U. agrees to pay $1.93 million to city for PILOT

After over a year's worth of serious debate and discussion, the University and the city have recently come to an agreement on the Payment In Lieu of Taxes issue. As the city's largest employer, the University has agreed to pay the city a $1.93 million "voluntary contribution" for this year and the duration of the five year agreement, according to Vice President for Finance Stephen Golding. "The University believes this is a good deal not only for the University but for the city," he said. "And it reflects that we are an integral part of the community and we must pay our fair share of the responsibility for maintaining city services." Carol Scheman, vice president for government and community affairs, stressed that the payment was a voluntary contribution and not a tax. And Golding held a similar view. "We believe that the University has always acted as a charitable institution," Golding said. Golding said several issues the University and city had been wrangling over were hammered out before the agreement came to fruition. Deputy Mayor for Policy and Planning Greg Rost said he was enthuisiastic about the agreement. "The city is extremely pleased that we were able to enter into an agreement with the University of Pennsylvania," Rost said. Recent legislation passed by the Pennsylvania Senate, Senate Bill 355, the Purely Public Charities Act, included an amendment that charities in Philadelphia that pay their chief executives more than $100,000 would lose their tax-exempt status. But, according to Golding, the amendment had no effect on the tax exempt status of the University. The issue centers around the city's asking the University to pay about 30 percent of the real estate taxes it would owe if it were a for profit institution, as part of the PILOT program. Last summer Mayor Ed Rendell began asking non-profits to pay a portion of the taxes due to the city if the organization were for profit. The city's move follows a national trend of financially strapped cities across the country that have asked universities and other non-profit organizations such as hospitals and churches to make payments in lieu of taxes. The city feels non-profits should pay for such municipal services as fire, police and street cleaning. And the city estimates that the new revenue could raise as much as $8.4 million, with $3.78 going to the city and $4.62 million allocated for the School District of Philadelphia. In addition the city has threatened to take the University and other non-profits to court if they refuse to comply with the city's wishes. Rendell is planning to announce in the next few days how effective he has been in getting large non profit organizations to pay a voluntary contribution to the city.

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