City Council panel examines how to fund cleaning up environmental hazards in Philadelphia's public schools

City Council’s Committee on Children and Youth held a public hearing Wednesday hosted by Councilmember at-Large Kendra Brooks in partnership with Philadelphia Jobs with Justice to examine the relationship between the property tax exemption for wealthy nonprofits on the School District of Philadelphia’s budget and how to fund cleaning up environmental hazards in district facilities.

Many Philadelphians, including those directly impacted by toxic school environments and those with ties to wealthy nonprofits, have called for nonprofit institutions to contribute 40% of foregone property taxes annually to the School District of Philadelphia as Payments In Lieu Of Taxes (PILOTs), to share the responsibility of funding public education.

Brooks said the school district needs $5 billion for capital repairs and to face the economic impact of the pandemic.

“It’s no coincidence that the vast majority of the students who attend public schools in Philadelphia are low-income children of color,” she said. “Children of color — especially Black children — are disproportionately impacted by the health conditions associated with environmental hazards, such as chronic asthma.”

State Rep. Rick Krajewski, D-188th District, said his constituency in West and Southwest Philadelphia has an estimated one in four children with asthma. Along with the lead and asbestos contamination that is endemic to the public-school buildings his district, the uncontrolled growth of mold has had an impact on the children who attend these schools.

“Chronic asthma can be debilitating — even fatal. And it’s shameful that our children are facing lifelong health conditions because of a lack of funding for our school buildings. Capital projects on university campuses have clearly not been hampered by the pandemic,” Krajewski said.

Jefferson University is gearing up to spend over a half-billion dollars on an outpatient building. University of Pennsylvania is building a $26-million guest house next to the existing university president’s house.

Construction of the Drexel University academic tower is underway at the former site of the University City High School.

“Penn’s 10-year commitment to contributing to the remediation of lead and asbestos from our schools is certainly needed but the chronic underfunding of the Philadelphia public schools also cannot be resolved with charity,” he added. “It is time for Penn to step down from its ivory tower and have a real mutual partnership with all of West and Southwest Philadelphia.”

Adam Langley, associate director of U.S. & Canadian Programs, Lincoln Institute of Land Policy, in Cambridge, Massachusetts, sees firsthand how PILOTs can be a significant revenue source for cities with a large nonprofit presence.

Cambridge, a city of around 100,000, receives over $7 billion per year in PILOTs, primarily from MIT and Harvard. Those two universities have 40- and 50-year agreements with the city. Then nearby in Boston, the city received $34 million in PILOTs in fiscal year 2020 from nearly 50 nonprofits.

Langley presented six recommendations for how local governments can take a collaborative approach when it comes to PILOTs:

• First, respectful dialogue with non-profits is the critical first step in starting discussion about PILOTs.

• Second, it can be useful to avoid the term PILOTs altogether, because there are some non-profits concerned that making payments in lieu of taxes increases the impression that they should be paying taxes and they worry how it might undercut their tax-exempt status down the road.

• Third, local governments need to justify why they’re seeking a certain dollar amount for a PILOT rather than of pulling a number out of thin air.

• Fourth, consider earmarking PILOTs for certain nonprofit priorities instead of having the money go into the general fund, which can be viewed as a black box.

• A fifth recommendation is to seek long-term PILOT agreements in the range of five to 30 years.

• Langley’s final recommendation is to reduce cash PILOTs for nonprofits that agree to provide new services for residents.

Brittany Alston, deputy research director of the Action Center on Race and the Economy, highlighted three key points: Private universities are wealth-driven institutions, not public services; mega nonprofits highlight the stark economic divide that exists in the city; and PILOTs are a vehicle to bring in revenue to the state.

Christina Ly, a senior at the Academy at Palumbo High School, spoke about the situation with her school’s ceilings in September 2018.

“Although renovators were sent to repair the damage, our roof still continued to leak. Water would leak into buckets and hallways as we would be shuffled between a time square of students navigating to their next classes. Our transition to our next class and our narrow hallways and our only one available stairwell had merely made matters into misery,” she said.

“So, what if we were in the building during the (ceilings) collapse, these collected budgets from PILOTs would have allowed us to renovate our rundown building and would’ve ensured it secured conditions in the first place. But it was too late because my school ceiling was left unprotected.”

Akira Rodriguez, assistant professor at University of Pennsylvania Weitzman School of Design, said that with Penn having become the seventh-richest university in the country, “conditions in public schools in Philadelphia require that we make that commitment again together with Jobs for Justice and other community groups.”

Penn for PILOTs is asking that Penn and other similar large nonprofit institutions pay 40% of what their property taxes would be if it were not a tax-exempt institution, to support the city schools.