Cornell and the City of Ithaca: A Love - Hate Relationship
Tax exemption laws affect town - gown relationship
October 19, 2007 - 12:01amMost Cornell students see living in the City of Ithaca as a stepping stone towards getting a college degree and beginning their careers. After graduation, many students leave Ithaca for New York City, Boston and warmer locales. But, those who have made their permanent homes in Ithaca take a different approach to the city.
A number of tensions have arisen in the 142 years that Cornell and Ithaca have been inextricably bound together. Like many large universities in small towns, Cornell has clashed with the city on financial issues for as long as most can remember.
A New York State law exempts all universities from paying property taxes, according to Svante Myrick ’09, a candidate for Common Council. Because a combined 70 percent of Ithaca is property tax exempt, according to John Gutenberger, director of the office of community relations and former mayor of Ithaca, the costs for people who do pay taxes becomes lofty.
“People are predisposed to feel negatively about the University because the taxes and costs are so high,” Myrick said. “When a service breaks down, people blame the University.”
Of the $2.3 billion worth of property within the City of Ithaca that is tax exempt, 97 percent of the total value is owned by Cornell, according to the City of Ithaca’s 2007 Summary of Assessment Plan. If Cornell paid property taxes, the plan indicates that the University would owe over $30 million annually. Instead Cornell gives an annual contribution of $1.1 million.
60 percent of this money is earmarked for the fire department, which serves the Cornell campus; the other 40 percent has no other mandated use. Cornell also gives an additional $425,000 to the public school system annually, said Gutenberger.
Conflicts over Cornell’s tax-exemption status have been going on for almost a century. Ithaca Journal articles dating back to 1914 reveal controversies over fraternities applying for tax exemption.
“Cornell has always been very protective of [its tax exemption], and the City has always been concerned,” said Mary Tomlan ’71 (D-3rd Ward), who represents most of Collegetown and the Cornell campus.
However, the exemption is necessary according to Gutenberger.
“The University would not be here if it were a taxable entity,” Gutenberger said. “If you pull away the tax exemption, you pull away services and everything we provide.”
Gutenberger also mentioned that Cornell does pay property taxes on some of its off campus holdings, including East Hill Plaza and the Business and Technology Park by the Ithaca Tompkins Regional Airport.
Tomlan said that Cornell provides many intangible benefits that make up for its lack of taxpayer dollars.
“Cornell contributes to the economy in other ways,” Tomlan said. “Students who do work-study, students who do studies in Ithaca for their classes and students who do recreation programs all provide economic benefit.”
Gutenberger added that Cornell has helped to develop the downtown area by working with the city to build an office building and hotel on East Seneca Street, which houses 300 Cornell employees and brings more business downtown. Cornell’s investment in the development of Collegetown by building the Schwartz Center for the Performing Arts and providing land for a parking garage behind Eddygate Apartments has also helped the city, Gutenberger said.
The Cornell Economic Impact on New York State Report, released in Feb. 2007. states that Cornell was responsible for $3.3 billion of the economic activity in New York State in 2005. This included a $636 million payroll.
Some of the money that Cornell pays to its employees eventually gets funneled back to the city once those employees pay taxes. However, much of Cornell’s workforce is forced out of the City of Ithaca because of the high housing costs, according to Myrick.
“Sometimes we have disagreements, but it is important that it not stop communication,” City of Ithaca Mayor Carolyn Peterson said. “I feel that communication and our ability to speak has improved and is improving. We have new ideas and collaborations that we hope to put together.”
Peterson said that she meets with President Skorton every six to seven weeks to discuss issues of mutual concern. She also meets with Gutenberger, Executive Vice President Steven Golding and Vice President for Student Affairs Susan Murphy ’74 on a regular basis. Through communication, she said that the University and the City can maintain a good relationship.
For example, President Skorton attempted to connect with the town by announcing at an Oct. 6 press conference that he wants Cornell to invest “$20 million over the next ten years in affordable workforce housing initiatives, transportation management problems and related infrastructure improvements,” according to a press release.
Though the lines of communication are open, Myrick thinks that there could be more discussion.
“Why is there so much tension?” asked Myrick. “I think it’s a lack of communication. I think Cornell could express the wishes of the University better and vice versa.”
The interdependence of the City and the University create tensions. However, through communication, both can succeed, according to Peterson.
“Frank Rhodes was president of Cornell when I was mayor [of Ithaca],” Gutenberger said. “He told me ‘you have to get in our face when we’re screwing up.’”