August 12, 2020; Philadelphia Inquirer
The Philadelphia Inquirer went on record yesterday with an editorial calling upon the University of Pennsylvania to make an annual payment in lieu of taxes (PILOT) to support Philadelphia’s public schools.
PILOTs are voluntary payments made by larger nonprofits to offset the costs of their nonprofit tax exemptions. For cities that host large nonprofits, sometimes in great number, the loss of property tax income can be significant—especially when it comes to schools, which tend to be funded in part through those taxes. The nonprofit infrastructure tends to resist the notion of agreed-upon PILOTs as a threat to nonprofit tax exemption overall, but community organizations and the media often break with that stance, as they have done in this case.
The Inquirer editorial describes the school as simply and imperiously refusing to discuss the issue, with David L. Cohen, president of the board of trustees at the University of Pennsylvania (Penn), saying last month that any new arguments for such payments are merely a rehash of formerly rejected pleas. This, the Inquirer calls intransigence, a stand that “ignores the extraordinary reckoning about race, equity, and justice now energizing the Penn community and others across the city and the nation.”
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The paper reports that a petition circulated by a campus group called Penn for PILOTs has garnered 1,000 signatures from the school’s faculty and students. More notably, another nonprofit, Philadelphia Jobs with Justice, has demanded “mega-nonprofit” schools like Penn, Drexel University, and Thomas Jefferson University start paying 40 percent of what their property taxes would normally be to the coalition’s own Philadelphia Education Equity Fund, where decisions for its use—solely for education in the public schools—could be made through a public process.
The presence of Penn, Drexel, and Jefferson benefits the city and the region in countless ways. But being in the city benefits them as well. All three universities are behind massive real estate projects reshaping the skylines on either side of the Schuylkill. Anyone who doubts the value of even a 10 percent abatement, let alone an exemption, in city property taxes should take note of the rush among private apartment developers to beat the pending reduction in that incentive.
The editorial concludes with a low-key shaming for the institution’s refusal to engage on this issue so critical to their home base. “A lively conversation about PILOTs for nonprofits is already underway,” the editorial board writes, “It’s time for Penn and other big players to be part of it.”—Ruth McCambridge