This Fight Could Turn into a Fee-for-All.

The State College Borough Council has recently been contemplating an increase in the in-lieu- of-tax impact fee which it collects from Penn State.

[T]he borough says it may need more university dollars to pay for the extra police, fire and sanitation services a college town demands.

Of course, that is akin to me contemplating a date with Jennifer Aniston. It's pretty much up to her and she really hasn't shown any interest.

But Penn State, citing the almost 775,000 it already pays the surrounding area, maintains the non-cash contributions a research university of its size and prestige gives back more than enough.

It turns out that the City of Pittsburgh is having a similar discussion about in-lieu-of-tax payments from its nonprofits According to this morning's Post-Gazette (h/t to the Pittsburgh Comet),

Contributions by universities, hospitals and other nonprofit organizations to the city of Pittsburgh should be based on a fair formula, rather than the current pay-what-you-want system, several city officials said yesterday.

An umbrella group representing local nonprofit organizations, though, said there should be no firm guidelines governing what it views as gifts to the city.

The way nonprofit contributions to the city are handled now "is not fair," said acting Controller Tony Pokora, who is conducting a study of ways to set nonprofit groups' payments in lieu of taxes. "There should be some rationale. I think it should be based on their profits."

[...]



[C]ity Councilman William Peduto, said Pittsburgh "needs to lead [the state's] other cities" in asking for state-mandated payments by "universities, hospitals and insurers, period. Not churches, arts organizations, or the Girl Scouts."



Currently, tax-exempt groups make voluntary contributions to the fund, which passes them on to the city under a pact negotiated in 2005. For that year, according to documents obtained by the Pittsburgh Post-Gazette, donations ranged from $10 by the Pittsburgh Ballet Theater to $1.5 million by the University of Pittsburgh Medical Center.



UPMC made a $523 million profit that year and provided $176 million in free health care. The ballet, by contrast, cancelled its orchestra to help pare a $1 million deficit.



Although the fund gave some nonprofit groups optional guidelines for giving, there is no apparent relationship between their donations and their assets.



For instance, the University of Pittsburgh's $800,000 contribution was around half of what it would have to pay the city if just one of its buildings, the Cathedral of Learning, was taxable. The building's assessed value of $140.5 million would generate a $1.5 million city tax bill.



That "shows that there's a structural problem in the city caused by our tax-exempt facilities," Mr. Pokora said.



He said the state should reimburse cities for some of the revenue lost because of the concentrations of nonprofit institutions within their boundaries, and that large, moneymaking entities like universities and hospitals should make additional payments.



"UPMC should be ponying up," he said. "The Little Sisters of the Poor, I don't think, should be paying a nickel."



The Little Sisters of the Poor pledged $150 to the fund in 2005.



Some organizations haven't been able to make consistent payments. The Children's Museum, for instance, gave $1,000 in 2005, but couldn't afford to contribute anything to the fund last year.



"Maybe in 2007 we will," said museum Director of Marketing Bill Schlageter.



The larger Carnegie Museums of Pittsburgh pledged $12,000 in 2005.



Duquesne University spokeswoman Bridget Fare said that although her institution's initial contribution was $10,000, it agreed to give $100,000 for each of the three years covered by the pact. It is also making annual $25,000 payments to the city under a separate deal related to non-taxed property.



[...]



"There should be a long-term agreement in place that deals with exactly who the nonprofits [that will give to the city] are and what they're going to contribute to the city each year," said Councilman Jim Motznik. The amount is more important than the sources, he said. "I don't think it's important who gives what."



State Rep. Don Walko, D-North Side, has, for a decade, pushed for legislation that would have the state kick in money to make up for revenue cities lose because of due to the presence of large nonprofit institutions. State budget problems have made that outcome unlikely, he said.



Big institutions "should make payments in lieu of taxes, and there should be some formula" mandated by the state, he said. "Politically, is that feasible? I'm not sure the answer is yes."

I would hope that the State College Borough Council would contact their counterparts in Pittsburgh to discuss cooperating on getting state mandated payment from Penn State and other large nonprofits.





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