Property tax exemption adversely affects Meadville

Allegheny College held over $42 million in tax-exempt property in 2014, releasing the college from what would have been a $921,883 tax bill, according to Nancy Mangilo-Bittner, a Meadville city councilwoman.

City Manager Andy Walker, ’00, said 45 percent of property in Meadville is tax-exempt. He said the college is not alone in holding this status, as the Meadville Medical Center, churches, government buildings and other nonprofits are also exempt from paying real estate taxes.

Walker said tax-exempt properties have an adverse effect on  Meadville residents. He said those who live on property that is taxable pay for all city services.

“By and large, 55 percent of the population is bearing the burden of delivering 100 percent of the local services,” Walker said.

Approximately half of the city’s revenue is raised through real estate taxes. Two-thirds of Meadville’s expenditures are on services such as infrastructure, upkeep of public buildings and police and fire forces.

In 2009, the Meadville City Council asked nonprofits to contribute 30 percent of what the city would gain through property taxes as a payment in lieu of taxes to Meadville. Mangilo-Bittner said some nonprofits agreed.

By and large, 55 percent of the population is bearing the burden of delivering 100 percent of the local services.

— Andy Walker

Allegheny gives an annual gift to the city of $65,000, Walker said. To achieve the 30 percent property tax payment. Allegheny would have to make a gift of $276,565.

According to Linda Wetsell, the chief financial officer and treasurer of the college, the annual gift started in 2005, at which time the college paid $50,000 to the city, with a 10-year commitment. In 2008, Allegheny increased the contribution to $65,000.

Allegheny College President James Mullen said the gift acknowledges the city’s contributions to the success of the college.

“What we’ve tried to do as a measure of our appreciation for what the city does for us, we make a gift every year,” Mullen said.

Sue Stuebner, Allegheny’s executive vice president and chief operating officer, said the college contributes about $600,000 per year to Meadville.

“There’s resources we feel a responsibility to support,” Stuebner said.

According to Stuebner, the college pays approximately $375,000 per year for water and sewage, as well as around $60,000 in property taxes on some buildings that do not meet the requirement for tax exemption.

Wetsell said the college’s contributions have gone up in recent years.

“More recently, the city has established a stormwater runoff fee, so that’s another component we haven’t paid to the city that we started paying about a year ago, maybe two years ago,” Wetsell said.

Meadville’s stormwater management program, implemented in 2012, is based on the number of impervious surfaces on property, or surfaces that cannot absorb stormwater and increase runoff into sewers. The college is not the only group to pay this fee, as the program affects homeowners, businesses and nonprofits.

“All that revenue is [going] directly to stormwater-related expenses. It’s not paying for public service, for police, fire and public works infrastructure,” Walker said.

Mangilo-Bittner believes the fee is the best way to handle the burden of a stormwater management system that is over a century old.

“It’s the fair way to do it, the stormwater management, because it’s based on the amount of runoff,” Mangilo-Bittner said. “I don’t think you could find a more fair way to make that work.”

Wetsell said the college’s contributions are proportional to the college’s annual budget.

“We are not-for-profit. It is appropriate that we’re not paying taxes,” Wetsell said. “I think we’ve worked with them [the city], and they’ve never asked us for the $900,000 [we would owe in property taxes]. I think that, based on the budget and based on other contributions we make to the city, I think that it’s a great partnership and I think that the amount is agreeable to both parties.”

Stuebner said Allegheny’s contributions to the city, while substantial, go unrecognized.

“I’m not sure if Allegheny and other nonprofits do as good of a job as we could about educating city council and others,” Stuebner said. “I don’t know that all of them know that, over the past five years, we’ve contributed over $3 million to the city.”

Mangilo-Bittner said the lack of revenue the city receives in taxes forbids Meadville from improving the city in basic ways such as maintaining infrastructure and improving its police and fire forces.

“We can’t possibly fulfill everything we want to fulfill,” Mangilo-Bittner said.

Meadville’s real estate tax revenue is based on a county-wide property value assessment. Walker said the the assessed value of the city’s combined property value has only risen by 1 percent since 1987. As a result, the city has raised real estate taxes six times, while lowering them twice, in the past 20 years.

Stearns said the city’s stagnant property values have affected the budget, as costs for emergency services alone rise between 8 and 17 percent annually.

The city could lower property tax rates by increasing contributions from nonprofits.

“We’d love to lower the tax rate by increasing the amount of contributions that we get,” Bob Langley, a Meadville city councilman, said.

Mangilo-Bittner said stagnant property values and increasing costs leave the city in a predicament. She believes the city may be forced to increase property taxes in order to manage the budget.

“At some point, something’s going to have to give,” Mangilo-Bittner said. “We’re either going to have to reduce [emergency service] forces or reduce [city] services, or the other people in the city, the other 55 percent [who pay property taxes], are going to have to agree that they want this so bad they don’t care that other people aren’t contributing.”

Mangilo-Bittner hopes the city will receive contributions from nonprofits, including colleges, in the same way other college towns do.

Linda Wagner, the vice president of finances and administration at Gannon University, located in Erie, said Gannon contributes $100,000 to the city of Erie each year.

According to Christine Baksi, the director of media relations at Dickinson College in Carlisle, Dickinson gives a gift of $50,000 to the Downtown Carlisle Association and a $50,000 payment in lieu of taxes to the borough of Carlisle annually.

Mullen believes Allegheny’s presence in Meadville provides opportunities beyond financial contributions the college makes.

“The city has been terrific in providing us with with a number of services, from fire to police,” Mullen said.” And we try, in return, to provide opportunities, both economic and for the cultural enrichment of the region.”

Walker said the college’s presence in Meadville is beneficial for both the city and the college, but the college can contribute more to the city.

“There’s no doubt Allegheny has a great impact on this community,” Walker said. “You can’t deny that Meadville is a better place, a better community, with Allegheny here. But there’s also a responsibility.”