Ben Parker/Sun File Photo

Cornell and the City of Ithaca have stalled on their negotiations over payments in lieu of taxes to the City. The current agreement is set to expire in June 2024.

September 7, 2023

Negotiations Between Cornell, City of Ithaca Stall Over Financial Contribution Disagreement

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Cornell’s negotiation process with the City of Ithaca over its financial contributions to the City in the form of payment in lieu of taxes have ceased to progress as of Aug. 11, Mayor Laura Lewis wrote in a Sept. 7 press release.

“The city entered the process motivated by a core belief that despite the tremendous overall economic impact the university community brings to the region and the city, Cornell’s direct financial contributions to the City are fundamentally lacking and fail to demonstrate a commitment to the needs of Cornell’s host city,” Lewis wrote in the statement.

As a higher education institution, Cornell is exempt from paying property taxes, but instead offers the City voluntary PILOT contributions. The University currently pays the City $1.6 million annually, which was dictated by a memorandum of understanding that outlined the amount Cornell contributes to the city since its inception in 1995. The MOU is set to expire in June 2024.

Between April and August, four negotiation sessions were held between City and University officials, during which the City presented its proposal that Cornell pay around $8 million annually. 

Lewis said that the City arrived at the $8 million figure based on projections of Cornell’s tax-exempt real estate holdings. Cornell’s property represents 45 percent of the city’s assessed property value, which would equate to approximately $33 million in property taxes paid to the City if Cornell was not tax-exempt. The City benchmarked its proposals against 25 percent of the $33 million.

Cornell’s latest offer to the City was approximately $3.15 million annually. The City responded by proposing a $5 million contribution, but Cornell indicated it would not offer any additional increase from the $3.15 million proposal, according to Lewis. 

“To demonstrate what is Cornell’s deep commitment to the City, we have proposed more than doubling that voluntary contribution to $3.15 million a year,” said Joel Malina, the vice president for University Relations, in an interview with The Sun. “While the prior agreement had 40 percent of the funds at the City’s discretion to use… we have approached this offer a little differently, where 80 percent of the money that we would give could be spent by the City any way it wishes.”

Malina added that while Cornell is proposing a MOU for a 20-year term, it would go into effect as soon as it is agreed upon, potentially being put in place for 21 years if enacted in the coming months. After increasing yearly for inflation, the total contribution over 21 years would be more than $83 million, according to Malina.

According to the University, Cornell currently spends nearly $29.2 million annually in expenditures that support the City and its residents, including around $5.9 million in contributions towards TCAT, the Community Housing Development Fund, Ithaca Area Economic Development and local non-profits. The figure also takes into account the $650,000 yearly contribution to the Ithaca City School District and a $100,000 proposed annual grant for faculty to work with the City on projects of mutual interest. The University also said it spends around $19.4 million annually for public safety, street paving, sewer, snow removal and other municipal services.

Lewis said that the City is planning its 2024 budget without any Cornell contributions, meaning the City will start the 2024 budget process with a $1.6 million hole in the budget. In her statement, Lewis said that Cornell’s final offer was the $3.15 million proposal. However, Malina said that negotiations are “absolutely not over.”

“What we indicated when we proposed this offer is that we felt it was generous. We felt we were comfortable with it. In no way did we intimate that discussions were over,” Malina said, adding that he had discussions with City officials as recently as today.

Local advocates have been pressuring Cornell to increase its contributions to the City for nearly 30 years. Most Ivy league institutions, including Princeton University, Yale University and Dartmouth College, pay PILOT contributions to their local municipalities. In fact, Princeton is the largest property taxpayer in Princeton, New Jersey, with about $6.2 million in voluntary property tax payments.

“Universities are all very different and their municipalities are all very different. The City of Ithaca is different in size and population to New Haven, Connecticut [and] to Princeton, New Jersey,” Malina said. “Those two universities have one municipality, our Ithaca main campus is situated in three municipalities. So it’s a difficult comparison.”

The University indicated that they are committed to the City of Ithaca and “have a real strong interest in the success of the City,” according to Malina. However, Lewis’ statement today and continued efforts by the Make Cornell Pay Coalition seem to indicate that not all community and Common Council members feel that same level of commitment.

“Despite a good faith effort to negotiate an amount compatible with the City’s needs, Cornell ultimately failed to offer a financial commitment reflective of its leading role in the community,” Lewis wrote. “This is a lost opportunity for Cornell to invest in and garner the support of its community.”