Despite their long history, payment in lieu of taxes (“PILOT”) agreements recently came under attack at the Florida Supreme Court. Local governments use PILOT agreements to contract with otherwise tax‐exempt land owners to secure payment for municipal services that would normally be paid for through tax revenue. This allows local governments to encourage development that provides a public benefit without bearing the entire loss. The propriety of such agreements was at issue in City of Largo v. AHF-Bay Fund, LLC. The question was whether these agreements were valid as contracts despite being calculated in the same manner as ad valorem taxes. Upholding PILOT agreements as enforceable contracts—not unconstitutional taxes—the Court went a step further, taking the opportunity to elucidate other issues of municipal government and property law. This case clarified the difference between taxes and the voluntary, bilateral agreements that can take their place while exploring the public policy behind PILOT agreements, like supporting affordable public housing and promoting freedom of contract. This Article provides context for the AHF-Bay Fund decision and analyzes how this case now serves as a valuable precedent for local government practitioners.