Issues in the use of payments in lieu of taxes to provide nuclear waste facility siting incentives

High-level, nuclear waste isolation facilities will be federally owned and therefore exempt from local taxation. Because local residents view tax payments as a major benefit of industrial development, the absence of these payments, coupled with the inherent undesirability of hazardous-materials-handling activities, may discourage communities from accepting a facility. One method to overcome this disincentive is for the facility to make payments in lieu of taxes to localities. This paper examines the concept of payments in lieu of taxes and presents statistics describing local fiscal characteristics. The range these payments might take under alternative-payment arrangements is calculated, and the impact of such payments on the facility's user-fee schedule is estimated. It is concluded that a payment plan based on hypothetical property-tax liabilities for an identical, but taxable, facility would have a significant revenue impact on most localities but would not increase user fees significantly.