What if NU's land were taxable?

The NU Evanston campus, in an image from Google Maps.

A new memo from Evanston city staff suggests that if Northwestern University's property could be added to the tax roles, it might yield as much as $5.9 million a year in additional property tax revenue for the city.

If all other tax-exempt properties in the city could also be taxed, the city's chief financial officer, Marty Lyons, says, that might bring in an additional $4.4 million.

Based on those estimates, similar gains in property tax revenue would be seen by other taxing bodies -- of about 14.4 percent if only NU's land were taxable and 25 percent if all exempt property was added to the tax rolls.

Lyons stressed in his memo that he conducted only a very simple analysis -- estimating the total square footage of non-exempt properties and dividing that by the total tax levy to come up with an estimated tax per square foot and then multiplying the estimated square footage of tax exempt buildings by that number.

A map showing exempt and non-exempt land parcels in Evanston. NU owns only about 28 percent of the exempt land area in town, but has 57 percent of the exempt building square footage.

He suggested that if aldermen what to conduct a more detailed analysis, the city should use its tax increment financing district advisory firm, Kane McKenna, to do that.

He also noted that if the university didn't exist, the land it occupies would probably have been developed at lower density levels, similar to adjacent sections of Evanston, and therefore likely would yield less property tax revenue than his estimate.

Given the success of Northwestern and other tax-exempt entities in defeating challenges to their exempt status, the memo's main value is probably as a talking point in discussions with the school about voluntary contributions it might make to the city.

The memo is scheduled to be discussed by aldermen at tonight's Administration and Public Works Committee meeting.

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Comments

Rein in the city staff

I think the aldermen need to rein in the city staff. This will do nothing but increase tension between the city and the University and risk damaging the positive relationship that has developed in recent years. Whoever decided to do this should be fired.

Who's starting it?

Oh, I think it's most likely that this report was prepared in response to an aldermanic request.

It only takes one to ask.

-- Bill

one alderman

"It only takes one to ask."

and I think we know who that one is...

Then maybe NU...

could ask for rent or compensation for all the land it gave to Evanston. On northside NU got land the land to Central and Ridge [maybe Asbury].  If they got rent from all the homes/businesses, their endowment would rise and they might be able to make NU tuition free. 

Hey Northwestern, time to pay your fair share!!!

Last year Princeton University agreed to pay more than $18 million to settle a lawsuit by local homeowners who claimed the fifth-richest U.S. school should be paying property taxes on its New Jersey campus. 

Under the settlement, 869 homeowners will share a pot of $10 million, intended as property-tax relief, from 2017 through 2022. The borough government will receive additional payments totaling almost $7 million, and a non-profit group, the Witherspoon Jackson Development Corp., will receive $1.25 million to meet the housing needs of poorer residents. Oh, that's a lot of money!! I like money.

Legislation that would have revoked the tax-exempt status of certain parcels of land owned by Yale University failed to pass before the Connecticut Legislature adjourned its 2016 legislative session. Yale, which opposed the measure, thanked the Democratic governor. Whew, that was a close one Yale peeps!

The Republican governor of Maine has supported a measure to allow localities to tax larger nonprofit organizations such as universities. The media and university admins went ballistic and accused the conservative guv, who supports school vouchers and eliminating the state income tax, as ... wait for it...you guessed it... a racist!! That'll shut down any meaningful debate with conservatives. 

Northwestern has two figure billions in endowments and it's time they pay their fair share in taxes. 

Any good lawyers in Evanston noticing the Princeton settlement and wiling to follow suit? Pun intended. :) 

Fair Share?

Really...Northwestern doesn't pay their "fair share"? They pay millions of dollars for building permits year after year and is, or is close to one of our largest water customers. Northwestern is also a huge employer. Let's not forget the enormous and positive economic impact for the retail and hospitality industries. If not for Northwestern Evanston wouldn't exist, it would be Rogers Park north from Howard to Dempster and Wlilmette from Dempster to Isabella. Maybe the city also needs to shake down the churches which also occupy a significant amount of real estate? 

Maine

Al, I've been trying to verify this statement:

  • The Republican governor of Maine has supported a measure to allow localities to tax larger nonprofit organizations such as universities. The media and university admins went ballistic and accused the conservative guv, who supports school vouchers and eliminating the state income tax, as ... wait for it...you guessed it... a racist!! 

I've been unable to find any instance of the media calling Governor Lepage a racist because of his proposal to lift the tax exemption of certain non-profit institutions or institute a regressive income tax.

In those cases where Governor Lepage was called a 'racist', it was due to incidents like this:

Back in January, LePage was responding to a question about how he has handled the state's opioid epidemic when he said "guys with the name D-Money, Smoothie, Shifty" come from New York and Connecticut to sell their heroin in Maine, and "half the time they impregnate a young white girl before they leave."

So, Al, can you please cite a source for your comment?

Endowments

Maybe Princeton feels they  can afford it---or they get even more threats from their government than NU does. 

Princeton does not have the largest Endowment but it has by far the largest per student---multiples of what NU has.

