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Student Council urges UVa to adopt 'Payment in Lieu of Taxes' program

The Student Council at the University of Virginia wants the school to help pay for public school improvements and affordable housing projects in Charlottesville to make up for the fact that it pays no property taxes.

The council passed a resolution in favor of the Payment in Lieu of Taxes, or PILOT, program last week in a 22-1 vote, with one abstention.

The resolution urges UVa to pay a portion of the property taxes it would owe if it were not tax-exempt.

UVa has one of the largest endowments of any public college in the country, totaling $14.5 billion as of 2021.

While the university’s property taxes would amount to roughly $15 million based on the nearly 2,000 acres it occupies, the resolution calls for an annual commitment of at least $10 million towards the city by 2030.

The program would be similar to those between Boston and Harvard and Boston universities; New Haven, Connecticut, and Yale University; and Providence, Rhode Island, and Brown University.

The resolution merely signals support for such a PILOT program; neither Student Council nor Charlottesville City Council have the legal authority to unilaterally require UVa participate. Further action is required from the university, the city and state legislators for any program to be put into effect.

Neither representatives of the Student Council nor UVa immediately responded to a request for comment from The Daily Progress.

City Council Member Michael Payne, who has been proponent of a PILOT program and was the inspiration for the resolution at UVa, said the Student Council’s approval is a step in the right direction.

“Because the university pays no property taxes, the city permanently loses out on revenue they own just within Charlottesville city limits,” Payne told The Daily Progress. “With about 95 land parcels and an assessed value of about $1.6 million, if the university paid the same tax rate as everyone else it would owe about $16 million per year. That amount of money would make a huge difference in Charlottesville.”

The Student Council decision on Feb. 14 came after two weeks of debate at the council’s weekly Tuesday meetings.

Third-year Rep. Andreas Masiakos, who sponsored the resolution, told the Cavalier Daily student newspaper he was inspired by Payne after the city councilor suggested a PILOT program during a visit to a university class last semester.

Masiakos provided two clarifying amendments to the resolution before its passage last week.

One amendment specified the city spend the money on Charlottesville public schools and affordable housing projects. The other said that the funds should come from a “relocation of existing discretionary funds” so that student tuition would not increase to pay for the program.

While similar programs can be found in other cities with strong university presences, their success rate is a matter of debate.

In New Haven, Yale announced in 2021 a new agreement that would raise the university’s financial commitment to the city by $52 million over the next six years.

“Yale and New Haven have a bond that has been tested by time and strengthened by shared purpose,” Yale President Peter Salovey said in a statement at the time.

However, in Boston, the city received only 68% of the requested PILOT money from educational institutions, including both Harvard and Boston universities, in its area in the last fiscal year.

Harvard has fallen short of its target contribution every single year since the PILOT program was introduced in 2011.

“In fiscal year 2022, Harvard contributed a total of almost $10.8 million — 79 percent of the nearly $13.7 million request, according to city data,” the Harvard student newspaper the Crimson reported on Oct. 14. “This fiscal cycle marks the fifth year in a row that Harvard paid 79 percent of the city’s PILOT request.”

The student newspaper also reported that $6.8 million of Harvard’s contributions were “community benefits credits,” which are calculated based on the amount that Harvard’s existing initiatives financially benefit Boston residents. This means that less than half of Harvard’s contributions came from discretionary funds.

And in Providence, Mayor Brett Smiley said earlier this month that the city’s PILOT program with Brown University, which expires this spring, should be expanded. Smiley is specifically seeking a change in state law that would tax properties rented out by tax-exempt universities to for-profit commercial tenants.

Brown spokesman Brian Clark told the WPRI news station that the Ivy League school paid $2.4 million last fiscal year for its commercial buildings and spaces.

Asked if the school would be willing to contribute more, Clark said the university is “proud of the significant number of ways” the school supports the city.

Ideally, Payne said Charlottesville and UVa would rise to the occasion and be one of the success stories.

“It’s just a question of ‘Does UVa have the will and desire to figure out how they’re going to make the program happen?’” Payne said. “One thing the university often responds with is ‘We’re a public university and we receive public money.’ The important context is that the university budget is only about 15% public money from the General Assembly. So the vast majority is not public and they do have the ability to allocate some of that to a PILOT program.”

Payne said part of the next steps toward enacting a PILOT program would be an education campaign to illustrate how the university could help support the community where it is located.

That’s a community where officials have been trying to cope with what they themselves have identified as a housing “crisis” since at least 2009.

The median sales price for a single-family residence in the Charlottesville area sits at about $400,000 today, according to the latest numbers from the Charlottesville Area Association of Realtors. The median income in the city is $31,161, according to 2020 census figures. The annual salary needed to afford a $400,000 house is at least $165,000, according to fintech company SoFi.

With more than 28,000 employees, UVa is the No. 1 employer in Charlottesville, where the population reached 51,278 in 2022, according to the latest data from the Weldon Cooper Center at the University of Virginia, which studies population demographics.

Payne said he believes that the community would support a PILOT program if they were exposed to the hard numbers and the potential benefit of university dollars flowing into the city’s housing and education programs.

“I think for it to happen really requires building education and support in the community that this is something that’s been done across the country,” Payne said. “It’s something that UVa has the ability to do, there are the benefits it could have for housing and education while building momentum in the city. For the university student body, alumni and faculty, this is something we really want to see UVa take action on.”

Payne said he believes the push for the PILOT program will be similar to the push for a living wage for faculty members.

After students, staff, faculty and community members lobbied the university, UVa announced in 2019 it would begin paying all full-time, benefits-eligible employees in its academic division and medical center “a living wage of at least $15 an hour.”


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