Schenectady Mayor prods Union College on taxes

The mayor is moving forward with an effort to get Union College to pay the city for fire and police services, along with tax payments for exempt off-campus properties.

Mayor Gary McCarthy sent a letter to Union President Stephen Ainlay on Thursday saying he is “very concerned” about off-campus properties not paying taxes and pushing Ainlay to reconsider a payment agreement for city costs associated with police, fire and ambulance services.

McCarthy’s letter points to Union’s new residence hall, the former Ramada Inn and houses along Seward Place all as properties that are tax exempt and causing a “recurring loss of revenue that is damaging to city taxpayers.”

“If Union College paid taxes on the off-campus properties it owns, the city, county and Schenectady City School District would receive $1.35 million in additional revenue each year, which would translate into a substantial tax cut for city residents,” the letter dated March 17 states.

Union’s new residence hall, at the corner of Roger Hull Place and Park Place, has an assessed value of $7.95 million. That brings the total assessed value of Union property off-campus to more than $31 million, according to McCarthy.

“The college and the expansion cost everybody a 2 percent increase in their taxes,” McCarthy reasoned today.

City Council President Leesa Perazzo said it costs approximately $700,000 for police and fire response to Union each year. In his letter, McCarthy is asking Ainlay to “again consider” a payment for the main campus for those city services.

“We’re turning finances of the city around and looking to have it stable moving forward,” McCarthy said. “Everyone has to participate in that. I sent the letter to put forth the position of the city and hopefully get some positive response from Union College.”

McCarthy said he is open to negotiations with Union. He said Ainlay has not yet responded to his letter.

“I’m looking to negotiate something that is fair for both entities,” McCarthy said. “We’re looking to have them be full partners.”

College’s impact

Union spokesman Phil Wajda said the college has not yet received McCarthy’s letter. In a prepared statement, he said Union has a $300 million economic impact on the Capital Region annually.

He added that Union also invests tens of millions of dollars on significant improvements to the neighborhoods surrounding the campus on Union Street.

“Union already plays a key role in driving the economy and cultural vitality of Schenectady and the surrounding region,” he said. “We remain committed to exploring further opportunities with the city on projects that are mutually beneficial to the college and the community.”

Ainlay could not be reached for comment today. But in an interview with The Daily Gazette last month, he said the private college has a substantial impact on businesses and the economy.

Ainlay described the college as a “major asset” and a “cultural resource” for Schenectady.

“I think in general there is a pretty sophisticated understanding of the impact Union has and that Union has brought a distinctiveness and prestige to Schenectady,” he said. “It’s exactly what the founders of this college, who were all citizens of Schenectady, envisioned.”

In response, McCarthy said he expects Union to contribute, like General Electric and the Golub Corp. do.

“GE benefits Schenectady and the region and I expect them to pay,” he said. “Golub benefits Schenectady and the region and they pay taxes. The Galesi Group has made a lot of investment here, and benefits and contributes toward taxes.”

Union has 2,200 students and 865 employees, including 211 full-time faculty members. Union pays taxes on a handful of properties the college owns on Park Place, which are rented to faculty and staff, Wajda said.

According to an economic impact report in 2013 released by the Commission on Independent Colleges and Universities, Union generates an estimated $8.4 million in taxes a year, including state personal income tax revenue and state and local sales tax revenue.

Union directly spends $122 million a year, plus $12.9 million in construction, the report says. The college also spends $20.5 million on students and visitors and has a $71 million annual expenditure for salaries and benefits.

‘Quite a burden’

Perazzo said Union is a valuable part of Schenectady but that the college drains the city’s services and is a burden on taxpayers.

“We’re fortunate to have a beautiful campus in the city of Schenectady,” she said. “That campus has never wavered through good times and bad times in the city. I would like to at least enter into a discussion with Union as to how they might play their part in continuing to strengthen our tax base and continuing to add to the good health of our fiscal status. We’ve had a lot of good news, but our taxpayers are still bearing quite a burden.”

McCarthy noted that the city’s conversations with Union regarding potential payments are not new. Perazzo said Union hasn’t been open to considering payments in the past.

Councilman Vince Riggi said discussions about payments from Union have come up in the past and that he would like to see a fair scenario for the city’s taxpayers.

“There are properties that are taken off the tax rolls and goes on everybody’s tax bills,” he said. “Is it fair for the taxpayers in the city? You can argue it both ways. Union brings more people in the city and students are spending money here. But you don’t know if you don’t ask.”

In his letter, McCarthy took a jab at his two-time challenger for the mayor’s post, Roger Hull, saying when Hull was president of Union it was “extremely unfortunate” that the former Ramada Inn was removed from the tax rolls.

McCarthy said the move has cost city taxpayers more than $7 million to date.

“A private developer could have owned the building and paid full property taxes to the city using the Empire Zone Program,” he said in the letter. “The college would have received 100 percent reimbursement from the Empire Zone Program for tax payments made to the city, county and school district for 10 years, and partial payments in years 11 to 14.”

Hull, who served as Union’s president from 1990 to 2005, said the Ramada Inn at the time was collapsing and that the college bought the building and rebuilt it.

“The PILOT was $60,000 a year, as I recall, that the Ramada Inn was paying,” he said. “What he is failing to say, because he does not know, is that the building was structurally unsound and was a lawsuit waiting to happen.”

McCarthy said a private developer could have also been used for the dozens of houses in the College Park neighborhood.

Hull said he decided to rehabilitate the homes in the area because it was “a crime-infested slum that was hurting us in terms of admissions.”

“My goal at the time was to try and help stabilize and turn around a neighborhood,” he said. “It was not my responsibility to try and figure out a way for the city to benefit financially. It was my responsibility that whatever we ended up doing was in the college’s best interest. I think we accomplished both things.”

McCarthy notes in his letter that his request is not unique, pointing to Rensselaer Polytechnic Institute’s use of a private developer to renovate homes in the city of Troy for student housing that now has a PILOT agreement.

Schenectady County Community College’s Center City location was also developed by a private developer, the Galesi Group, and has a PILOT agreement.

“I certainly understand and appreciate the fact that Union makes many positive contributions to Schenectady and the Capital Region,” McCarthy said in the letter. “With that being said, the college in previous years missed out on opportunities to help Schenectady.”

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