This is a letter to the editor from former Ithaca City Attorney Charles Guttman. It was not written by The Ithaca Voice. To submit op-eds, please send them to Matt Butler at firstname.lastname@example.org.
I have heard people describe the proposed agreement between the City of Ithaca and Cornell — in which Cornell will pay the city $4 million per year in lieu of property taxes — as very generous of Cornell. I think not.
I reside in the City of Ithaca. I was the Ithaca City Attorney in 1995 when the first payment from Cornell to the City was negotiated. In 1995, the City asked Cornell to make a payment in lieu of taxes, pointing out that Cornell significantly benefitted from City services such as fire, police, public works, etc. Cornell agreed this was a valid argument but refused to make any payment. Only after we stumbled upon the fact that Cornell was in violation of the Zoning Ordinance’s parking requirements (which meant the City could not issue any new building permits) did Cornell realize it had to negotiate.
Cornell and the City agreed to a modest payment over 12 years. The City wanted to establish the precedent that a payment in lieu of taxes was valid, knowing the amount would increase over time.
There is no question that there are many parts of the university – fraternities and sororities, student housing, movie theaters, fitness centers, restaurants, a hotel, etc., that would be paying property taxes if they were not part of Cornell. Because of this logic, other universities make payments in lieu of taxes.
Yale agreed to pay $13.2 million in 2022 and over $24 million by year 5 on its agreement with New Haven. Princeton paid $11.6 million. Harvard paid $10.8 million.
$4 million is incredibly small, especially considering how much bigger Cornell is both in terms of number of students and acreage, though Harvard has about the same enrollment numbers.
This underpayment by Cornell significantly adversely affects the City of Ithaca and its residents. It results in extremely high property taxes being paid by all other properties in the City (and therefore very high rents) as well as many public services being underfunded.
In the press release announcing this proposed agreement, Cornell University President Pollack noted that Cornell provides additional funding to our community, including, for example, TCAT. However, my understanding is that TCAT is now facing serious financial difficulties and will be eliminating certain lines temporarily, including a line to West Hill, where many lower-income and people of color reside. Cornell has refused to increase funding of TCAT.
Cornell also mentioned its contributions to the Ithaca City School District to which Cornell pays approximately $650,000 per year. I estimate that well over 10,000 students live on campus or in fraternities or sororities or tax-exempt graduate housing. If that number is accurate, Cornell is paying $65 per person per year in lieu of school taxes. A $200,000 home in Ithaca pays $3,282 in school taxes. If the entire Cornell campus was assessed at $40 Million, then $650,000 would be in the right ballpark. Many individual buildings on campus exceed that amount.
Cornell did not mention its contribution to Tompkins County. Everyone living in Tompkins County pays County taxes, either directly as property taxes or as part of rent. Cornell did not mention its contribution to the County because it is less than one dollar.
The remaining question is whether Cornell could afford to pay more. Its endowment is in excess of $10 billion. If that endowment earned just 5% per year, the annual income, which is tax-exempt, would be $500 million. $25 million, at 5% of their income, divided between the City, the County, and the School District is a reasonable figure.
I urge everyone to think about this and urge their council members to reject this proposed agreement. Show up at Common Council this Wednesday and let your voice be heard.