Image credit: Appily
On Wednesday, April 10th, activists met in a Durham church to learn about campaigns for payment in lieu of taxes (PILOT) aimed at wealthy, tax-exempt universities. The event was organized by City Council member Nate Baker. The main feature was a conversation with Professor Davarian Baldwin, author of In the Shadow of the Ivory Tower: How Universities Are Plundering Our Cities, a 2021 book about the political economy of higher education.
Major universities like Yale, UPenn, and others have been pressured by grassroots campaigns into making PILOTs to their local communities. Yale pays $23 million per year and UPenn pays $10 million [1, 2]. Taking note of these victories, activists in Durham are building a campaign that will push Duke University to contribute $20 million per year to city funds.
The total value of Duke University's properties is unclear, so much so that the most reliable estimate comes from a 1998 article in the Duke Chronicle. The author, formerly a high official of the university, estimated that Duke University's properties were worth "somewhat over $900 million, theoretically obligating Duke to pay some $15 million in taxes across the county and the city. Of that, some $6 million would be payable to the city." [3]
Davarian Baldwin is the Raether Professor at Trinity College and founder of the Smart Cities Lab. Image credit: X account of Davarian Baldwin
The $900 million is worth $1.7 billion when inflation is taken into account. However, the $1.7 billion estimate is certainly too low. It does not include properties that Duke University has acquired since 1998, Durham's increased land values, and several other factors.
What is not in dispute is that Duke University and Duke Health System paid only $3.7 million in property taxes in 2023 [4]. Most of the school's properties are used for educational purposes, making them tax exempt under 501(c)(3) rules.
“Duke is an important partner in Durham that has some existing community programs and of course covers some of its own services. Nevertheless, we are essentially subsidizing Duke because they are not paying property taxes,” said Baker. “The cash-strapped city of Durham is, in other words, subsidizing a $12 billion-endowed university.” [5]
According to US News & World Report, Duke University is the seventh best university in the US. The achievement is bittersweet since Durham Public Schools is ranked 55th among school districts in North Carolina [6].
For an elite university located in a community with poor educational outcomes, voluntary payment of property taxes offers a pathway out of injustice. Duke University may find itself looking at the example of UPenn, which sends $10 million a year to Philadelphia City Schools as their PILOT [2].
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During the talk, Baldwin observed that universities don’t often volunteer a PILOT. Payments to the community tend to be won by grassroots campaigns, such as when a movement called New Haven Rising brought Yale to the negotiating table.
“Everywhere I go, the schools say, ‘He hates universities’”, said Baldwin, “But every year they put out mission statements talking about being a good neighbor to the community. I’m just holding them to that.”
At Wednesday’s event, some audience members were skeptical that Duke University could be pressured to pay up. Baldwin pushed back. He said that universities get uncomfortable when their business, labor, and political practices are subjected to scrutiny. Since PILOT campaigns tend to involve a great deal of public education on these topics, schools often agree to make voluntary payments to shore up their status as a pillar of the community.
City Council member Nate Baker. Image credit: Instagram account of Nate Baker Instagram
“Go talk to 40 and 50-year residents. They have the receipts," said Baldwin, "They want to talk about their stories’”.
Baldwin advised that the PILOT campaign should be led by long-time Durham residents and university workers, particularly the Black members in those groups. He also pointed out that the campaigns often gain allies on the City Council, who are attracted by the prospect of additional revenue.
“What mayor doesn’t want more money?” asked Baldwin.
Work Cited
1. Basler, Cassandra. “Yale Announces ‘Historic’ $135 Million Payment to New Haven.” Connecticut Public, 9 Mar. 2023, www.ctpublic.org/education-news/2021-11-17/yale-announces-historic-135-million-payment-to-new-haven.
2. Stellino, Molly, and Molly Stellino. “Activists Question Whether Wealthy Universities Should Be Exempt From Property Taxes.” The Hechinger Report, 18 Dec. 2020, hechingerreport.org/activists-question-whether-wealthy-universities-should-be-exempt-from-property-taxes.
3. Burness, John. “Dismiss Durham'S Idea to Tax Duke'S Dime.” The Chronicle, 15 Apr. 1998, www.dukechronicle.com/article/dismiss-durhams-idea-tax-dukes-dime.
4. Mungai, Mary. Durham City Councilman Proposes Duke Pay “Fair Share” in Property Taxes | the Durham VOICE. 14 Mar. 2024, durhamvoice.org/durham-city-councilman-proposes-duke-pay-fair-share-in-property-taxes/#:~:text=According%20to%20their%202023%20Annual,million%20in%20property%20taxes%20annually.
5. Duke University. Duke University’s Endowment. 2023, giving.duke.edu/wp-content/uploads/DukeEndowment.pdf.
6. “Durham Public Schools - North Carolina.” Niche, www.niche.com/k12/d/durham-public-schools-nc.