For nearly 175 years, Northwestern University has been exempt from paying property taxes in Evanston, Illinois, thanks to its 1851 charter. This exemption poses a significant challenge for Evanston officials seeking more contributions from the city’s largest employer.
On July 27, the City Council rejected an advisory referendum proposal. It suggested asking voters if tax-exempt organizations, like Northwestern, should pay equivalent taxes for commercial uses of their property outside their nonprofit scope. The proposal did not pass due to a 4-4 tie vote, with one alderman abstaining because of his employment with the university. Mayor Daniel Biss was absent, unable to break the tie.
Illinois requires real estate owners to pay taxes, but allows exemptions for schools, government agencies, nonprofits, and religious institutions. Northwestern’s exemption is unique, awarded before Illinois’s 1870 Constitution, making its properties “forever free from taxation.” Despite this, many nonprofits pay property taxes when engaging in commercial activities unrelated to their missions. Northwestern operates several commercial ventures on its property, yet remains exempt.
Alderman Parielle Davis, leading the push for payment in lieu of taxes (PILOT), states, “We want Northwestern taxed as a nonprofit.” The proposed referendum allowed exemptions for commercial activities with City Council approval.
“We’re not asking for much more than what really every other university does,” Davis emphasized. “Given the charter, we cannot compel Northwestern to pay anything.”
Some Council members, like Alderman Bobby Burns, questioned the referendum’s necessity, suggesting a direct discussion. Burns preferred to explore legality and implications first.
Alderman Jonathan Nieuwsma shared reservations, noting that while it might pass, a non-binding referendum won’t solve the issue. He believes a legal ordinance or strategic negotiations, like the stadium deal, would be more effective.
The city recently negotiated community benefits with Northwestern for their new $875 million stadium, suggesting strategic engagements can yield benefits.
During discussions, Corporation Counsel Alex Ruggie reminded members that Northwestern’s charter has withstood legal challenges and remains a legislative anomaly.
Alderman Matt Rodgers supported the referendum, citing his nonprofit’s obligation to pay prorated taxes for commercial use. He proposed later introducing an ordinance addressing this matter.
The Council’s tie vote reflects reluctance to confront Northwestern directly or selectively choose battles. Alderman Nieuwsma stated, “The charter has been problematic since 1851, but it’s the law.” He warned that without negotiation, a challenged ordinance would likely face costly legal battles with the university.
Leave a Reply