State to audit UC, CSU’s property tax exemption

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At a meeting Wednesday, a state legislative committee approved an audit to investigate losses in tax revenue for local governments from property acquisitions by CSU and UC campuses.

The audit, which will examine the impact of the loss of property tax revenue on local fire departments, was approved by the Joint Legislative Audit Committee to begin in July. It will evaluate four CSU and three UC campuses over a period of about seven months, at a cost of about $486,200.

The legislators who proposed the audit recommended that the state auditor investigate UC Berkeley, UC Santa Barbara, UC Merced, CSU Dominguez Hills, CSU Stanislaus, San Diego State University and San Jose State University.

As state institutions of higher education, the CSU and UC systems are exempt from property taxes, which support local services such as police and fire departments as well as city infrastructure.

When one of these campuses expands by acquiring previously private property, the local government no longer collects taxes on that property — which could decrease funding for emergency fire services, even as the student population demanding those services grows.

To investigate the seven campuses, the audit will identify all property purchased since 2010 and, if the property was previously private, determine the estimated loss in tax revenue. It will also ascertain the budgetary allocations for the provision of fire and emergency medical services at those seven campuses and their surrounding communities.

At the meeting, Steve Juarez, UC Office of the President director of state governmental relations, said that among the 10 UC campuses, a variety of relationships exist between the campus and the local fire services. UC Davis, for example, has its own fire department, while other campuses share responsibility with the local fire department or provide financial support.

He said he hoped the audit would also examine the positive fiscal impact created by UC campuses and the businesses they attract.

“The estimated loss of revenues is peanuts, frankly, as compared to economic contribution of campuses in the region,” said Karen Zamarripa, the CSU assistant vice chancellor for advocacy and state relations, at the meeting.

City Councilmember Jesse Arreguin acknowledged that UC Berkeley is a “major economic engine” but maintained that by acquiring private property in the city, the “university is not paying its fair share.”

He cited the Golden Bear Center, a UC Berkeley Extension facility located at University Avenue and Milvia Street, as a private building acquired by the campus. The university, he said, views these acquisitions as strategic investments.

“(The UC system’s) real estate speculation is taking money away from communities that the buildings are in,” Arreguin said.

In 2005, the city and campus settled a lawsuit over UC Berkeley’s 2020 Long Range Development Plan, in which the campus agreed to allocate $1.2 million per year — adjusted 3 percent each year for cost of living — to the city for sewer infrastructure, fire services, neighborhood improvements and joint transportation efforts.

But to Carroll Wills, the communications director for California Professional Firefighters, which supports the audit, Berkeley is still “a particularly difficult situation” because of the large proportion of the city’s area owned by the campus. Similar concerns were raised by Berkeley’s Council of Neighborhood Associations in November.

“There is not a particularly strong incentive for campuses to find ways to pay more money for things that they have,” Wills said. “Our concern is that moving resources from local entities could ultimately result in a diminishment in service capability.”

Sahil Chinoy is the lead higher education reporter. Contact him at [email protected] and follow him on Twitter @sahilchinoy_dc.