- The Washington Times - Tuesday, March 16, 2004

PITTSBURGH (AP) — Duquesne University bought a $22 million apartment building this year and converted it into housing for 750 students as part of a multiyear plan to boost enrollment.

The purchase means more space for the Roman Catholic university — and the loss of another taxable property for Pittsburgh, something city officials say the financially struggling city can’t afford. So Pittsburgh is challenging the tax-exempt status of the dorm, and considering taking the fight to other universities.

As state and federal aid to cities is being cut, cities are becoming increasingly aggressive about seeking tax dollars from university and college property that generates revenue for the institutions. A growing amount of tax-exempt property is eroding the tax base in many cities, officials say.

The Pittsburgh City Council passed a resolution on March 9 that allows the city’s attorney to challenge the tax-exempt status of Duquesne’s new residence hall, and to examine future property purchases by nonprofits.

Some cities and colleges have negotiated arrangements in which schools pay something in lieu of taxes and other fees. Harvard University, for example, has made voluntary payments to Cambridge, Mass., since 1928. Its president has said that whenever Harvard purchases property that is being taken off the tax rolls it “will make a voluntary payment for a period and at a level commensurate with the impact of the acquisition.”

Those agreements don’t always come easily, and when negotiations between governments and schools don’t work out, the disputes often end up in court.

Northwestern University and Evanston, Ill., settled a federal lawsuit in February after years of acrimony over taxes. The university is exempt from property taxes but pays taxes and fees on parking, athletic events, utilities and other services.

In the lawsuit, the university accused the city of including dozens of its buildings in a historic district in retaliation for Northwestern’s refusal to make voluntary payments in lieu of property taxes. The designation prevented the school from making changes to the buildings without city approval.

The university and city agreed that 14 of the university’s properties would be excluded from the historic district, while 42 others would keep the designation.

In Connecticut, New London City Manager Richard Brown has asked the city’s assessor to start taxing the hockey rink at Connecticut College and two buildings at Mitchell College. Forty-six percent of the property in New London is tax-exempt, he said.

The state is supposed to reimburse cities for 75 percent of the taxes they would be getting on tax-exempt property — a program known as PILOT, or the Payment in Lieu of Taxes — but local governments are seeing subsidies of only about 60 percent, Mr. Brown said.

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