[Durham INC] Fwd: Could Durham ask Duke for Payments in Lieu of Taxes?

Thu Mar 2 08:52:06 EST 2023

Mayor O'Neal says she's "been in conversations with Duke officials, and
those conversations are ongoing,”

Read about it here, and pass it along to other friends and neighbors!

#ElaineIsOnIt

Most higher education institutions do not pay property taxes, leaving the
cities that host them with a gaping revenue loss, but negotiated agreements
to bridge that divide are becoming more common.
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Open in app
<https://open.substack.com/pub/bcpi/p/could-durham-ask-duke-for-payments?utm_source=email&redirect=app-store>
or online
<https://substack.com/redirect/2/eyJlIjoiaHR0cHM6Ly9iY3BpLnN1YnN0YWNrLmNvbS9wL2NvdWxkLWR1cmhhbS1hc2stZHVrZS1mb3ItcGF5bWVudHM_dG9rZW49ZXlKMWMyVnlYMmxrSWpveU56UTNOalEzTWl3aWNHOXpkRjlwWkNJNk1UQTFPVFF6TVRBM0xDSnBZWFFpT2pFMk56YzNOVGMxTURZc0ltVjRjQ0k2TVRZNE1ETTBPVFV3Tml3aWFYTnpJam9pY0hWaUxURXpOREF3T1RjaUxDSnpkV0lpT2lKd2IzTjBMWEpsWVdOMGFXOXVJbjAueUxYd0pwMTdKSnZKd3ZXa1BOTHpJalhZYVNyUFYtMXcwTEZoeDhqQmdOMCIsInAiOjEwNTk0MzEwNywicyI6MTM0MDA5NywiZiI6dHJ1ZSwidSI6Mjc0NzY0NzIsImlhdCI6MTY3Nzc1NzUwNiwiZXhwIjoxNjgwMzQ5NTA2LCJpc3MiOiJwdWItMCIsInN1YiI6ImxpbmstcmVkaXJlY3QifQ.x0HBbzDRG5WMXCYlmkivjjOq9R4P-PvOV-j-6G7rDDw?>
Could Durham ask Duke for Payments in Lieu of Taxes?
<https://substack.com/app-link/post?publication_id=1340097&post_id=105943107&utm_source=post-email-title&isFreemail=true&token=eyJ1c2VyX2lkIjoyNzQ3NjQ3MiwicG9zdF9pZCI6MTA1OTQzMTA3LCJpYXQiOjE2Nzc3NTc1MDYsImV4cCI6MTY4MDM0OTUwNiwiaXNzIjoicHViLTEzNDAwOTciLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.yLXwJp17JJvJwvWkPNLzIjXYaSrPV-1w0LFhx8jBgN0>Most
higher education institutions do not pay property taxes, leaving the cities
that host them with a gaping revenue loss, but negotiated agreements to
bridge that divide are becoming more common.

Bull City Public Investigators
<https://substack.com/redirect/fe242b67-af8c-4d85-a033-905fe448377c?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
Mar 2
<https://substack.com/redirect/fe242b67-af8c-4d85-a033-905fe448377c?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>

