City may force U. to pay taxes

Under a new program proposed by Philadelphia Mayor Ed Rendell in July, most non-profit organizations -- including the University -- will have to "donate" money to the city or risk being hit with high taxes. The goal of the program is to raise an additional $33 million a year in revenue and free services from normally tax-exempt agencies which are not "purely for charitable use." This includes about $8.5 million from area colleges. The money and services will be used in the city's school districts. The plan calls for non-profit organizations to pay at least a third of the property taxes they would owe the city if they did not enjoy tax-exempt status. But the organizations can substitute some of the payment with services to Philadelphia schools. If they refuse to pay this, then the city can take action in court, possibly causing the organizations to pay 100 percent of their would-be taxes, effectively eliminating their tax-exempt status. The University, which is one of the many institutions affected by the program, responded harshly to the proposal in a statement released in July. "As the city's largest private employer, and a leading research university that views public service as an integral part of its mission, Penn makes a significant contribution to the economic stability, health, and educational well-being of the city," the statement read. "The University believes it deserves its tax-exempt status, while recognizing the obligation to the city, and already contributes a significant amount for a variety of services received." Former Executive Vice President Janet Hale said in July that while she has not yet seen the details of the mayor's program, she thinks it is "important to note that Penn is a partner to the city." "We've done a lot of things -- we pay taxes early [and] there are a lot of services that we provide," she said. "We're really an economic engine to the city." According to the statement, the University already provides a number of services to the city, including: · Pre-paying millions of dollars in wage taxes during a city budget crisis; · Establishing the Penn-Merck collaborative with the Philadelphia school system, creating programs that provide teacher training, student tutoring, and mentoring; and · Providing thousands of University volunteers who donate their time in hundreds of people-to-people programs. Hale said that since University officials have not seen the details of the proposal, it is difficult to estimate how much the program would end up costing the University. The Associated Press contributed to this article.