City looks to nonprofits to find more revenue

October 07, 2012 12:00 am • Last Updated: October 07, 2012 11:37 pm

By By KATHLEEN EDGECOMB Day Staff Writer

New London - With state aid decreasing and the cost of providing municipal services growing, some nonprofits are helping their host municipalities by voluntarily kicking in dollars.

Following the lead of Providence and New Haven, where Brown University and Yale University respectively contribute millions for city services, Mayor Daryl Justin Finizio said he wants to have discussions with the nonprofits in New London, including Mitchell College, Connecticut College and Lawrence & Memorial Hospital, about ways to come up with more cash for the city.

But that may be complicated. Mitchell and Conn already make annual voluntary payments to New London. And L&M says it contributes millions every year in services and programs for the community.

"We're more than happy to sit down with the mayor and discuss different options, but increasing what we already do is going to be a tall order," said William Stanley, vice president of development and community services at L&M.

About half of this 6.5-square-mile city, which is home to a regional hospital, many social service agencies, three colleges and dozens of churches, is nontaxable. The largest nonprofits - Connecticut and Mitchell colleges and the hospital - cover nearly 400 acres with an assessed value of $444.8 million. The U.S. Coast Guard Academy, a federal installation on 103 acres, is assessed at $96 million.

Together, all four cover about 0.7 square miles.

And while New London receives millions from the state's Payment In Lieu of Taxes program plus federal money for education, property owners provide the rest of what it costs to run the city.

Seeking revenue

Last month, residents rejected a general-government budget that would have increased taxes by 7.5 percent. The City Council is revising the 2012-13 budget to get to a roughly 5 percent increase, but some residents say that the $41.4 million budget is still too high. The city also spends about $39.8 million on public education.

Finizio said he is looking into ways for nonprofits to contribute more, but he acknowledged that the larger organizations are also economic engines and bring other assets to the table. They are some of the largest employers in the region, and visitors to their institutions patronize local businesses. They also provide volunteers for projects around the city, from tutoring in the schools to cleaning up the parks.

"They do contribute significantly,'' Finizio said. "But we need to recognize we are in a new economic reality. Taxpayers and voters have demonstrated fairly clearly they don't want to pay significant increases to keep the city solvent and pay for services we all use."

He said he'd like to negotiate with the colleges and nonprofits to see whether there is any way to get more voluntary cash donations. He also wants to lobby the legislature to increase PILOT program funding.

Already contributing

Connecticut College is in the middle of a 10-year, $100,000 contract with the city, paying $7,500 a year from 2008 to 2012 and $12,500 a year from 2013 to 2017. The city and the college reached the agreement in 2007, after a dispute over whether Dayton Arena, the college ice rink, should be exempt from property taxes.

In 2003, Mitchell College began paying $35,000 a year since reaching an agreement with the city over taxable parcels that were added to the campus. A new four-year agreement was reached last week with Mitchell, which has been facing its own economic troubles and laid off 20 percent of its full-time faculty last week. The college will pay the city $28,750 a year in property taxes.

"Although all of Mitchell College's facilities are used for educational purposes, we recognize that the college has deep roots in this community, and we want to do our part to contribute to the programs and services which the city provides to residents,'' college President Mary Ellen Jukoski said.

While the colleges are under no legal obligation to pay real-estate taxes, Conn's and Mitchell's monetary donations to the city are significantly less than those from nearby, much larger Ivy League schools that own massive amounts of real estate in their communities and have endowments in the billions.

Yale, with an endowment of $19.4 billion, donates $8 million to New Haven every year and pays about $4 million in real-estate taxes. Brown, which has an endowment of $2.5 billion, gives nearly $6.4 million to Providence, in addition to the $1.5 million in real-estate taxes it pays.

By contrast, Mitchell College has a $6.1 million endowment. Connecticut College has a $212 million endowment.

Mitchell and Conn provided lists of support and activities that the faculty and students contribute to the city every year. At Mitchell, its beach and facilities are open to public events. The fire department trained at its boat dock, and about 150 students each volunteer 20 hours annually for the city through a community service program.

"We recognize that although we may be an exempt institution, we are part of the larger community,'' said the college's attorney, Glenn Carberry, who negotiated the agreement with the city. "There is a sense of community that has developed and, for the time being, it makes good sense to continue this long-standing tradition."

Connecticut College hosts the Connecticut Early Music Festival and the Connecticut Storytelling Festival. Many of its facilities are open to the public at little or no cost, including the library, the Connecticut Arboretum, Olin Observatory and Dayton Arena. Groups such as Alcoholics Anonymous, Camp Rotary and the Science and Technology Magnet High School use space for free or at reduced rates.

"As an educational institution, we have an obligation to spend tuition and gifts to the college in a way that provides a direct educational benefit to our students,'' President Leo Higdon recently told the students. "We support New London within the framework of this mission."

Tough economy for all

Stanley, at L&M, said the hospital provides $12 million in free programs and services, such as discounted or free health services and donations to support youth groups, the homeless hospitality shelter and the Garde Arts Center. The hospital, which employs 2,800, also offers incentives for its employees to purchase homes in New London.

"We do it because we are part of the community,'' he said. "We think we have a great, mutually supportive relationship with our community and the city. If there are opportunities to expand them, we are willing to sit down and talk about it."

But, he added, health care providers are also "looking down the barrel of our own very difficult economic times. Once the new health care kicks in, we are going to face very difficult financial challenges ourselves, not unlike what the city is facing now."

Through the PILOT program, the state pays cities and towns about 25 percent of what the tax assessments would be on property owned by nonprofits, according to city Finance Director Jeffrey Smith. The statute allows for the state to pay up to 45 percent, he said.

Finizio said that after the November election, he wants to lobby local legislators to seek increased PILOT funds as a way of raising revenue. It is an issue for all municipalities, he said, especially for small cities such as New London.

"It's always going to be something on the agenda, as we move forward during the next year or two," Finizio said.

"In theory, the hospital and other services are here in our city, and the state PILOT program is supposed to help balance that out,'' Smith said. "But it's not fully funded."

He said asking the colleges to make voluntary payments is fine, but the city has to look at their ability to pay.

Finizio said he will be going to Hartford and will work with the Connecticut Conference of Municipalities on changing the PILOT legislation.

"We need the state to increase pilot funds,'' he said.

k.edgecomb@theday.com

What they give, what they have

Annual contribution

Institution

to host community

Endowment

Connecticut College

$12,500

$212 million