<https://substack.com/app-link/post?publication_id=1340097&post_id=105943107&utm_source=substack&isFreemail=true&submitLike=true&token=eyJ1c2VyX2lkIjoyNzQ3NjQ3MiwicG9zdF9pZCI6MTA1OTQzMTA3LCJyZWFjdGlvbiI6IuKdpCIsImlhdCI6MTY3Nzc1NzUwNiwiZXhwIjoxNjgwMzQ5NTA2LCJpc3MiOiJwdWItMTM0MDA5NyIsInN1YiI6InJlYWN0aW9uIn0.tgt6xUVyhoWpBlEUXfHcZF4Ztn0ULhUzs4Erf4SKTjI&utm_medium=email>
<https://substack.com/app-link/post?publication_id=1340097&post_id=105943107&utm_source=substack&utm_medium=email&isFreemail=true&comments=true&token=eyJ1c2VyX2lkIjoyNzQ3NjQ3MiwicG9zdF9pZCI6MTA1OTQzMTA3LCJpYXQiOjE2Nzc3NTc1MDYsImV4cCI6MTY4MDM0OTUwNiwiaXNzIjoicHViLTEzNDAwOTciLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.yLXwJp17JJvJwvWkPNLzIjXYaSrPV-1w0LFhx8jBgN0&utm_source=substack&utm_medium=email>
<https://substack.com/app-link/post?publication_id=1340097&post_id=105943107&utm_source=substack&utm_medium=email&utm_content=share&action=share&triggerShare=true&isFreemail=true&token=eyJ1c2VyX2lkIjoyNzQ3NjQ3MiwicG9zdF9pZCI6MTA1OTQzMTA3LCJpYXQiOjE2Nzc3NTc1MDYsImV4cCI6MTY4MDM0OTUwNiwiaXNzIjoicHViLTEzNDAwOTciLCJzdWIiOiJwb3N0LXJlYWN0aW9uIn0.yLXwJp17JJvJwvWkPNLzIjXYaSrPV-1w0LFhx8jBgN0>

Save
<https://substack.com/app-link/post?publication_id=1340097&post_id=105943107&utm_source=substack&utm_medium=email&action=save&triggerSave=true&token=eyJ1c2VyX2lkIjoyNzQ3NjQ3MiwicG9zdF9pZCI6MTA1OTQzMTA3LCJpYXQiOjE2Nzc3NTc1MDYsImV4cCI6MTY4MDM0OTUwNiwiaXNzIjoicHViLTEzNDAwOTciLCJzdWIiOiJzYXZlLXBvc3QifQ.WH5VM-HcGZCLYV84AUkcfuAX2icqJC91HF18GzTlI5o>

*This is the first of a three-part series investigating Payments in Lieu of
Taxes (PILOT) programs that are expanding across the country and how a
PILOT program could potentially impact Durham.*

As rents continue to sharply increase across Durham and new boxy monoliths
with opaque garage doors nestle in between older working-class bungalows,
the pressures on the neighborhoods of Durham are building. Housing concerns
have dominated the local political discussion for years, with seemingly
little relief despite Durham voters overwhelmingly passing a $95 million
affordable housing bond in 2019. Last month, some Durham residents and the
Housing Action Team from the People’s Alliance crafted an idea to involve
Duke University: they joined a petition calling on Duke to provide
on-campus housing for all their undergraduate students
<https://substack.com/redirect/0ae01379-8e31-459e-8aea-ebe5e4cb3a68?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>.
The petition has yet to secure 200 signatories after being in circulation
for a month, but it has acquired some notable critique
<https://substack.com/redirect/6a14bd13-6262-4fc0-917b-954766344b39?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
.

Understanding that Duke could be a partner in overcoming the current
housing crisis in Durham is a very reasonable consideration. Although in
the most recently reported data from our two local universities, the 6,543
undergrads
<https://substack.com/redirect/1eec0280-7afc-40ba-b93d-9d0a6fa7773c?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
at Duke are quite comparable to the 6,434 undergrads
<https://substack.com/redirect/a7d79f7d-a001-496b-a62c-60b9e2752dce?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
at North Carolina Central University, Duke has a staggering $12.1 billion
endowment (as of June 30, 2022
<https://substack.com/redirect/a929398c-3384-46b0-b501-0419a11d58d6?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>)
compared with just over $38 million at NCCU (at the last filing on June 30,
2021
<https://substack.com/redirect/4710d2e7-c0b4-48f1-8312-2008b8b4e3f1?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>).
According to the federal Department of Education, Duke had the
sixteenth-largest endowment
<https://substack.com/redirect/8805dfce-e417-4699-a820-79f6f8f9b059?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
among all post-secondary institutions in the country in 2020.

