ITHACA, N.Y. —The negotiations over a new Memorandum of Understanding between the city and Cornell University have halted after the institution’s negotiators declined to contribute more than approximately $3.15 million annually to the city.
Negotiations over Cornell’s payment in lieu of taxes (PILOT) to the city have “ceased to progress,” as of August 11, according to a release obtained by The Ithaca Voice Wednesday night.
Four negotiating sessions were held between April and August of this year, during which the city presented its proposal of an $8 million annual contribution from the institution.
This amount represents approximately 25% of the $33 million in property taxes the institution would legally be responsible to pay if its property were taxable.
Cornell’s initial offer was approximately $3.15 million per year, to which the city responded with a counter of approximately $5 million. Cornell then indicated, according to Lewis, that “it would not offer an additional increase from the $3.15 million proposal and moved to end discussions.”
The annual contribution amount, which is $1.6 million currently, has been dictated by a nearly lapsed MOU between the city and school that has outlined the amount Cornell contributes to the city since its inception in 1995. The MOU is scheduled to expire next year.
Cornell Vice President Joel Malina said in an interview Thursday morning that the school “greatly values” its relationship with the City of Ithaca. He said that the school’s offer of $3.15 million per year for the proposed 20-year length of the new memorandum is nearly doubled its current commitment, and that 80% of the funding is unrestricted, with 20% set aside for “areas of mutual interest” like infrastructure. Under the current MOU, only 40% of Cornell’s voluntary contribution is unrestricted.
“It gets to a point where we feel comfortable with this latest offer, but that by no means suggests that we have ended the conversations,” Malina said.
The graphic below outlines Cornell’s offer to the city and was provided by Malina.
He said the offer would equal $83 million over the span of the MOU, because the amount would be adjusted for inflation annually. The city’s two offers thus far would equate to about $100-$160 million in voluntary contributions from the school, roughly, over the span of the MOU.
Lewis said the city will enter the 2024 budget cycle with a $1.6 million gap in the budget as city employees and officials create it without Cornell’s support.
There are no future payments from the institution to the city scheduled for 2024, according to the statement.
“This is a lost opportunity for Cornell to invest in and garner the support of its community,” Lewis said in the statement.
“Despite a good faith effort to negotiate an amount compatible with the city’s needs,” Lewis wrote. “Cornell ultimately failed to offer a financial commitment reflective of its leading role in the community.”
Malina was insistent about the school not walking away from its commitment to the city, and that he “has heard from the city” since the Aug. 11 date Lewis said signaled the end of negotiations.
Malina justified Cornell’s position by noting the nearly $30 million in other contributions the school makes to the community through funding sent to entities like TCAT ($1 million per year), the Ithaca City School District ($650,000 per year) and the Community Housing Development Fund ($200,000 per year). The bulk of that $30 million is made up of $19 million in services that Malina said the school provides like infrastructure maintenance, snow removal and public safety, which the city would otherwise have to pay for and provide.
“Our commitment to the city, which we believe is reflected in this proposal, is strong. Is it enough for the city? It may not be, but we’d like to get to a point where we can reach this agreement,” he said. “These are dollars that can be spent in really important ways that will help the city and its residents, and also help Cornell.”
The institution’s property holdings in the city represent nearly half of the city’s assessed property value to date, which according to Lewis’s office, is roughly 45% at last calculation.
Cornell’s tax-exempt real estate holdings equate to about $33 million in property taxes the city has been missing out on since the MOU was first signed. So far this year, the institution has contributed $1.6 to the city per the MOU.
Other Ivy League institutions have long touted their large contributions to the communities they exist in. In stark contrast to Cornell, Princeton is the highest property taxpayer in Princeton, New Jersey, paying $11.6 million in property and sewer taxes in 2022, including about $6.2 million in property tax payments for properties that are eligible for exemption from property taxes, according to the institution’s contributions summary.