louis has an earnings tax — over 9,000 of our employees pay the earnings tax, including myself, by the way."

Indeed, last year, Washington University employees paid $6.27 million in city earnings taxes, Webber said — more than any other business or institution in the city, ahead of BJC, AT&T and A-B InBev. He said cities that have an earnings tax typically don't have PILOTs. Detroit and Pittsburgh are two exceptions.

An intensified push for money from nonprofits comes at a time when the groups are already being hit by a slump in grants and contracts and states are slashing social service funding, said Tim Delaney, president of the National Council of Nonprofits. And those cuts then push more people to nonprofits for help, he added.

"The policymakers right now are so anxious to try to come up with ways to fill the revenue stream that they are not fully appreciating the ripple effect of harm that they are causing," Delaney said.