NEWS- School injection: UVA study missed cost of taxes
Whether it's a tenured philosophy professor dropping a bundle on delicacies at Whole Foods or a frat boy letting loose Friday night with Mom and Dad's credit card at the Biltmore, everyone knows the University of Virginia means a lot of money for Charlottesville. However, a minor detail in a study released last month by the school's Weldon Cooper Center for Public Service points to one area where Mr. Jefferson's university may be costing the city and the county multi-million dollar losses each year.
The report, examining the university's economic impact on local and state economies, estimates that UVA's tax-exempt status cost the city of Charlottesville and Albemarle County $11.5 million in foregone property tax revenues in the 2005 fiscal year alone.
The university does pay taxes on its non-academic properties like the Boar's Head Inn, and pays some service fees in lieu of property taxes on certain facilities, but these are small compared to the amount lost. The authors of the report did make valid points about the incalculable tax benefits from purchases, meals, and lodging racked up by the students, faculty, and visitors lured to the area by the university, but property taxes remain the most important source of revenue for local government.
The study– which cost $47,200 and to which 96 people inside and outside the university contributed– is the first of its kind since 1990.
"It's something we do periodically when it's clear the times have changed," UVA President John Casteen said at the June 28 press conference inside the Rotunda. According to the authors of the study, changes since the last report include a more than 12 percent increase in enrollment, construction of two new research parks, and more than 3,000 new employees.
Though the question of lost tax revenues was raised at the June press conference, the authors of the report side-stepped the issue and did not explicitly mention the $11.5 million loss. And the figure, it turns out, is actually a low estimate, as the calculations in the report are based on a mishmash of property value assessments, some as old as 1995.
These inaccurate figures are explained in the report by the suggestion that current assessments for many properties do not exist; it is difficult to assess properties that lack equivalents in the private sector; and the fact that "There is no incentive for local governments to make detailed assessments of properties that are not taxed."
As it turns out, there are current assessments, and there is an incentive to make them: it's the law.
Despite acknowledging the city and county assessors in the appendix, the authors of the report apparently failed to consult them about tax-exempt property values. According to Charlottesville assessor Roosevelt Barbour, under city and county ordinances, all properties, including tax-exempt ones, must be assessed annually, even those belonging to UVA. Up-to-date records are readily available online or from the respective assessor's office.
John Knapp, senior economist for the report, says he was aware of online records and annual assessments (he had even looked up the value of his own house), but claimed he didn't know UVA's tax exempt properties were included in either one. Despite direct contact with Bruce Woodzell, the county assessor, Knapp was content to collect the property values from within the university. "I tried getting those values from the localities," Knapp said, "but it's so difficult."
However, it took one Hook intern with an Internet connection only one afternoon to calculate that UVA tax exempt properties for 2006 add up to $2.14 billion in total assessed value, compared to the $1.37 billion figure cited in the Cooper Center report.
This means that the city and county lost a combined $17 million in foregone real estate taxes alone in the 2006 fiscal year, far more than the estimated $11.5 million.
The Hook's figure, although calculated in consultation with the assessors' most recent records, also faces one of the same problems that the study's own number struggles with: it's difficult to accurately assess one-of-a-kind landmarks like the Rotunda or behemoths like the medical center.
If a $17 million annual tax loss seems gargantuan, it's actually a fraction of the sum UVA claims to pump into the local economy. The study reports $1.1 billion in university-generated local spending in 2005. But this money does not necessarily go to local government, and it doesn't even all go directly to the regional economy; about $366 million never ends up in local hands.
Not surprisingly, the study's findings are very much in line with the university's oft-repeated goal: maintaining its status as a preeminent "flagship research university." The authors of the report consider the out-of-state money brought in by federal research grants and fellowships a key component of the economic contributions the university makes on a state-wide level.
There's little doubt UVA plays an influential role in Charlottesville's economic health. The Weldon Cooper researchers point out that the university even voluntarily provides funding for local police, fire and rescue departments, and for the emergency call center.
But at its core, the report seems to be nothing so much as a justification for why taxpayers should support the university and give it free rein.
"It looks like the taxpayers are getting a great deal," research director William Shobe said with a smile. But if taxpayers are interested in why they're footing the bill for UVA, they may also want to know just how much the bill really is.