BATEMAN |  Cornell Still Does Not Pay its Fair Share to the City of Ithaca

Wealthy universities across the country benefit from tax exempt status while they sit on endowments in the billions that grow every year and collect millions in tuition dollars annually. Their tax exempt status can have a significant impact on the budgets of the cities and towns that host them. PiLOTS (payments in lieu of taxes) or other voluntary contributions have become one way for universities to contribute, but these agreements are shaped by the power imbalance between wealthy institutions and often underfunded towns. This is glaringly clear in Cornell University’s recent negotiations with the City of Ithaca to provide a voluntary contribution to the city. While the estimated value of taxes on Cornell property would be approximately $33 million without the exemption, the University refused to pay the $8 million the City asked for. With a negotiating team led by an experienced Washington, D.C. lobbyist, Cornell initially offered just over $3 million. Exploiting Ithaca’s budget deficit, the University made clear they would walk away if the City did not accept the bad deal they were offering. Despite calls for opposition from Ithaca residents, City officials ultimately accepted $4 million each year for 15 years.

To maintain its legitimacy as an educational institution for the common good and to fulfill its moral and social obligations to contribute to the well-being of these communities, Cornell should pay its fair share. Ithaca and the surrounding region may benefit from Cornell’s presence, but that presence also imposes heavy financial and social costs. The University makes extensive use of public services to serve its large population and footprint yet its privileged legal status directly contributes to a cost of living and housing crisis in Ithaca and surrounding communities. Many people who work in Ithaca, including Cornell staff, cannot afford to live in Ithaca. Public school teachers and public transportation workers, for example, often commute up to an hour to their jobs. The $33 million tax burden that would otherwise fall to Cornell is instead dispersed among homeowners, and landlords pass it off to their tenants without fail. Even students must often take on debt to afford rental housing, the cost of which is far higher than cities of comparable size and location. Ithaca has accumulated a large public debt despite high property taxes and faces a sustainability crisis in the long term. Meanwhile Cornell sits on a ten billion dollar endowment and tremendous property holdings in both Ithaca and New York City — the majority of which it pays no property tax on. Needless to say, this unfinanced burden impedes Ithaca in meeting not only its current obligations but also any aspirations to address emergent and urgent municipal issues of our time — like critical preparation and mitigation for emergencies linked to ecological and climate crises.

For the last 20 years, Cornell has made a miserly contribution to the City of Ithaca, and even less to the wider communities in Tompkins County and beyond. The University pays far less, per student, than other Ivy League universities do in their voluntary payments. For instance, Yale paid $13.2 million to New Haven in 2022 (approximately $893/student, almost five times Cornell’s payment) which will grow to $24 million by the fifth year of its agreement with New Haven. Harvard, with a number of students equivalent to Cornell, and Princeton with far fewer, each paid over $10 million in 2022 to their respective cities. The terms of Cornell’s contribution, moreover, have been heavily restricted so that much of the funding it does provide must be spent on priorities set or agreed to by Cornell. Cornell’s large footprint imposes costs and it is only fair that these costs be managed democratically, through the institutions, decision making processes and participation of the people of the city and county.

Originally posted 2023-11-04 23:39:06.