Ballasted by its billions in investments, Duke has grown to become a
world-recognized research university and medical center. The school and
affiliated medical center stretch across four campuses (East, West,
Central, and Medical) to occupy over 1,000 acres—as well as another nearly
500 acres at its golf course and over 7,000 acres of Duke Forest. The
campuses (and golf course) are all within the Durham city limits, but
because the vast majority of building and parcel usage are considered part
of educational purposes under IRS 501(c)(3) rules, Duke has tax-exempt
status and does not pay property tax on most of their properties. A Bull
City Public Investigators review of 2022 property tax bills found that Duke
University paid just over $240,000 in property taxes, the Washington Duke
Inn paid just over $500,000 in property taxes and the Duke Health System
paid over $800,000 in property taxes—$559,764.67 of which came from a
single new health center on Page Road
<https://substack.com/redirect/9deaaaa0-2ea7-4527-b015-48cc191df43a?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>.
The few Duke-affiliated properties that are being taxed are properties that
are being leased, according to representatives from the Durham County Tax
Office. The vast majority of Duke’s property is not subject to property
tax, which means the City and County are missing millions of dollars in
potential revenue.
<https://substack.com/redirect/91c0c148-b19a-4ebd-9504-5c3c1dae2349?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
The
Duke West Campus parcel from the Durham County Tax Administration’s tax
parcel portal. (https://property.spatialest.com/nc/durham/#/property/108792)
An Old Problem with Old Solutions

It is not just 501(c)(3)-eligible organizations that are exempt from tax:
property owned by any level of government is also exempt from paying
property tax to localities. In communities with significant federal land,
the situation became especially untenable as it put a disproportionally
high tax burden on the few parcels of land that were not federally owned.
Congress took this matter up in 1976 with a bill that provides Payment in
Lieu of Taxes, or PILT when referencing this federal program. The Department
of Interior administers the PILT program
<https://substack.com/redirect/db10263b-d470-4836-bce7-f3aa222d3b93?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
and distributed $549.4 million to over 1,900 local governments in 2022.
PILOT Programs Can Be Voluntary

Even before the federal PILT program was initiated, some major research
universities had voluntarily negotiated a PILOT arrangement with their host
local government as early as the 1920s according to a 2010 report from the
Lincoln Institute for Land Policy
<https://substack.com/redirect/9e72378f-ed45-4e9f-87c9-9ea917fc5eed?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
(Harvard is said to have begun making payments to Boston and Cambridge in
1928.) PILOTS can be viewed as the recapture of lost revenue potential, the
reimbursement for services rendered to the tax-exempt property by the local
government, or a blend of both intentions. PILOTs often are preceded by
lengthy negotiations. Alternatively, some local governments like the City
of Boston
<https://substack.com/redirect/86a884d6-ffa9-4a16-a181-487687512c74?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
have a blanket approach where, in Boston, they request specific amounts of
PILOT payments as “voluntary contributions” from any type of tax-exempt
entity that owns property valued at over $15 million.

The City of New Haven, Connecticut, and Yale University initiated a PILOT
first in 1991, and then in 2021, the partnership accelerated with Yale
agreeing to significantly increase their annual contribution by $10 million
per year
<https://substack.com/redirect/e80f4671-6171-438d-a8cf-3db804fe74ee?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
to bring their annual PILOT to the City of New Haven to $23 million per
year.

Philadelphia City Schools now receives a $10 million per year
<https://substack.com/redirect/8ea79d2f-a6b6-409d-83c2-f9c2c499591c?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
direct PILOT contribution from the private Ivy League University of
Pennsylvania after organizing efforts among UPenn staff and faculty joined
a multi-year campaign by pro-labor activists and advocates.

Harvard University has been publicly lambasted
<https://substack.com/redirect/33297071-81e4-4ff9-b644-13559afc5fbf?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
in the past when they decided to shortchange the City of Boston and the
City of Cambridge on their requested PILOTs.

