Besides Philadelphia, Bethlehem and Allentown are the two largest cities in Pennsylvania that do not receive major financial contributions from nonprofit property owners. Take a NEWS POLL.
BY COLIN MCEVOY and LYNN OLANOFF
As Bethlehem and Allentown have grappled with their recent financial challenges, they’ve turned to their property tax-exempt hospitals and colleges for possible financial contributions.
While this may be a new concept in the Lehigh Valley, many cities across Pennsylvania and the nation have been asking -- and in many cases receiving -- such donations from their largest nonprofit landowners for years.
Aside from Philadelphia, which is engaged in a battle with its nonprofits, Bethlehem and Allentown are the two largest cities in the state not to receive any major financial contributions from nonprofit institutions.
Allentown plans to meet in coming weeks with its local hospitals and colleges about such payments. Bethlehem unsuccessfully sought such payments last year, and city officials would like to continue pushing the case.
"It is very commonplace," Bethlehem Mayor John Callahan said. "Most institutions see this kind of support for their host communities as (being) in their self-interest."
The two cities are among an increasing national trend of cities seeking nonprofit contributions as they struggle with largely stagnant tax bases from a down economy and increasing pension and health care costs. But they have no legal authority to compel those payments in lieu of taxes, known as PILOTs.
David L. Thompson, vice president of public policy for the National Council of Nonprofits, said he has seen an increase in PILOT requests, with most cities starting with the "eds and meds," or schools and hospitals.
Thompson called these efforts short-sighted, noting such institutions tend to increase property values in their communities, thus creating a smaller budget hole for their cities in the first place.
"When all you have is a hammer, everything looks like a nail. Well, they have tax power, so they think, 'By golly, we're going to use it,'" he said. "Nonprofits were solving problems in these communities before these people were elected, and they'll be there after they leave office."
Lehigh Valley efforts
An Allentown City Council committee will meet in coming weeks with Muhlenberg College, Cedar Crest College, St. Luke's Hospital and Lehigh Valley Hospital.
While the city's hospitals do not make any annual payments, they do offer laboratory tests, mammograms, ambulances and other services valued at about $225,000, according to the city.
Council members have said they believe the colleges could contribute much more in comparison; the city receives only a $24,000 annual stipend from Muhlenberg, which went toward a police car last year.
Muhlenberg College spokesman Mike Bruckner said the institution helped purchase other items in the past, like an infrared camera for the Allentown Fire Department.
"Obviously hospitals and colleges are very different from each other in their missions, their finances and their contributions to the community, so it would be difficult to compare them in a useful way," Muhlenberg College President Randy Helm said.
Representatives from St. Luke's and Lehigh Valley hospitals did not say they would agree to making payments. But Lehigh Valley Health Network spokesman Brian Downs said the organization works with the city on ways to defray health-related costs.
"Our hope is that during this process that council recognizes the critically important services (we provide), as well as the positive ripple effects that hospital systems have on the local economy," St. Luke's spokesman Kenneth Szydlow said.
View full sizeJohn Callahan Callahan sought $1 million in contributions from Lehigh University, Moravian College and Lehigh Valley Health Network last year. He would like city council to pick up the issue again this year, as Allentown's council has.
He’s particularly focused on Lehigh University, the city's largest landowner, which has a reported $1 billion endowment. Callahan said the school could contribute more, especially when compared with peer institutions.
Other contributions
While Philadelphia gets no annual contributions from its colleges, the University of Pennsylvania built an elementary school for the city and renovated a significant amount of the housing stock in its neighborhood, Callahan said.
Lehigh University in recent years has given $225,000 to the South Bethlehem Greenway, $75,000 to the South Side library and has pledged to contribute $100,000 a year for five years to a proposed neighborhood improvement program.
"We can do our best work by marshaling the resources we have -- which is a really high-quality faculty, a lot of whom are working in the South Bethlehem community -- and a really committed group of students," Lehigh spokesman Jordan Reese said.
Callahan countered that many colleges nationwide provide such project-specific donations but still make an annual contribution to their host municipalities.
Across Pennsylvania
In Pennsylvania, eight out of the state’s 13 cities with more than 40,000 residents receive at least some financial contributions from their local nonprofits.
Erie gets $2.8 million and Pittsburgh gets $2.6 million from local nonprofits, which are the eighth- and ninth-highest contributions in the country, according to a 2012 study from the Lincoln Institute of Land Policy.
New Jersey’s Princeton ranks 10th at $2.5 million. A total of six New Jersey towns receive money from nonprofits, compared with Pennsylvania's 17, the study found.
Lancaster, home to about 60,000 people, has for many years received financial contributions from Lancaster General Hospital and Franklin & Marshall College. The hospital contributes $1.38 million a year, while the college gives $160,000, according to the study.
G. Terry Madonna, director of Franklin & Marshall College’s Center for Politics and Public Affairs, said the college and the hospital have very good relationships with Lancaster’s elected officials. But such relationships aren't always positive and probably account for why some towns get contributions while others do not, Madonna said.
No thanks to PILOTs
View full sizeSal Panto Jr. Officials from some municipalities are fine with receiving only occasional, little or no money from their local nonprofits, as is the case with Easton, Phillipsburg and Hackettstown.
Easton Mayor Sal Panto Jr. said Lafayette College is a great financial partner for the city and has sponsored many city projects over the years, most notably $300,000 for its ambassadors program Downtown.
"I wouldn't want to present a PILOT because I think we're probably doing better without it," Panto said. "They've never turned us down."
Phillipsburg Mayor Harry Wyant Jr. also is happy with the $10,000 the town gets each year from St. Luke's Hospital to help pay for the town pool. He hasn't considered asking for more because the organization is still new in the town, having taken ownership of Warren Hospital last year.
"We realize they're tax-exempt, and that's tough on the town, but still, when they can help us out it means a lot," he said.
Hackettstown is home to both Centenary College and Hackettstown Regional Medical Center.
Town council has at times weighed asking the organizations for financial contributions, but Mayor Maria DiGiovanni said she knows both entities face economic challenges.
"In this economy, the nonprofits have felt the strain," said DiGiovanni, who sits on the hospital foundation board. "We wouldn't ask (for a donation). I'm appreciative they're in our town because it's something that makes us special."