Syracuse University has won the latest round in a court battle over its tax-exempt status, but a top Syracuse city official wants the fight to go on for one last round.
The state’s Appellate Division, the second-highest court in New York, ruled last week that the University’s Schine Student Center was fully exempt from taxes. Starting in 2021, the city of Syracuse had levied taxes on about 8% of the building’s value, citing the presence of commercial chain restaurants in the building, such as Panda Express and CoreLife Eatery. That decision created an annual tax bill of $62,000. The university sued to restore its full tax exemption but lost at the local court level.
In April, Syracuse University took its appeal to the judges of the Appellate Division. The city did not send a lawyer to argue its side of the case, telling city lawmakers at the time that what it had said in written arguments was enough.
In the hearing, university lawyer Zach Schauf of the Barclay Damon law firm argued that prior court cases stretching back 70 years affirmed that colleges can own and operate outside businesses.
“What the Court of Appeals said is what matters is what activity are you engaged in, not sort of what form of business organization have you used,” Schauf told the judges.
He noted that, though the building is open to the public, their study showed that more than 95% of all visitors to the building and more than 99% of all purchases are made by people affiliated with the university.
Syracuse City Auditor Alex Marion has no direct say in what happens next, but he’s urging Mayor Sharon Owens and the Common Council to pursue an appeal to the state’s highest court, the Court of Appeals.
The justices, Marion said, “said that the Schine Student Center exists in its entirety in the furtherance of the educational mission of Syracuse University. Now, I have to be quite honest, I cannot tell you what the educational purpose of a Panda Express is. If there were an educational purpose to Panda Express, I think I would have figured it out by now.”
The issue is the latest in a long-running debate over the tax-exempt status of non-profits, which make up about half of the city’s property value but pay no taxes. Syracuse University pays taxes on about one-third of its more than 100 properties in the city, most for off-campus housing facilities. It also makes an annual payment to the city of about $1 million as a contribution, the contract for which expires at the end of June.
Marion said that if the university were fully taxable, it would contribute about $35 million per year to the city and its school district.
The city has not yet said whether it will appeal. Earlier this year, the city’s top lawyer, its corporation counsel, advised the Common Council to give the university the full tax break. The council voted to fight Syracuse University’s lawsuit, resulting in the decision in the university's favor.