City might expand U.'s tax burden

The city may re-evaluate the tax-exempt status of Philadelphia's "non-profit" institutions -- including the University -- by demanding special payments and community services or property taxes, a city official said yesterday. The financially-strapped city may choose to look specifically at some of the University's operations that are run more like businesses than charitable institutions, said David Glancey, the city's chairperson of the Board of Revision of Taxes. Currently, only a few of the University's properties, such as the Shops at Penn, pay taxes because of the University's "non-profit" status. "There might be profit centers that the University may have, which could very well make it subject to taxes -- for example, maybe some research centers," Glancey said. Budget Director Stephen Golding said that any change in the University's tax-exempt status would have a serious financial effect. "We would certainly be very concerned about a general revisiting of the question of tax-exempt statutes for universities and hospitals in the city, because it obviously would have a significant impact on our budget," he said. University officials said they believe the University is well within the law, and deserves to maintain its "non-profit" status. "We would resist this, and we would want to be very clear that we are meeting all the requirements of a tax-free institution," said Acting Executive Vice President John Gould. "The law tells us we are tax-exempt." But Golding said he is concerned that the city might revisit the issue of "non-profit" status. "We have to realize that we may have to see some re-writing of the current [non-profit] statute," he said. "We're very interested in maintaining our tax-exempt status, and we do recognize an obligation to pay for city services." Golding added he feels the University has contributed substantially to the city in other ways besides taxes. "I think the historical position of the University is that we are willing to pay for services which we receive from the city," Golding said. "In fact, we pay for our trash dumping. Conversely, we provide services which would normally be provided by the city. The University Police is an example." Glancey said he thinks that there may be cases where University facilities -- such as parking lots -- have unfair advantages because of the "non-profit" status. The University has been cooperative with the Board of Revision of Taxes in the past, Glancey added. "All of the dealings that I have had with the University have been very up front," he said. "I can't say that they have gone out of their way to bring us information, but any time we have asked, they have been very up front." The debate over whether to tax some "non-profit" organizations has occurred most recently during the city's budget hearings. Much of the recent inquiry into "non-profit" organizations was spurred by a 1985 State Supreme Court ruling which redefined the eligibility requirements. Although Mayor Ed Rendell's administration has not decided whether it will pursue more of the University's tax dollars, it is looking into Glancey's suggestions. "The administation's view is one that has not changed," said Kevin Feeley, the mayor's press secretary. "Those are ideas which have been studied for a long time, but there has been no decision made to [start taxing some non-profit insitutions]." At-Large Councilmember Happy Fernandez, who was present for Glancey's presentation during the budget hearing, said she feels that the important issue is equity. "We need to make sure that everyone is carrying their fair share of the tax burden," Fernandez said. "My question is one of fairness." Fernandez also said she thinks that some organizations with "non-profit status" have functioned as profit-making institutions. She said that some groups are clearly "non-profit," but "the grayer area would be . . . a hospital that is making $17 million in profits."