I read with disappointment Mitch Gruber’s opinion piece about the University of Rochester needing to contribute more financially to the City since it does not pay property taxes. There is essential information missing that I would like to add.
Every not-for-profit in the city is exempt from income and property taxes. The rationale for this is based on the notion that its income and property are used for charitable purposes and not for shareholder profit. So, the first question to ask is whether the University of Rochester is adequately using its property to fulfill its research, education, and health care missions to benefit the community.
The work the people do at the University may be unknown or taken for granted by the community. Let’s review some of that, starting with its educational mission to teach and train thousands of students who come from all over the world to study here. This mission is the same as K-12 public schools, who are also exempt from taxes and actually use taxpayer dollars to fulfill their important mission. The University’s students often stay in our community to add to a skilled workforce. The University runs an Upward Bound program each year that helps prepare low-income area high school students for college. It offers an annual $25,000 scholarship for RCSD students who attend. Its enrollment goals include filling a portion of its entering class with students from areas that are economically distressed, and with students who are the first in their families to attend college. And the University spends significant additional resources each year to ensure these students are supported so that they can successfully graduate.
The University’s greatest strength is its stature as a research university. Its researchers attract research funding, mostly from the federal government, which is used to work on cutting-edge issues to improve our world. The breadth of research projects underway each year at the University is awe-inspiring. Many of the research projects are theoretical issues of no clear commercial value. Were it not for research universities like U of R, these issues would not be addressed at all. External research funding does not cover all the costs of its research programs, so the University invests a lot of money each year to pay researchers and buy equipment and other laboratory assets.
The University supports the community in cultural ways as well. The Memorial Art Gallery is focused on attracting all members of the community to gather in its creative space and enjoy its diverse art. A visible sign of that is its new outdoor sculpture park, which provides a welcome space for everyone to enjoy. The Eastman School of Music is internationally known for its skill in training musicians and there are concerts open to the public regularly that showcase the talent there. Eastman runs a successful and subsidized community music school. The University supports Gateways Music Festival, which, in turn, supports professional classical musicians of African descent.
Finally, the University’s health care mission is particularly focused on our local community. According to the latest IRS filing by the University, it spent over $478 million in its fiscal year ending June 30, 2022, on charity care to area residents. Mt. Hope Family Center is a national leader in trauma-informed care for children and families. The Medical Center has dedicated its resources to lead-poisoning research and abatement initiatives in our area. It provides dental services to inner-city and rural youth. It invests in several smaller regional hospitals in upstate New York to ensure they continue to exist to provide accessible health care to their local communities.
These examples only scratch the surface of the work employees at the University are doing to fulfill its charitable missions.
Unlike many of its peers, the University has not grown by buying property that was generating property taxes and so taking it off the City’s tax rolls. The University has developed its own land that was never on the City’s tax rolls to begin with. Many voluntary payments made by our peers, as cited by Gruber, were to account for the loss of revenue those community faced by the purchase of land by the other schools that took it off those tax rolls.
Like the City, the University never has enough money to fund all the programs it wants to. It spends every penny of its endowment funds each year that it legally and ethically can. No one would think to take money away from City programs to fund the University’s programs. Neither do I think the University should take money away from its charitable causes to fund City ones. Each organization has its own important missions that are critical to the City and neither’s are lesser than the other’s.
I disclose that I am a former general counsel of the University of Rochester.
Gail Norris
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I mean. That’s nice. But U of R has a $2,300,000,000 endowment. The annual interest on that alone would be in the 100 million or more range. That is a lot of cash. They declare annual revenue on the order of 70 million a year (not counting strong or other affiliated for profit entities). Their real estate holdings are vast and those would usually be valued in the 7% range – especially in Rochester metro area.
The current development was done by an outside company that did a lot of that work tax free, or with tax rebates in anticipation of future taxable property tax and other income, and then the U of R acquired this for-profit organizations assets and converted them to not for profit assets tax free. One has to wonder if that whole maneuver was planned – get the tax breaks ahead of time for the construction with the promise of future taxes from those entities, then convert them to profitable non-profit assets.
Health care facilities in particular rake in huge profits. Disguising those under the “not for profit” banner doesn’t mean they’re not making a profit as an entire entity. It just means their assets go to grow that endowment fund, or are stored away as egregious executive salaries. If strong is so community minded, why don’t they (for instance) publish the rates of the medical procedures they provide without having to enter tons of personal details and insurance information into their system.
Strong also has a program where they approach families whose relatives are terminal during their grief and emotional upset to get them to have their dying family’s assets transferred or donated to the hospital. Seems a tad predatory to me.
In all – just having a hospital or a school or any other entity doesn’t necessarily make one a net positive for a community. The city, and the metro area, do depend on U of R/Strong. But U of R/Strong depends on the community too – and that community could sure use some help right now.
U of R should Grant $5 million per year to RPD.
It would be useful if the Beacon would offer a dual article where Gail Norris and Mitch Gruber could discuss this further. The U of R / Strong is too important to our area to have misinformation proliferate.
I am glad to see this response as I was also concerned about Mitch Gruber’s comments. Thank you, Gail.
Just a quick mention of Golisano Children’s Hospital which provides care to our communities children and their families. Mitch, you think they should pay property taxes? Mitch, you think as a not for profit they are not giving enough to our community? I suggest looking at how the City of Rochester is spending its current tax dollars instead of trying to take dollars from not for profits.
Disclosure: I am a friend of Gail’s. And 25 year Board member and former Board Chair of GCHAS.
I am greatly disappointed with these examples of tokenism. Rochester again is behind other progressive cities who are taking innovative and progressive approaches. Other fine universities find the capacity to do more meaningful work than UR. OK, UR should be credited with some benefits it provides. But it could be doing much better. That was my takeaway from Mitch’s courageous stance!
I agree with Richard.