ITHACA, N.Y.—The Common Council voted to accept a new financial agreement with Cornell University that will be outlined in a new 15-year Memorandum of Understanding (MOU) document.
In the deal’s first renegotiation since the early 2000s, Cornell will increase its annual voluntary contribution to the city to $4 million per year. The deal is set to end in 2038, sooner than the previously proposed 21-year deal that would have ended in 2044, a change that was made during the meeting Wednesday.
Council members voted 9-1 in favor of accepting the deal, with Alderperson Cynthia Brock being the sole dissenting vote. During the last several weeks, the ongoing MOU negotiations took center stage in Ithaca politics, as community members voiced objections to the proposed deal—primarily seeking a term length of under 10 years and a higher annual contribution.
The vote followed a lengthy back-and-forth discussion between council members about the term length of the MOU and other potential changes. There was almost no debate about the financial terms of the deal, specifically the $4 million annual contribution, a substantial increase from the school’s previous yearly contribution but half of the city’s initial position when renegotiations began.
The $4 million contribution is tied to inflation, leading City Attorney Ari Lavine to note that over the duration of the 15-year deal, the school’s contributions would likely amount to around $75 million. Over the last 15 years, under the prior MOU, Cornell gave about $21.6 million in voluntary annual contributions, though school officials have maintained that Cornell’s overall impact is greater than its contributions.
The deal also includes an additional $100,000 of funding from the school for the city to use Cornell resources for city-wide issues, such as hiring a professor to help with the city’s sustainability goals.
Alderperson Robert Cantelmo initially proposed to change the length of the deal from 21 years to 10 years, along with changing language that limited the city’s lobbying abilities.
Mayor Laura Lewis interjected to note that in discussions with Cornell’s negotiating team, they had made clear they were unwilling to accept less than a 15-year term for the proposal, reflecting movement from Cornell’s previous position of not negotiating the deal from its 21-year proposal. Cantelmo subsequently revised his amendment to 15 years.
The school was, though, amenable to changes to the lobbying clause of the previous MOU, which will now allow the city to lobby for changes to state or federal laws around tax-exempt organizations as long as the city does not pursue legal action against Cornell over its tax-exempt property—the source of much of the tension between the city and the Ivy League school.
Alderperson Cynthia Brock was the lone voice against the deal, instead suggesting that council push for a seven-year MOU term, after the 15-year possibility had been proposed.
“Based on these terms, 15 years at [the Consumer Price Index], I don’t think that is reasonable. It’s better, and I appreciate that,” Brock said. “But I don’t think it’s a good deal for the city to commit to for 15 years.”
Brock’s proposal was met with vehement disagreement from both Cantelmo and Alderperson Jorge DeFendini, who argued the fiscal risks of rejecting the deal, and potentially creating a large hole in the 2024 budget, outweighed the benefits of going back to the negotiation table to seek better terms. Both said rejecting Cornell’s terms would result in either significant property tax increases or layoffs in city government.
“By proposing something that we know Cornell will reject, you are willing to gamble the jobs of city staff or the pocketbooks of tax payers by torpedoing an acceptable deal,” Cantelmo said.
Most councilors agreed with Brock’s overall sentiment—that Cornell’s contributions still weren’t satisfactory under the new MOU—but it wasn’t enough to quash their support for the amended agreement.
Some council members, like Kris Haines-Sharp and Phoebe Brown, both expressed that they had arrived at the meeting ready to vote against the deal, but had been swayed by their colleagues’ comments.
Alderperson Rob Gearhart acknowledged that he “wasn’t happy” with the deal, but understood the city’s lack of leverage in the scenario. Still, Gearhart, Brown and others thanked the city’s negotiating team for its work on the deal and for achieving the $4 million per year commitment.
Cornell Vice President of University Relations Joel Malina provided The Ithaca Voice with a statement following the vote where he thanked the council for their approval. He said the agreement will now be considered and voted on by the university’s board of trustees.
The board has an in-person meeting next week in Ithaca. Malina said he will inform the city of the results of the vote. Any MOU agreement is contingent on approval by both the Common Council and the university’s board. According to comments at the meeting, the MOU includes an early termination clause allowing either party to end the agreement with six months’ notice.