There are also several active PILOT campaigns occurring across the nation. In
the St. Louis area residents and students are trying to persuade the
private Washington University
<https://substack.com/redirect/17612ab9-965b-4105-ab2c-bc7f985cf05a?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
to enter into a PILOT to assist local governments. There is even a push at
the public University of Virginia to enter into a PILOT with the City of
Charlottesville, where the UVa Student Council voted just last month
<https://substack.com/redirect/c0f44cef-a14a-4da3-a605-e921da571121?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>
to tell the University that it should be voluntarily contributing at least
$10 million annually to the City’s revenue.
Mayor Elaine O’Neal says she is on it

Given the flurry of successful PILOT initiatives in peer communities and
the recent grassroots endeavors we’ve seen to propose solutions directly to
Duke, Bull City Public Investigators summoned our Mayor, the Honorable
Elaine O’Neal, to ask if anything might be brewing between the City and our
devilish university friends in West Durham.

“I have been in conversations with Duke officials, and those conversations
are ongoing,” Mayor O’Neal told BCPI. A native Durhamite, Mayor O’Neal
explained that there are numerous points of discussion that she has been
engaged with Duke. Although a champion from the ranks of our leading
elected official is quite important to the pursuit of a PILOT, recently
initiated PILOTs demonstrate that concerted organizing efforts that join
residents with members from the university community can still take years
to fully develop into a PILOT agreement.
POLL
Should the City of Durham pursue a PILOT with Duke University?

Yes! Why hadn't we tried years ago?
<https://substack.com/redirect/2/eyJlIjoiaHR0cHM6Ly9iY3BpLnN1YnN0YWNrLmNvbS9hcGkvdjEvcG9sbC92b3RlL2VtYWlsP3Rva2VuPWV5SjFjMlZ5WDJsa0lqb3lOelEzTmpRM01pd2ljRzl6ZEY5cFpDSTZNVEExT1RRek1UQTNMQ0p3YjJ4c1gybGtJam8xTXpjMU5Dd2ljRzlzYkY5dmNIUnBiMjVmYVdRaU9qRTBNems0TWl3aWFXRjBJam94TmpjM056VTNOVEEyTENKbGVIQWlPakUyT0RBek5EazFNRFlzSW1semN5STZJbkIxWWkweE16UXdNRGszSWl3aWMzVmlJam9pY0c5c2JDMTJiM1JsSW4wLlNiSWY4V20xaE9sX3RnQjJveVZXVjIxejhteHhoQUViY010V1VjWDFJcmMiLCJwIjoxMDU5NDMxMDcsInMiOjEzNDAwOTcsImYiOnRydWUsInUiOjI3NDc2NDcyLCJpYXQiOjE2Nzc3NTc1MDYsImV4cCI6MTY4MDM0OTUwNiwiaXNzIjoicHViLTAiLCJzdWIiOiJsaW5rLXJlZGlyZWN0In0.boeC85N5yAeb7Ztd2aIL_d1A7Hl0sFZl7RxBsV0NY84?>

Ok. It's certainly worth a shot.
<https://substack.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.IDFcNiJ8eONhcHgLF_ewWCjZ6d77dMmFg7a7xZ7ktCY?>

No- it's not worth the effort.
<https://substack.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.MHZVPBJ41ieAH0SS4VSxdKgn71T5eoHH_hv2TZxacJs?>

Let's read Part 2 before deciding.
<https://substack.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.am3qbnjjbkz4qc8ob3tBf6eaR4FsOdA49lBZjXPs0MY?>Part
2: Coming Next Week

We will continue our investigation into what a PILOT could look like in
Durham with another installment next week. We anticipate having additional
interview material and will take a deeper dive into the tax valuations of
Duke property.

*Do you have a story lead or tip? Contact BCPI at BCPI.durham at gmail.com
<https://substack.com/redirect/3fcdee5f-53c1-47c8-afd1-1bbee417d571?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>*

*Follow us on Twitter @BCPI_
<https://substack.com/redirect/96998751-c6fe-416b-8906-c76235521c4a?j=eyJ1IjoiZ2N3emMifQ.RQYyeV40NEDJycVk9gr2DuYm8he69H-bJt5e8H9cxyk>*

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