ITHACA, N.Y. – How much money Cornell contributes to the City of Ithaca is a perennial question, even if – with an agreement in place through 2024 – it is unlikely to change dramatically in the next few years.
Cornell, which is tax-exempt, owns property in the city with an assessed value roughly equal to the total of all taxable properties in the city combined, about $2.1 billion. If the university paid property taxes, it would double the city’s annual levy or else reduce the amount businesses and homeowners pay, Mayor Svante Myrick said at a presentation to the Community Life Commission on Monday that was meant to provide an overview of past negotiations with the university.
In lieu of paying property taxes, Cornell contributes to the city according to the terms of a Memorandum of Understanding written in 1995 and amended in 2003, which sets a schedule of voluntary payments. In 2018, the university paid the city about $1.3 million, with about $802,000 earmarked for fire services.
During his Monday presentation, Myrick revisited the familiar talking point, saying Cornell’s current contribution is not enough and insisting the university should offer unrestricted funds rather than paying for projects that directly benefit it.
Joel Malina, Cornell’s vice president for university relations, countered in a statement to The Ithaca Voice that Cornell contributes significantly more than the $1.3 million payment by bolstering the local economy, paying taxes on “Cornell-related” buildings like the Cornell Store on the Commons, and providing funds to area non-profits including public schools and transit.
No new proposals are on the table; the current conversation was sparked, in large part, by the accidental omission of a date on a report attached to Monday’s commission agenda, which made it appear as though the city was issuing a new request for a higher Cornell contribution rather than reviewing past requests. (The agenda has since been updated with dates and links to information provided by Cornell.)
Nevertheless, as the mayor and five Common Council members vie for reelection they will likely face questions from voters about whether Cornell should give more, how much and what for. Here’s a quick explainer of where the City and Cornell currently stand.
What does Cornell contribute?
Cornell’s direct contribution to the City of Ithaca in 2018 was $1,336,198, with $801,719 going toward fire services and the remaining $534,479 going into the general fund. The yearly payment agreed to in the city and university’s MOU is tied to the Consumer Price Index, and is expected to rise slightly in 2019. In 2004, the first year after the MOU was amended to its current terms, Cornell paid $1,250,000 to the city.
The payment agreed to per the MOU does not capture Cornell’s total contribution, as Myrick acknowledged Monday. In its annual local economic snapshot, the university says it contributed a total of $7.93 million to local governments, the Ithaca City School District, non-profit organizations and transit support. The snapshot also points to Cornell’s broader impact on the local economy, citing university purchasing, student and visitor spending, construction projects and payroll.
In addition, the university pays property taxes on non-educational buildings beyond its main campus, such as the Cornell Store on the Commons, REV: Ithaca Start-Up Works, and the Breazzano Family Center for Business Education in Collegetown, making it the third largest property tax payer in Tompkins County.
While the university does not pay municipal property taxes on its campus, it is required to pay applicable municipal fees for services including water, sewer and stormwater management. Common Council restructured stormwater fees in the 2019 budget, shifting the burden of fees to large property holders and increasing the amount Cornell will pay in 2019.
While there’s no simple way to quantify Cornell’s total contribution to the City of Ithaca, it is clear the university contributes more than the annual payments outlined in the MOU and much less than it would owe in property taxes if it were not exempt.
Could the city get a better deal?
Myrick frequently compares Cornell to other Ivy League and elite schools to argue that the local university does not match its peers’ support for municipalities. He compiled a report in 2012, which was made public in 2014 and re-circulated at Monday’s meeting, comparing contributions from Princeton, Harvard, Yale, Boston University, MIT, Brown and Penn State across dimensions including the size of the schools’ endowments, student population and municipal population.
Representatives from Cornell have repeatedly called Myrick’s report erroneous, as in this 2014 opinion letter by John Carberry, director of media relations.
Without getting bogged down in the specific numbers included in the report – which are now seven years outdated – it does point to several different arrangements universities and municipalities have used to structure contributions.
Myrick asked Monday, as he has in past discussions, “What would it be like if Harvard were here, or Princeton?” A look at the arrangements Harvard and Princeton have with their host cities suggests those universities are not inherently more generous but have been somewhat successfully pressured into growing contributions by a standardized, citywide PILOT program in Boston and a lawsuit in Princeton.
Harvard voluntarily contributes funds to Boston through a standardized PILOT, or payment in lieu of taxes, program the city implemented in 2012. Boston requests that all tax-exempt institutions with property valued at more than $15 million contribute 25% of the tax they would be assessed, minus a credit for demonstrated community benefits. In 2018, Boston requested about $12.5 million in PILOT payments from Harvard, based on a property assessment of $1.5 billion. The requested payment was offset by a $6.25 million credit for community benefits. Harvard ultimately paid about $3.6 million, or about 80% of the city’s request.
Princeton University, meanwhile, has adjusted its municipal contributions partly as a result of a lawsuit filed by homeowners in the municipality of Princeton in 2011. Homeowners brought suit claiming the university’s property tax-exemption should be revoked, since the university routinely brings in profits and engages in commercial activity. The university settled the case in 2016 and agreed to pay about $1.6 million per year for five years to assist low-income homeowners with property taxes, in addition to existing voluntary payments to the city. During the case, a judge ruled the university bore the burden of proof to demonstrate buildings it claimed exemptions for were used entirely for educational purposes. That decision incentivizes the university to keep some buildings, such as graduate student housing, on the tax rolls. In 2017, Princeton paid $5.8 million in taxes on properties it claims could be exempt.
Ongoing negotiations
Myrick said Monday that he has tried, and failed, to bring Cornell to the negotiating table each year to establish a formal PILOT agreement. Since the current MOU does not expire until 2024, there is little incentive for Cornell to reopen discussions.
Still, the city is pursuing other ways of drawing on Cornell’s resources. The stormwater fee is not specific to Cornell, but is an example of distributing costs based on service usage rather than tax assessments. The city and university are in conversation about other ways Cornell can contribute to infrastructure that it relies on.
Dan Cogan, the city’s chief of staff, said Cornell has offered a total of $750,000, paid out over three years, to repair Stewart Avenue.
While that money would go a long way toward filling potholes or simply repaving a road, Cogan said Stewart Avenue is in need of more comprehensive upgrades, including work on water, sewer, gas and telecommunications lines, sidewalks, and drainage.
“It’s not simply a matter of, ‘Okay, they gave us some money, let’s throw down some pavement,’” Cogan said. A thorough rebuild is projected to cost as much as $7 million, he said.
Myrick said Monday that while contributions from Cornell are generally appreciated, there are issues with accepting funds for special projects that directly benefit the university community. For instance, Stewart Avenue is not the only street in need of repair, and $750,000 could help address smaller issues elsewhere in the city before any major Collegetown project gets underway.
“It can be problematic to give somebody the ability to give money for a project that they’re interested in,” Myrick said. He added that it could create a scenario where “roads near the wealthy neighborhoods would be lovely, and the roads near the poor neighborhoods would be poor.”
Members of the Community Life Commission expressed interest in learning more about how other cities and universities have tackled this problem, and plan to discuss potential avenues for research at their May meeting.