VERGENNES — Loud calls to reverse a legislative decision to subject fraternities and sororities to the property tax is raging in Burlington but reverberating in Addison County, where several prominent University of Vermont alumni reside.
At issue is a decision by the 2014 Legislature to lift the property tax exemption on fraternities and sororities in Vermont, beginning Jan. 1 of next year. It is a move that some fraternity representatives said would result in the closing and sale of some buildings that have provided a social, academic and philanthropic outlet for many generations of University of Vermont students.
Former Waltham resident Laurence Jost is president of the Alpha Gamma Rho Alumni Association. Alpha Gamma Rho is the social-professional fraternity for agriculture at UVM. Other prominent Addison County alums of Alpha Gamma Rho include Jim Bushey of Bourdeau Bros., Robert Foster of Foster Brothers Farm, longtime ag educator Bill Scott, Bill Sayre of the A. Johnson Co. and Joe Pappas of Champlain Orchards.
At a recent Legislative Breakfast in Vergennes, Jost made an appeal to lawmakers to reinstate the property tax exemption for fraternities and sororities before the end of this session.
“We, as a coalition, have asked repeatedly for a hearing in the Senate Finance Committee and House Ways and Means, and have been denied that hearing,” Jost said. “Please grant us that hearing. If not, and if the repeal doesn’t happen, we would have to sell to UVM and Champlain College our properties. The state could … receive between $80,000 and $100,000 in taxes. If we sell — nothing.”
According to the website savegreeklifeatuvm.com, sunsetting the property tax exemption — first enacted in 1906 — will raise a combined total of around $225,000 from the 10 Burlington-based fraternity and sorority houses subject to the state portion of the tax.
“This issue … places an additional and new fiscal strain on those fraternities and sororities and the students who are members, adding another financial challenge to the already high cost of higher education,” according to the website.
Jost said beginning on Jan. 1, the Alpha Gamma Rho fraternity at 16 South Prospect St., Burlington, with 2.3 acres, will begin to pay upwards of $40,000 annually in property taxes.
“Our students, with 20 students, who reside in the chapter house built in 1863, cannot afford cannot afford $40,000 in property taxes,” Jost said. “That would be municipal and K-12 property taxes.”
Instead, representatives of “Greek life” at UVM are proposing what they believe is a fair compromise: A Payment In Lieu Of Taxes (PILOT) amounting to 50 percent of the municipal tax in Burlington. Jost said frat and sorority reps are also willing to talk about a contribution in lieu of the education property tax, noting the fraternities and sororities do not have an impact on K-12 expenses.
“We would like a hearing to negotiate what we would be willing to pay in taxes,” Jost said. “We have been denied that hearing for two years.”
Jost believes many lawmakers are eager for a do-over on the property tax exemption issue.
“Two years ago, on two lines of a 20-page bill, the fraternities and sororities at UVM lost their exempt tax status,” Jost said. “I have had legislators say to me, ‘I didn’t read the whole bill. I didn’t know it was in there, and I’m sorry I voted for the bill.’”
Greek life representatives are closely following the progress of Bill H.725, now in the House Ways and Means Committee. That bill simply proposes “to allow the property tax exemption for college fraternities and societies to remain current law by repealing the repeal of those provisions.”
It appears H.725 has a steep hill to climb. Two powerful Addison County lawmakers said they are not inclined to rescind the repeal.
Sen. Claire Ayer, D-Addison, is vice chairwoman of the Senate Finance Committee and the Senate Majority Whip. Her late husband, Dr. Alan Ayer, was a fraternity member and she said she shared his belief “in the value of that kind of a system.”
But looking at state revenues, she does not think the state can continue to give a break to fraternities and sororities.
“For my 14 years in Senate Finance we have been talking about fraternities and sororities as one in a number of candidates that didn’t fit that well into the ‘charitable and pious’ organizations, like Saint Peter’s Church and the hospital that the state intended to give tax breaks to,” Ayer said.
