Taxed Off: Ithaca bristles at Cornell tax exemption

Kelsey O'Connor, and John R. Roby
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Cornell University

From Chautauqua to Clinton and points between, some of the largest and wealthiest property owners in New York state enjoy complete exemptions from property taxes.

They're the state's nonprofit colleges and universities, and nowhere is the question of their actual and potential economic impact to the surrounding community more stark than in Tompkins County. Since the 1990s, Cornell University and its surrounding municipalities, including the city of Ithaca, have disputed the proper level of tax and service support owed by the university.

Cornell "owns so much land in our community, if they paid taxes they would pay somewhere around $35 million a year. Right now they pay like $1.25 million," said Ithaca Mayor Svante Myrick, a 2009 graduate. "They are tax exempt so maybe they shouldn’t pay the full $35 million. Just for scale, that would be half the city budget; Boom, right there. Everybody’s taxes would immediately be cut in half."

Cornell University: West Campus, Libe Slope and the Arts Quad.

More than a third of the county's nearly $12 billion in assessed property fell under some kind of tax exemption in 2015. Of Tompkins' $4.3 billion in tax-exempt property, Cornell accounted for 59 percent, or $2.6 billion, according to figures from the county assessor's office. Another $480 million, or 11 percent, was tied to Ithaca College.

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All told, the two educational institutions account for 26 percent of all Tompkins County property.

The situation in Tompkins is an outsized example of a common theme upstate, where dozens of colleges and universities make up large fractions of the tax base, but enjoy a complete break from property taxes.

Along with sales taxes, property taxes are either the largest or second-largest revenue streams for counties and other municipalities upstate, helping fund everything from salaries to police and fire protection to snow removal and road maintenance. Moreover, tax-exempt education institutions are frequently heavy users of many of those services.

Cornell University students study beside a statue of Andrew Dixon White outside Goldwin Smith Hall.

The schools, meanwhile, point to a range of ways that they do pay — or at least, churn additional money into local economies — which is translated into local revenue via sales taxes on purchases or property taxes that rise with increasing demand and land values.

Beyond that, there are "payment-in-lieu-of-taxes" agreements in place between colleges and some municipalities, as well as voluntary contribution pacts. Cornell and the city of Ithaca have had one of the latter in place since 1995. It has grown over the years from $250,000 annually to about $1.25 million, with the funds divided between fire protection and other municipal services, according to the mayor's office.

In 2015, Cornell also contributed $3.9 million in municipal fees, and $7.8 million to public transportation and local nonprofits, and through taxes paid on non-academic buildings, according to the university.

Cornell also contends that ripple effects from $934 million in payroll, $209 million in student spending and another $71 million in visitor spending helps Tompkins County and Ithaca defray costs by boosting local sales-tax revenues, and the property taxes paid by the landlords housing its students who live off campus.

Mayor Svante Myrick

Yet the university has faced requests from the city, town and county to boost its contribution to Ithaca to $6.5 million annually. That figure would equal the average that other Ivy League schools contribute in their communities, and would represent only 7.5 percent of its bill were it to pay taxes on all its assessed property.

"I feel strongly that we would be better off if Harvard University were in Ithaca," Myrick said. "The taxes would be lower. The streets would be better paved. I’d rather that Yale was in Ithaca because we’d have more police officers and a better-funded fire department. If Princeton or Brown were in Ithaca, then the quality of life would be higher, and the cost of living would be lower."

The university has said its contribution "compare favorably" with its peers, and noted it's met all obligations to the city "despite our own financial challenges during the Great Recession."

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