BY TONY WEST/ The biggest business in Philadelphia pays almost no taxes. Yet while our city’s schools are starved for revenue, the University of Pennsylvania’s students are well funded – and generally move into prosperous careers after they graduate.
A band of activists says that’s wrong and is seeking to change it. It wants Penn, as well as other large nonprofit educational and medical institutions, to resume voluntary PILOTs. These are “payments in lieu of taxes” on their real property, which for-profit businesses as well as residential owners pay.
Their ask from Penn: $6.6 million. That amounts to 0.1% of Penn’s annual operating budget.
Leading the charge are Philadelphia Area Jobs With Justice, a coalition of labor unions and community groups, and its student wing, Student Labor Action Project.
SLAP has been active on Penn campus for 10 years, fighting for better pay and job security, paid sick time and union representation for the Ivy League school’s dining-hall employees and security guards, with some success. But PILOTs only became fair game in 2013, thanks to a key court decision.
Penn and other major nonprofits used to pay millions of dollars annually in PILOTs, thanks to diligent jawboning by politicians – among them its noted alumnus and now faculty member, then-Mayor Ed Rendell. Then, in 1997, the Pennsylvania General Assembly passed Act 55, which broadened the tax exemption for nonprofits. Penn’s PILOT promptly shriveled and disappeared.
In 2012, however, the Pennsylvania Commonwealth Court issued a decision, Camp Hachshara Moshava of New York v. Wayne Co., that insisted any commercial components of nonprofit real-estate (e.g., food and shopping concessions) must be taxed. City Council reacted in 2013 by passing a bill that enjoined the City to pursue potential tax collection from nonprofits vigorously.
But it is not clear the City has followed through, said Gwen Snyder, JWJ’s executive director and a 27th Ward Democratic Committeewoman. She met with City Finance Dir. Rob Dubow about a year ago asking for information on stepped-up enforcement. She was disappointed, reporting Dubow was “completely unresponsive.” Dubow told Snyder the Office of Property Assessment was making audits of nonprofit properties for commercial activities “but he could not give any records of its findings.”
Contacted this Tuesday, Dubow repeated nonprofit properties have been audited. For details, he said, “You can go to the OPA website and see what property is taxable and what is not.”
After that meeting, JWJ resolved to launch a drive to press Penn to resume PILOTS.
It’s not that Penn is the only target, explained Snyder. It is merely the largest of the giant “eds and meds” that increasingly dominate the city’s economy.
“Philadelphia has the most tax-exempt land of any major city,” advised Snyder. “Six out of the eight largest cities in America receive PILOTs from major nonprofits for essential public services and for schools.”
Given the desperate plight of the School District, which scrambled hard for months plug a deficit by raising an added $55 million with a cigarette tax, Snyder argues PILOTs collectively can go a long way toward addressing vital needs.
Penn and other institutions retort their employees do pay all city taxes, and they have lots of employees. But for-profit employers also benefit from city services, Snyder noted, in addition to their employees; so both companies and workers pay city taxes. Therefore nonprofits are getting a free ride on for-profit companies, she argued.
“Taxes provide public jobs,” Snyder said. “They hold down the middle class in many areas, especially for people of color.”
A May 2013 meeting at Monumental Baptist Church in West Philadelphia drew 100 community residents, including a Penn faculty member, in support of lobbying Penn to resume PILOTS. “The response to our petition was overwhelmingly positive.”
Snyder began meeting with community and faith leaders last spring to elicit their support. At the same time, SLAP started to organize Penn students.
“We began holding monthly community dinners to link students with the issues of the city around them,” reported Daniel Cooper, spokesperson for SLAP. The plight of city schools was particularly troubling to students, he said.
“We are very unhappy with that. We hold the university and the administration accountable,” Cooper stated. “We don’t want education just for the privileged young people at Penn; we want education for all.”
This fall, Snyder reached out to Amy Guttman to ask her to meet with a delegation from the community about PILOTs. Penn’s VP for government and community affairs Jeffrey Cooper (no relation to Daniel Cooper) responded on Guttman’s behalf and met with Snyder.
It was a cordial meeting, said Snyder; but Jeffrey Cooper ended by saying a PILOT program was not on the table.
“We provide substantial benefits of cash, programs and personnel to the School District at Penn Alexander and Lea Schools,” Cooper said. “Penn contributes strongly to public safety as well. We feel this is a better way to give to the city than by PILOTs, which did not work well here in the ’90s and are not working well in other cities right now.”
Then came Ferguson, Mo., and the wave of activism that followed it and other incidents affecting the Black community. On Dec. 9, 50 to 100 students organized by SLAP and SOUL (Students Organized for Unity and Liberation) showed up uninvited at Penn President Amy Gutmann’s holiday party and staged a “die-in”. Gutmann drew national attention by lying down on the floor at the party and joining in the die-in herself.
What went unreported, said Daniel Cooper, was the student protestors were also demanding Penn resume its PILOT program.
The poverty of the city around their posh campus troubles the protestors, Cooper said.
“It’s easy to be in solidarity with the people of Ferguson but the issue is also hitting home. Philadelphia is one of the poorest large cities in the USA,” he said. “It is essential that Penn do its part to pay for the services these poor taxpayers are now providing it.”
While Gutmann may have pitched into the die-in with enthusiasm, she decidedly refrained from endorsing a pay-in as well on that evening.
Since then, though, said Daniel Cooper, he has received word from Jeffrey Cooper that Guttman has called her VP to say she “looks forward to starting a dialog” with SLAP in which PILOTs can be discussed.
JWJ will release a comprehensive report on PILOTs in January to light up a citywide discussion on the role of the mega-institutions in funding municipal services.