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.