Illinois Constitution Protects NU

We must have more than usual serious budget issues if staff is wasting their time considering a run at NU for property taxes.  My understanding is that NU is protected from taxes of any kind, by the Illinois Constitution.  NU had the foresight (before Evanston was Evanston), to have that language written into the constitution.  Good luck having the language changed.

Let's not waste time and fees on "consultants" before we know whether or not there is a  snowball's chance... in getting a constitutional convention for a rewrite of NU tax obligations.

Actually ...

It's the charter granted to the university by the state legislature back in the 1850s that is the basis for NU's tax exemption.

All the universities in the state -- public and private -- have an interest in maintaining their exemption from taxes ... and they've got a lot of influential alumni ... so the odds of the legislature inviting expensive litigation by attempting to rewrite the charter of NU ... or the rules under which other schools are tax exempt ... seems extremely remote.

But it's been a popular hobby horse for some folks in Evanston to ride over the years.

-- Bill

What about lands devoted to non-educational purposes?

Parts of the exemption may be nearly untouchable.  But there is a lot of NU land devoted to non-educational purposes, and it's not clear that this must be tax-exempt either legally or on the basis of providing a societal benefit.  Nothing about the NU charter envisioned rec centers and athletic facilities.  There are 34 parking lots of various sizes in Evanston owned by NU, a number of which would seem to be simply land-banked.  Given the density of development, many of these lots would disappear if the landowner was forced to cover the normal carrying cost of holding the land.

Does NU have too much money ?

NU seems to find the money for one expensive arts building after another---reminds me of the city's moves to create them.

NU also finds the money to create new sports [they call them 'recreation'] facilities and yet claim they don't have room for other things---like a library to hold the books.  Instead of devotiing some of the land ON campus to a supplemental library, they reduce the books in both the engineeriing and main library [they say they still have them] and ship them off to a remote site 40 miles away.  They say they can retrieve a book in 24 hours---how long since the librarians did research ? Researchers often need a source immediately or have to look through many books to find what they need. Maybe NU does have too much money and can afford to fund the city.  Looks like they forgot what a university is for---education.

And then we have all the money that goes to Big 10 and other sports.  They don't even require physical education---not even swimming that might have  saved the life of the rower.

Where are all these magical,

Where are all these magical, mythical "arts buildings" you criticize? I can name only one of them that actually exists on campus, while most of the new construction seems to serve the sciences, engineering, and business. But thanks for playing. 

Arts buildings

Pick-Staiger Concert, Witz Centr Performing Arts, Regenstein Hall, Ryan Center Musical Arts, Louis Hall, Block Museum, Arts Green, Cahn Auditorium, old Roycemore school

Probably more

Those aren't new buildings

I graduated 25 years ago and all those buildings but the Ryan Center were there then.  

The School of Music is highly respected.  The Theatre Department is one of the top drama schools in the country.  Why shouldn't they have classroom and performance space?  Why are you mad about a bunch of buildings built 40+ years ago?

Northwestern isn't going to be paying these taxes.  If people are unhappy about the state of Evanston's finances...then they should look at how the City of Evanston manages its finances.

As a Matter of Subject

Well now doesn't that just open Pandora's books (oops box) to a visionary thought that just maybe that offsite remote place will be eliminated after the parking lot is taken away for 3/4 of the patrons and will render that place for books nearby useless and a floor would  be designated (with a benefactor's name on it ) for engineering books only. Such as a space at Robert Crown be used for NU skaters per donation..

Another approch

Maybe ssme smart lawyer can challenge the laws  that allow NU to avoid property [other taxes] on 'non-educational' property. I doubt those who made the deal foresaw Big Ten sports; while music and theather have a long tradition in America, I don't think the scope of NU buildings and 'academic' programs at NU was envisioned; nor was a Journalism school. They would be shocked at number VPs, and SVPs to handle every minor issue students claim---yes the personnel are not property to be  taxed but all the building to house them are. Surely not all the 'recreattion' buildings [read training for semi-pro sports], sailing facility, are vital to an education [at time of founding required US/Europen  history and literature, philosophy, religion, science, math, academic languages [Latin, Greek, French, German] and others current student never get close to.

But with the failure to even be able to tax the purely commerical land NU holds, these others are beyond  the pale.

what if city council tried to

what if city council tried to run the city on the tax money residents already give them?

$200 per household per year

I am sure we have heard people repeating that taxes are high in Evanston b/c NU pays no property tax.  Well maybe a little bit.  Based on the estimate in the article it is $200 per household (assuming 30,000 households).  That are far more than the difference between tax in Evansotn and Skokie or Chicago.

NU can buy an unlimited amount of property

How is it sustainable that NU can buy an unlimited amount of property, houses, buildings that is then converted to being tax free. They are siphoning away our tax base. I can understand original property from NU's campus, but buying Evanston homes and taking away the taxes is madness. They have been buying up houses like crazy on Orrington. Just learned that NU bought up a second house on the corner of Orrington and Central. One this year (a beautiful property!) along w a house on Clinton and in 2013. They own 3/4 houses on the four corners there.  It has been estimated they have taken 50 houses at least off the tax rolls. Why should Evanston subsidize them? And Rise our taxes to do so?


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