Last week, Rochester City Council voted to give the University of Rochester control over two critical assets.
We sold the East End Garage to UR and transferred the remaining loan on the College Town development from a private developer to the university. These are both positive developments for our community because it keeps the garage and College Town under local control. I believe UR will be a good owner of these assets because the university’s success is forever intertwined with the success of the city of Rochester.
Yet, I voted affirmatively for these transfers only because UR agreed to pay full taxes on the parking garage and to maintain the payment in lieu of taxes for College Town. PILOTs are payments made to compensate local government for some of the property tax revenue lost due to tax-exempt ownership of real estate. UR acknowledged that neither the garage nor College Town help achieve their charitable mission, and therefore did not propose to utilize their tax-exempt status.
This is a positive step for the university, and a reflection of the brand-new strategic plan they published a few weeks ago. The draft plan lists “contributing to and benefiting from a just and vibrant city of Rochester and the Rochester region” as one of the university’s core beliefs. I commend the university leadership on stating this explicitly and investing in important infrastructure in the city.
There is still much more to do. UR is by far the largest property owner in Rochester, and the university pays almost no taxes due to its nonprofit status. Yet, UR uses the services that our municipality provides. Most notably, in the case of emergency the university depends on Rochester’s public safety infrastructure, including emergency communications (911), police and fire departments.
It’s time for UR to follow the lead of its peer institutions by acknowledging the inequities in the existing tax code and contributing more financially to its home city. Just as UR accepts the reality of paying property taxes and PILOTs on its new acquisitions, the university should consider a similar financial arrangement on much of the rest of its portfolio.
Due to federal tax laws, a PILOT agreement between the university and the city would have to be voluntary. A growing number of universities are engaging in these voluntary discussions and negotiations. In Syracuse, for example, the university has had a quasi-PILOT agreement for more than a decade, and recently increased the amount of money it gives the city. Faculty at the University of Pennsylvania in Philadelphia advocated for a PILOT for years before the institution ultimately agreed to a lump sum payment of $100 million over 10 years to the municipality for asbestos remediation in schools. There are dozens more examples of universities working with their municipal government to be exemplary corporate citizens.
This is a particularly important moment for the city of Rochester to find new funding sources for critical programs. We have been fortunate to receive an extraordinary amount of federal aid in the last few years through the American Rescue Plan Act. As those dollars sunset, we must find ways to pay for new programs that we know work—initiatives like the Office of Violence Prevention and Guaranteed Basic Income. Additionally, this community has huge issues to tackle that will require significant dollars, including improving our housing stock and bridging the digital divide.
In this moment, city leadership has asked the university to join its peer institutions in generating a voluntary PILOT agreement. We are still waiting for an answer. It is fitting, though, that UR—the region’s largest employer and economic engine—help pay for strategic investments that address violence prevention, housing quality and the digital divide. All these will benefit the Greater Rochester community and the university. For example, bridging the digital divide will help underserved families in myriad ways, and will also help UR reach more people through telehealth services.
Financial investments like PILOTs will help UR achieve the goals of its new strategic plan and would reflect its motto, “Meliora,” a Latin word meaning “ever better.” For the Greater Rochester community to be ever better, we need our anchor institutions to step up and help lead us to a more prosperous future.
Mitch Gruber is finance chair and councilmember at-large of Rochester City Council. The Beacon welcomes comments from readers who adhere to our comment policy including use of their full, real name.
After reading all the financial comments and concerns, I look at just how valuable this “house of education” is. Does higher education trickle down toward a K-12 system that is in crisis? Nope. None of the “houses of higher learning” are bothered to provide a helping hand. To them it appears that the system is impossible to fix. They just turn a blind eye towards the urban education crisis. That’s their problem, right. I have written to every college and university in the immediate area for their assistance, for reaching out to a broken education system, nothing. There’s no money in it. Someone else’s problem. With all their so called expertise, they cannot and will not help. I don’t care if they have a billion in their endowment account. As long as all of our urban kids can read, write and do the math, but they just ignore the problem. Decades of urban education failure right under their collective noses.
