LV Cities Shortchanged by Colleges & Hospitals

Callahan with LU's Women's Basketball Team Last Week

In Bethlehem Mayor John Callahan's budget proposal, he's including a revenue item that's highly unusual in the Lehigh Valley. It's called a Payment in Lieu of Taxes, or PILOT, under which exempt organizations like colleges and hospitals make a financial or in-kind contribution in recognition of the services provided by that municipality. Although the Lehigh Valley sees little revenue from exempt organizations, the chart below shows that it's a common practice in the rest of the state.


PILOT Contributions to Cities Throughout Pennsylvania

	2011 pilot contribution	2011 gf revenue	% of revenues
lancaster	$1,675,000	$46,189,083	3.63%
erie	$930,000	$60,466,724	1.54%
york	$584,400	$43,839,026	1.33%
altoona	$308,114	$26,707,569	1.15%
wilkes-barre	$489,466	$43,848,830	1.12%
chester	$347,199	$41,631,586	0.83%
harrisburg	$401,522	$55,993,156	0.72%
scranton	$198,000	$74,991,268	0.26%
bethlehem	$58,670	$67,822,462	0.09%
allentown	$50,000	$88,082,868	0.06%
easton	$0	$28,270,465	0.00%
average	$476,522	$52,661,812	1.00%
median	$347,199	$46,289,083	0.83%
rank			bethlehem ranked 10 of 12
beth at ave.			$678,969
beth. at median			$565,626

According to a study done by Public Financial Management, Inc., most colleges recognize a moral, if not legal, obligation to support their municipalities. Franklin and Marshall, for example, contributes 0.35% of its assessed value annually to Lancaster. In addition, it maintains for Buchanan Park. Alvernia, Albright, Kings and Wilkes University all make annual contributions on a voluntary basis, ranging from 0.05% to 0.28%. Widener University pays Chester annually for the cost of two police officers.

But Lehigh University, which has an assessed value in Northampton County estimated at over $204 million, pays nothing.

While making no contributions,tax exempt entities like Lehigh have benefited from City Services, as indicated by the fire calls made in 2011.

exempt entity	fire calls	service costs
lehigh	220	$283,800
moravian	107	$138,030
lv muhlenberg	31	$39,990
st. luke's	0	$0
bethlehem housing authority	84	$108,360
total:	442	$570,180

In addition to fire calls, there are other services provided, from street cleaning to police protection.

For nothing.

Maybe Lehigh should be billed for municipal services, a la carte. After all, it sits on a $1.1 billion endowment. At the same time, senior citizens on fixed incomes struggle to pay real estate tax dollars into the City so that Bethlehem firefighters can respond to the university's false alarms.

Bethlehem Mayor John Callahan thinks it's time for that to change.

Moravian and Northampton Community College, with much smaller endowments than Lehigh University, have informally expressed a willingness to help. So have medical institutions, in the form of in-kind services. But while benefiting from the revitalization of the City's south side, Lehigh University has dragged its feet for the past 6 years on voluntary participation in any PILOT program.

Although acknowledging he lacks the power to force Lehigh to make any contribution, Callahan believes he can persuade them. "I'm going to shame them into it," he stated, noting that it is ridiculous for an entity that takes up 20% of the City's land mass to provide nothing, while smaller schools like Moravian and Northampton Community College are stepping up to the plate despite their own financial troubles.

Like Bethlehem, both Easton and Allentown have received next to nothing from the colleges and exempt institutions inside their borders.