Building A Partnership: How Cornell Can ‘Do the Greatest Good’ for Ithaca

 

Margherita Fabrizio   Apr 24, 2023, Updated Apr 24, 2023 - Ithaca Times Article

After Cornell’s Tax-Exempt Status and Ithaca’s Bottom Line, was published in the Ithaca Times February 15, 2023, I heard from dozens of Ithacans wanting to know more and work for an equitable partnership between Cornell and our community.

  

The issue of unaffordability for all in the city, whether students, renters, homeowners, landlords, or retirees, struck a nerve. Many wondered aloud at our long-seeming complacency with high taxes and understaffing for basic, critical services, like fire, public safety, roads, and water, and were surprised to learn of the over $2.7B worth of tax-exempt property owned by Cornell within the city. The article seemed to unleash a long-simmering, widespread sentiment.

  

In response to that, a citizens group, the Fair Share Campaign, formed to further explore legislative and legal remedies, and models proposed or already in place in other communities hosting institutions with large, tax-exempt footprints.

  

The enormous missing piece of a tax base created by tax-exempt landholders is obviously not unique to Ithaca. Our struggle to make up this gap is being replicated in many American college towns. Perhaps future national solutions will remedy the problem. In the meantime, wealthy universities have been called out for being “hedge funds with classes attached,” given the size of endowments and the amount of revenue generated from licensing, patents, and royalties.

  

In 2021, Cornell’s endowment earned almost $3B but these profits were exempted from taxes. It is projected that in about 25 years, the collective total of the Ivy League endowments will top $1 trillion, so it seems inevitable that the pressure to contribute fairly to host communities will only increase. 1% of Cornell’s operating budget is more than half the city’s budget, and 1% of its endowment is more than the city’s total budget.

  

To ensure all stakeholders are knowledgeable regarding current town-gown partnerships, especially among Ivy League schools, local volunteers are researching and preparing materials to be reviewed before discussions begin. The current agreement between the City and Cornell is due to expire June 30, 2024. It was originally signed 20 years ago.

  

Cornell currently contributes $1.5M through a Memorandum of Understanding to the city with more than half earmarked for the Fire Department. Using current assessments and tax rates, if not tax-exempt, Cornell would pay $94M this year totaling $33M to the city, $15M to the county, and $46M to the school district. Cornell pays about $2.8M on taxable property which includes East Hill Plaza. The $94M figure illustrates the large gap in property taxes that we are currently operating with.

  

Cornell absolutely contributes to the larger Ithaca community in countless ways. It makes Ithaca unique, international, and culturally vibrant. It is the county’s largest employer, and the university and its current and prospective students contribute hundreds of millions of dollars annually to our local economy. Thousands of students volunteer throughout the community each year. Yet the fact remains that running a city is not cheap, and though the small number of taxpayers here are already stretched beyond the limit, Ithaca is still largely under-resourced.

  

To thrive as a community, all must contribute a fair share in the form of dollars directly into the coffers. Without a true university partnership, we cannot be an affordable, diverse city, with critical services at the standards required for a city this size—and these vital goals are undoubtedly shared by Cornell for the benefit of its thousands of students, faculty, and staff. To continue to just raise local property taxes to attempt to fill our enormous gap is not a sustainable option. Many Ithacans believe Cornell can fully partner with our community without compromising their ability to carry on their important work as an institution of higher learning and world-class research.

  

The process ahead needs to be a transparent one and free of conflicts of interest; it should include the city, county, and school district, plus public presentations, and community participation. Many candidates running for Council this year have added the issue to their platform; we are also moving into a new model with a City Manager and a new Mayor. Given all of this, it would make sense to finalize an agreement after the new administration is seated. The community can use time wisely now to get up to speed on the issue.

  

Cash-strapped communities across the country are looking more and more analytically at their budget shortfalls and their connection to hometown tax-exempt institutions. It’s time Ithaca catches up. For Cornell, this moment is an opportunity to embrace its home base, and as its motto says, “do the greatest good,” by paying its fair share to help reposition the community’s health. Cornell can at the same time become a leader among its peers on an issue that is likely destined for more state and national attention.