This is an op-ed by Fifth Ward Common Council candidate Jason Houghton. It was not written by The Ithaca Voice. To submit op-eds, please send them to Matt Butler at mbutler@ithacavoice.org.
The impending June 2024 expiration of the Memorandum of Understanding (MOU) between Cornell University and the City of Ithaca has received heightened attention over the past few months. The MOU, initially established in 1995 and amended in 2003, sets forth Cornell’s voluntary financial contribution to the city. Because Cornell is tax exempt yet owns an estimated 47% of the property value within the city, it is no surprise that tax-paying residents are keenly interested in the future of this agreement.
Under the current MOU and according to the 2023 approved city budget, Cornell will provide approximately $1.6 Million to the city’s general fund of just over $71 million. By comparison, Ithaca residents subject to the property tax levy will pay $30.5 million. To place these numbers in clearer context, we can say that If Cornell were subject to city property taxes on its estimated assessed value, it would pay nearly one dollar for every dollar paid by an Ithacan. Instead, it pays five cents.
To be sure, Cornell finances many of its own services apart from the city: it maintains some streets, sources its own drinking water, and runs its own police department, as examples. For these reasons, it is understandable that Cornell is not a fully equal contributor to city services. The fact remains, however, that Cornell’s presence, while providing numerous benefits to the broader community, also places greater demands on the city services and infrastructure from which it directly and indirectly benefits. Cornell employees traveling to and from work use city streets, producing wear and tear. Cornell relies upon the Ithaca Wastewater Treatment Plant and the Ithaca Fire Department. Large numbers of Cornell students living in tax-exempt dormitories walk on city sidewalks and enjoy city parks.
The expiration of the MOU has garnered resident attention because it comes at a time when Ithaca is simultaneously experiencing unaffordable housing and underfunded city departments. Housing unaffordability, in no small part, is impacted by the outsized property tax burden placed upon city residents – renters and homeowners alike. With increasing assessment values and high tax rates, the combined city, school and county tax bills can nearly double a mortgage payment or represent a third of monthly rent. Yet despite these high tax bills, the city struggles to adequately fund its departments. Retention of employees has become a recurring issue due to below-market wages, and the condition of much of Ithaca’s infrastructure is the subject of widespread resident and visitor complaints. While this paradox of high taxes and underfunded departments results from many factors, the oversized and tax-exempt footprint of Cornell looms large among them. Many city representatives have stated that they wish to close these funding gaps, but it makes one wonder how the city will finance it. Does it expect costs to fall on those already shouldering a heavy tax burden, or will the city seize this opportunity and push for a more equitable financial relationship with Cornell?
In light of these circumstances and in the interest of transparency, I would encourage the mayor and other representatives to be forthcoming with their constituents about plans and preparations for the MOU expiration. The city should assess and share with residents what it requires to fully fund its departments with fair-market wages. It should make public the general terms it hopes a future agreement with Cornell contains. Indeed, a group of volunteer residents has recently formed the Fair Share Campaign to assist in this effort. This group has gathered data from communities hosting Cornell’s peer institutions as well as other communities with large tax-exempt footprints. By examining the agreements, models, and legislative remedies that these municipalities have put in place, they hope that the city, its citizens, and Cornell alike can be fully informed about current circumstances and possible outcomes. The city should welcome their input.
Just as importantly, the city’s timetable for discussions should be transparent. With significant changes coming to our municipal government at the start of next year—a city manager, a new mayor, and new terms for all 10 Common Council seats—it makes sense for those stakeholders to have a voice in any final agreement. This should be neither a rushed process nor a hidden one.
The expiration of the MOU presents an opportunity for Cornell as well. It is no secret that friction has existed for decades between city representatives and the university on this very topic. I believe Cornell’s leadership recognizes that sound government services benefit all who call Ithaca home. Well maintained streets, resilient infrastructure, affordable housing, and public safety within the city make Cornell a more attractive place for prospective students and faculty recruits. The university’s current contribution to the city represents approximately .03% of its annual operating budget and 5% of the obligation it would have if not tax exempt. With such a large presence in the community, it is no wonder that many feel those numbers are lacking. With even an increase in its contribution that brings it more in line with its peers, Cornell can make a substantial difference for municipal services that both directly and indirectly benefit the university.
Ithacans understand that a healthy community with responsive city services requires a contribution from us all. Not everyone uses all city services, or we may use them in varying degrees, but we all contribute nonetheless. The city and Cornell have an opportunity to reset their financial relationship, help make city departments whole, and ensure Cornell is a more equitable partner in its home community. How the city approaches this opportunity and the city’s desired outcomes should be shared and communicated to its citizens.