Negotiations between Cornell and the City of Ithaca began in April of this year in preparation for next year when the original MOU document, signed back in 1995, was set to expire.
Terms of the document were last amended in 2003 with few changes and was criticized again in 2014 by former mayor Svante Myrick when he called the university’s lack of contributions “shameful.”
Lewis is the fourth mayor in Ithaca history to haggle with Cornell in hopes of negotiating an increase in financial support with fewer restrictions to support the city’s budget.
Under the prior MOU, Cornell made an annual contribution of $1.6 million to the City of Ithaca, which it already has made this year. That MOU held that 40 percent of the funding for the city was unrestricted, compared to the 80 percent now, meaning the city gains about $3.2 million in money for whatever it needs.
Cornell will also pay the city an extra $2.4 million this year to fill the gap between what the school had already given this year and the terms of the new agreement.
Four negotiating sessions were held in the months of April to September, while members of the Common Council and city staff began the process of creating the 2024 budget, which according to New York State law, must be balanced and adopted no later than December 1, 2023.
The negotiations were plagued from the start with anxieties intensifying as negotiations continued about the city needing Cornell’s contributions to avoid a substantial hole in the 2024 budget.
DeFendini has been vocal about the time constraints affecting the negotiating team’s ability to stand their ground and demand a more lucrative deal.
“Everyone at this table is concerned about the budget,” DeFendini said at a previous MOU meeting. “To me, that sounds less like a partnership and more like a hostage situation.”
Lewis emphasized the importance of including Cornell’s contributions in the 2024 budget to council members and the public in recent Common Council meetings. Without the $1.6M in contributions from the university next year, city officials would be forced to make difficult decisions to fill the gap: Substantial layoffs of city employees or an approximate 10-13% rise in property taxes.
Malina attended the Common Council meeting on Sept. 21, the same meeting where Lewis tabled the MOU and postponed the vote until Oct. 11. He was accompanied by Jared Pittman, associate general counsel at Cornell and member of its negotiating team early in the process.
When DeFendini shared his concerns, Malina assured council members that the university is “not imposing a deadline” and that this is “not a power play.”
Back to the table?
Members of the public, most prominently the Make Cornell Pay Coalition, were quick to criticize not only Cornell’s final contribution offer for being far too low, but both the negotiating teams, for making deals “behind doors, in smoke filled rooms,” a phrase used repeatedly by naysayers.
The coalition organized actions against the deal and inspired an open letter from Cornell faculty against the proposed MOU that was sent to the school’s leadership the first week of October.
Council members were not pleased with the results of the negotiations either, particularly with the $4M annual contribution negotiators agreed on, which was $4M less than the city originally proposed when negotiations began.
The deal’s initial length of 21 years and the lobbying restrictions, both of which were changed in the approved MOU, had also drawn the scorn of interested observers.
In an interview on Sept. 18, Lewis told The Ithaca Voice she believes for negotiations to be productive and effective, “you have to first start with a high bar, recognizing that’s not the amount you’re going to get.”
“You always start with your highest request,” Lewis said at the time. “And then you work on meeting.”
She said she was “pleased with the $4 million,” as it represents a significant increase from Cornell, along with a “substantial amount” the city gets to determine how to use it without restrictions.
The Common Council voted to table the final agreement in response to public outcry and criticism of the deal at the Sept. 20 special meeting where council members were expected to vote to accept or reject the MOU.
Since 1995, when the first deal was struck, requests for increased contributions from former mayors have been met with by decision-makers at the university.
Former Mayor Ben Nichols, who served from 1990 to 1996 and was a Democratic Socialist, forced Cornell’s hand to craft the first MOU document. When negotiations began in 1994, Nichols requested $2.5 million annually from the university. Upon their refusal, he began to deny requests for building permits for Cornell, as well as non-critical services the city provided.
Nichols created leverage the city was not legally afforded under state and federal law. As a result, five months later, negotiators compromised on a $250,000 annual contribution and agreed to the same MOU document city officials are amending this year.
