Burlington wants institutions to pay for infrastructure

The Dudley H. Davis Center at the University of Vermont. The college is one of the tax-exempt entities being asked to contribute more money to the city. File photo by Josh Larkin/VTDigger
The Dudley H. Davis Center at the University of Vermont. The college is one of the tax-exempt entities being asked to contribute more money to the city. File photo by Josh Larkin/VTDigger

By Morgan True

For Vermont Digger

Mayor Miro Weinberger is asking several major institutions to increase their payments to the city to help pay for his ambitious 10-year infrastructure plan.

The institutions, which are tax-exempt, already pay the city a contribution in lieu of taxes. That began 30 years ago when Bernie Sanders, then mayor of Burlington and now the state’s junior senator, waged what The New York Times described as a “crusade” to get the University of Vermont and Medical Center Hospital of Vermont (now the UVM Medical Center) to help pay for city services.

Sanders told the Times in 1987 that the property tax was regressive and the institutions needed to help reduce the burden citizens felt paying for key city services.

“It is appropriate to ask individuals and institutions to pay their fair share,” Sanders added.

The Sanders administration lost a court battle with the hospital, but it was successful in getting both institutions to start making voluntary payments to the city for basic services such as police and fire.

Weinberger is seeking to have the institutions pay the city more because of increased needs.

“Burlington has a challenge meeting its public needs if it’s not getting a fair level of contributions from its institutions,” Weinberger said. “It’s a challenge for us to make the investment we need to when a very large percentage of our grand list is tax-exempt.”

While property taxes accounted for 77 percent of the $30.5 million Burlington collected in tax last year, 44 percent of property in Burlington, geographically, is owned by entities that don’t pay property tax, according to city budgets and its grand list.

Thirty-one percent of the total assessed property value is property that belongs to those same tax-exempt entities, according to the city’s grand list.

Payment agreements with tax-exempt institutions

Burlington received an additional $5 million in payments in lieu of taxes from the state, utilities and nonprofits such as Howard Center, which paid $54,778 and the Champlain Housing Trust, which paid $52,635.

UVM, the UVM Medical Center and Champlain College make separate payments for city services, which totaled $1.8 million in fiscal 2016. Those agreements are based largely on the benefits the institutions derive from city services.

Weinberger is asking UVM and Champlain College to increase their payments by a combined $1 million annually for the next decade to bolster his infrastructure program.

The mayor has been negotiating with UVM and Champlain College for months, making formal proposals for new payments in March, he said. Weinberger said he expects the $1 million will be split on a 7-to-1 ratio with UVM paying the lion’s share.

The mayor said he’s not asking UVM Medical Center to do so formally, but instead the hospital is making philanthropic gifts to support the program, most recently a $250,000 donation for improving the waterfront bike path.

Neither the city nor the hospital would say if such gifts would be recurring annually during the life of the mayor’s infrastructure program. Weinberger isn’t able to seek an increase to the hospital’s payment for services, because of a 30-year agreement with UVM Medical Center signed in 1999.

At that time, the hospital was building a new outpatient facility and then-Mayor Peter Clavelle disputed its assertion that the new addition would be exempt from property tax.

The city and the hospital again went to court and a resulting memorandum of understanding set UVM Medical Center’s current payment for services at $325,000, increasing 2 percent annually.

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