The city is not a good example Follow the Money Mitch Foodlink for example is deep in funding but don’t help Too many conflicts of interest At large council – really. How did you handle racism at FL WHERE ARE THE CHECKS and Balance
UR can and will be profiled. What abt u Lightfoot Smith giving only to certain area Lets start a CAB Council Accountibilty Board. Ask Mitch how many of them knew abt Moses and McFadden. Special Interest and Conflict of Interest need to called out. Isn’t this the pot calling kettle black. COUNCIL IS CORRUPT VOTE IN NEW PERIOD
Great comments and participation. My single concern, over and above all the money wrangling, is the fact that the University of Rochester resides within shouting distance of a RCSD that fails our youth. They are the experts. If that educational success can’t or won’t reach out the help the RCSD to finally teach the way kids learn, what is their purpose. They have already proven that higher education is a great place to spend a career. Great income and guarantied. And please don’t point to the East High rescue. There was a healthy exchange of dollars and cents to cover their effort. All of our higher education places of education should be strategizing and attacking (if you will) the decades of failure right under their noses. If they won’t or are unable, what is their purpose or mission? Get with the program and collectively extend a hand to a RCSB who can’t seem to graduate kids, who let thousands drop out to get their education on the streets, who eventually become members of the generational poverty sector of urban Rochester. Education is thee foundational issue when it comes to jobs, equality, fairness, choice and all the other items that the graduates of these institutions of higher learning enjoy. It’s really that simple. Should those institutions decide that this is worthwhile, I would move back to Rochester to help with the implementation. I know, big deal, who are you?
Mitch – I’d ask you and others to consider the possibility that city residents are better off with UR allocating these incremental resources.
Also if there is a financial windfall from UR going forward – will the city/county total tax levy remain flat thus lowering the property tax burden for homeowners?
I agree wholeheartedly with Mitch. As a city resident living just blocks from UR and College Town, I see interconnections daily. Students benefit from our free food stand and Little Free Library in front of our house, a graduate student has a side job helping with our garden, employees live near us and some have children who attend city schools and summer programs. UR and the City need each other as full partners to thrive.
thank you Mitch for your always thoughtful and direct comments about important issues. I remember Joel Seligman combating at a U of R diversity conference a few years ago that, a great university can only be that in concert with a great city.the U of R can certainly take advantage of its tax-free status by being a much larger financial contributor to our community. Follow the example of ESL, whose significant philanthropy is driven in part by the fact that they pay no taxes. Their philosophy is to give that money to the local community rather than the government. The U of R would do well to follow that model.
I could not agree with City Councilmember Gruber more. UR has well over a billion dollars socked away in its funds. NY State Comptroller Tom DiNapoli told me personally, after a meeting with Labor, that 27% of NY properties were off the tax rolls as non-profits. This was about a decade ago, so I imagine it is worse now. He also stated that a majority of those properties were off the tax rolls due to religious exemption. Why? As referenced above, do they not use the infrastructure like roads and bridges, water, sewer and lighting, as well as services such as police and the fire department? Regardless of the religious extremists on the Supreme Court, the fact the rest of us are paying their share of property taxes violates the Establishment Clause of the Constitution. If one can quantify that a non-profit’s services save taxpayers money over the non-profit’s tax bill, exemptions may be made. There are non-profits that pay seven figure and high six figure salaries, often listing them as part of the total of “Labor costs”, and the rest of us pay their fair share of property taxes. Whether a resident or a business, if you want lower property taxes, fairness requires addressing this injustice.
This might look good on paper to a taxpayer, however where does UR get the incremental money from ? (raise) Tuition? Is this going to be part of the feedback loop where the institution raises tuition to cover its such outlays, then the Feds raise student loan underwriting to cover for it, only to have the student find themselves in a position post grad to not be able to pay it back (thus the pols want us taxpayers to fund the default)?
By the way, in this scenario, nobody in College Administration staff takes a pay cut, nor do endowments go towards lowering tuition…