At a town hall event held October 10, the night before council members headed to a vote, approximately 60 members of the public showed up to the Tompkins County Public Library to air their grievances with the deal. Cantelmo and Lewis were on-hand to field questions and concerns.
Lewis and members of the Common Council as a whole were criticized for their lack of creativity in leverage-building tactics like Nichols.
When the university walked away from negotiations on August 11 and refused to increase its final offer, Lewis distributed a statement about a month later on September 7, condemning Cornell negotiators for their “unwillingness to act in good faith” to come to an agreement that works for both parties.
Cantelmo explained there were three hard deadlines city officials had to juggle in deciding how to vote in line with their constituents. First, the aforementioned state law that requires cities to approve a balanced budget by December 1, 2023.
“We don’t have legal leverage over them. That’s something everyone hates to hear, it’s an unpopular thing to say,” Cantelmo said at the meeting. “But that does not change the fact that it’s real.”
At the town hall, Cantelmo urged the visibly frustrated attendees to turn their attention toward their state and federal representatives working in Albany and Washington D.C. to pressure them to make changes to tax-exempt policy as it relates to educational institutions.
The city will now be able to pursue similar efforts, thanks to the changes in the MOU that eliminated the clause preventing the city from lobbying for such causes. The city is still forbidden from pursuing litigation against Cornell on the matter.
In Malina’s address to council at the Sept. 21 Common Council meeting, he was explicit in saying the university would not amend the agreement, but would be “open to certain changes to section 6,” the section of the MOU document outlining legal barriers to the city’s lobbying, if it meant the approval of the entire deal.
Malina agreed with council members that the university should not be interfering with legislative action of council, such as lobbying.
“What is important to us is that the clause around judicial action remains,” Mailna said. “We do not think it is appropriate for us to be in this relationship only to have the city turn around and sue us for our tax-exempt status.”
Attendees at the public meeting on Oct. 10 also pressed Lewis about the possibility of Cornell agreeing to a stop-gap payment to allow more time for negotiations and public input. She said she knows the university’s negotiators will not agree to this. The idea of a stop-gap agreement was not broached during Wednesday’s Common Council meeting.
Less than a decade after Nichols’ standoff in 1995, Mayor Alan Cohen worked with the university to add two amendments to the MOU, both of which have been heavily criticized by the public and members of the Common Council.
Cohen showed up to negotiations with the same intentions as Nichols before him, demanding an increased annual contribution to the city. But in the end, the new amendment did two things: extended the duration of the terms to remain in effect until 2024 and added a CPI escalator — a measure of the average change over time in the prices paid by consumers for goods and services.
The CPI escalator made it so Cornell’s annual contributions would increase in line with the national rising costs of living. But Alderperson Cynthia Brock told The Ithaca Voice in an interview that using the CPI as a metric does not “protect the relative importance of Cornell’s contribution” over a long period of time, a sentiment she expressed during the meeting as well.
Brock argued the city’s increasing expenses, on things like labor and insurance for instance, outpace CPI. The 2024 budget narrative prepared by city officials shows a 14.9% increase in insurance costs compared to the 3.7% increase in the CPI from last year, according to the U.S. Bureau of Labor Statistics.
She said she would think differently about using only CPI as a metric if the agreement lasted for a shorter period of time.
“I want to take Cornell at its word that we’re partners. Part of that partnership recognizes we want a meaningful contribution throughout the length of the agreement,” Brock said. “The longer that agreement is, the more important that CPI becomes to maintain the purchasing power and significance of that contribution.”
The city’s negotiating team included Mayor Laura Lewis, Alderpersons Rob Gearhart and Kris Haines-Sharp, Chief of Staff Deb Mohlenhoff, City Controller Steve Thayer and City Attorney Ari Lavine.
Cornell’s negotiating team included Vice President for University Relations Joel Malina, Vice President for Budget and Planning Laura Syer, Vice President for Finance Simon Allen, Associate Vice President for Community Relations Gary Stewart and Associate General Counsel Jared Pittman.