The Downtown PILOT (Payment-in-lieu-of-tax) Program is a financial incentive designed to encourage commercial real estate development in and around the Central Business Improvement District (CBID) by holding property taxes at the predevelopment level for a set amount of time. To be eligible for a PILOT, the value of the building renovations, site improvements, or new construction must be equal to or greater than sixty percent (60%) of the total project cost.
The Center City Revenue and Finance Corporation (CCRFC), an affiliate board of the Downtown Memphis Commission and an Industrial Development Board, is the entity authorized to grant Downtown PILOTs.
A property owner never pays less tax as a result of receiving a Downtown Property PILOT. The local property taxes are held at the predevelopment level for a set period of time but never reduced lower than what is currently being charged.
At the end of the PILOT lease, the property returns to the tax rolls at the improved value, dramatically increasing the taxes due the City and County. In addition, the City and County benefit from the increased values related to properties surrounding a PILOT project, which could not have occurred without the PILOT generated improvements.
The Downtown Property PILOT program is specifically designed to encourage high-quality, catalytic development projects. This incentive does not cover issues such as job creation or job retention. The sole purpose of this program is to spur development Downtown as a way to improve the overall economy of Memphis and Shelby County.
Also, Downtown Property PILOTs are reserved for projects that would otherwise not happen. The applicant must demonstrate that the development project would not be financially feasible without a PILOT. The most critical qualifying criteria is the “but for” test. That is, but for the tax incentive provided by the PILOT, the project to improve the property would not be financially viable.
Click here for the CCRFC Board page with meeting schedule, minutes, agendas, staff reports, and project application materials
Contact the DMC Development Staff with any questions at (901) 575-0540.