“I fully support this tax change,” she added. “It has been coming for a long time. We have heard from fraternities and fraternal organizations a number of times over the past years.”
Ayer said she would ask her committee chair, Sen. Ann Cummings, to accord some more time to fraternity representatives to plead their case. But she does not think a proposed PILOT agreement would benefit the state.
“In terms of the offer to pay part of the property taxes, that doesn’t do anything for the state,” Ayer said. “Property taxes out here in the rural area raise a very small percent of the total of our property taxes in general, so that isn’t going to help all the rest of us who pay the taxes for fraternities and sororities — and it’s not just Burlington.”
Rep. Dave Sharpe, D-Bristol, is chairman of the House Education Committee, but previously served for more than a decade on House Ways and Means. Sharpe noted the Legislature in 2010 established a “Blue Ribbon Tax Commission ” that included, among others, a former UVM fraternity member — Bill Sayre of Bristol, appointed to the panel by then-Gov. James Douglas of Middlebury.
“They looked broadly at our tax policy and they said, ‘exemptions are a really big problem,’” Sharpe said.
Sayre said the proposed lifting of the property tax exemption on fraternities and sororities was part of a package of proposals that required compromise from individual commission members.
“I missed it, it was as simple as that,” he said of the fraternity/sorority tax proposal.
He believes his colleagues might have also opposed applying property taxes to fraternities and sororities if they had been armed with the information available today on the benefits of such student organizations. He noted, for example, that Alpha Gamma Rho students this past weekend raised $5,000 for the Children’s Miracle Network.
Sayre said that instead of paying full property taxes, fraternities and sororities should be asked for a PILOT that “takes into account all the good things they do for the university, community and students.”
LIFTING EXEMPTIONS
Since property taxes (as opposed to income taxes) have prevailed as the preferred revenue source for funding schools and municipal services, lawmakers have had to look at ways to maximize its yield while trying to keep the overall rate increases as low as possible, according to Sharpe. Hence the legislative effort to lift property tax exemptions, Sharpe said.
“Whether we have children in private schools or fraternity members with no children yet, we all agree we should contribute to the education of our youth,” Sharpe said.
The list of exempt organizations and other entities has gotten too long, according to Sharpe. That list has even included the health insurance goliath Blue Cross-Blue Shield, a public non-profit. Sharpe said he tried unsuccessfully, awhile on Ways and Means, to remove the Blue Cross property tax exemption.
“When we give an exemption over here, all the taxpayers left over have to pay the bill,” Sharpe said. “So we have generated huge amounts of tax exemptions — sales, property and income tax exemptions and deductions. And when you do that, the group of taxpayers who have to pay the bills in our society … shrinks. All of us paying our full share of taxes pay a higher burden. It isn’t fair in our system to have such broad exemptions for certain classes of people where the rest of us have to pay an increasing amount of taxes to support that.
“We need to have a fairer tax system,” Sharpe said.
The application of property tax exemptions on fraternities and sororities will not affect Middlebury College. College trustees voted unanimously in 1990 to ban single-sex social organizations. The college has a system of social houses that function as dorms and are owned by the college, noted Sarah Ray, director of media relations for the liberal arts institution.
The old DKE Alumni House is owned by the DKE Alumni Association, and the college leases it as office space. The land on which it is located is owned by the college and is considered part of the main quad of campus.
“Any student can apply to live in any social house as part of room draw,” Ray said in an emailed response to the Independent. “No membership of any type is required to apply or live there.”
Middlebury College continues to keep close track of the tax status of its vast property holdings.
“The college has reviewed every piece of college-owned property in Middlebury with the town of Middlebury,” Ray said. “We went through the same process with Cornwall and Ripton. This was done to be sure each piece of property was properly categorized with respect to taxes, and that the college and the towns were in agreement on how they viewed the tax category assigned to each property.”
Reporter John Flowers is at [email protected].