| North by Northwestern

In 1855, the trustees of what was then North-Western University sent an amendment to their charter to the Illinois legislature. The amendment was comprehensive, barring the sale and manufacture of all liquor within four miles of Northwestern. Within decades the amendment would turn “Heavenston” into a hub of the temperance movement.

Attracting far less attention and looking almost like a legislative afterthought, the fourth clause of the amendment was simple. It appended to the University’s charter a short but comprehensive modification: “That all property of whatever kind or description, belonging to or owned by said corporation, shall be forever free from taxation for any and all purposes.”

A brief history of money

Relations between Northwestern and Evanston are at something resembling a historic high. The University has dropped off the Princeton Review’s list of most strained town-gown relations, no one hollered about blowjobs or brought any fucksaws to school this year and despite students’ best efforts, the noise from Dillo Day concerts caused a bigger stir than any off-campus parties. Evanston’s property tax rates are two percentage points higher than those of any other municipality in Cook County, but no one has proposed bleeding money from Northwestern to lower those rates.

That last one marks a turning point. For what feels like the first time in decades, financial relations between Northwestern and Evanston are harmonious. Credit Northwestern’s donations to the city, or perhaps the $2 million brought in for Evanston by building permit fees for campus construction, but these days there’s a palpable sense of partnership between the city and the University. As Evanston Mayor Elizabeth Tisdahl wrote in an email, “We plan to have the best town-gown relationship in the nation and we will get there, hopefully sooner rather than later.”

Though rowdy students and haughty academics have done their part to harm University-city relations, the heart of the tension between Northwestern and Evanston has always been money. Take the property tax amendment, long a source of contention. It was intended as a way for the state government to support the University and to acknowledge the scholarly contributions it makes to its community without having to spend money.

It did not take long for that well-intentioned gesture to become a source of enmity. In 1875, the county collector found Northwestern delinquent in its tax obligations and assessed the University for more than $10,000 (more than $200,000 in 2014 dollars). Northwestern disputed the matter in court. When the Illinois Supreme Court came down on the side of the county, Northwestern took the fight even higher. As then-University treasurer T.C. Hoag put it, “The tax cases involve so much in the future that it is very important we leave nothing undone.” That approach paid off. In 1878, the U.S. Supreme Court sided with Northwestern in the case of University v. People. Students celebrated by building bonfires in a “blaze of glory,” reminding us that tone-deaf student behavior transcends the centuries.

In the 160 years since that case, Hoag has been proven right: The property tax exemption is still critical to town-gown relations. It helped undermine a proposed 1930s merger between the University of Chicago and Northwestern thanks to rumors that UChicago was trying to pull itself off the tax rolls. It played a role in the creation of the Lakefill, when the University found it cheaper and politically easier to reshape nature itself than to buy land in Evanston.

When Evanston failed to pull tax revenue out of Northwestern’s land, it turned instead to students. To fight budget shortfalls in the late 20th century, the city three times floated the idea of a tuition tax. Had the 1983 proposal—the most viable—gone through, Northwestern students would now be paying an additional $702.54 on their tuition. Each time, students avoided such a tax thanks to a national outcry fueled by higher education.

“It sounds like a really ominous thing,” John Vaughn of the American Association of Universities said to the New York Times. “If Evanston can get away with it, it would be foolish for other communities not to try it.”

That the city would so frequently return to an idea that, each time, earned it bad press across the nation is indicative of the acrimony that existed between the city and the University. Northwestern, Evanston residents felt, was not paying its fair share. Relations between the city and the University reached their lowest point at the start of the new millennium. In 2000, more than 80 percent of voters supported a toothless referendum that asked the city to negotiate with the University to get Northwestern to pay its “fair share.” Citizens formed a Fair Share Action Committee that lobbied the University to make a payment in lieu of taxes, or PILOT, seeking $15 million annually for the city.

The Independent Senior Citizens of Evanston even floated a plan to cast the University off entirely, deannexing it from Evanston proper. Alderman Ann Rainey stressed to the Chicago Tribune at the time that a deannexation plan would never go through, because even in the worst periods of their relationship, the city and the University are still inseparable. “We couldn't divorce Northwestern. It's an intricate part of this community," Rainey said.

Even if deannexation was unfeasible, Rainey could still dream. As she told the Chicago Sun-Times, “What I’d like to do is carve Sheridan Road and have [Northwestern] float away into Lake Michigan and maybe attach itself to Waukegan.”

Unbalanced Relationship

In the 15 years since the heady days when Evanston residents dreamed of cutting Northwestern adrift, the financial situation has gotten worse for Evanston. In the first half of the 2000s, the city was still running a surplus on its general fund. Since 2005, the city has been unable to bring the expenditures of its general fund below revenue. Government spending and public employment still have not yet returned to pre-2008 levels.

While the city has suffered economic distress, the University has come out relatively well. Though the recession took a toll on Northwestern’s investments, the endowment is back above 2008 levels. And where Evanston has tightened its belt, Northwestern has expanded its enrollment and poured millions of dollars into building new facilities. With the start of the University’s $3.75 billion We Will fundraising campaign, that gap will likely widen still further.

This isn’t to suggest that Northwestern doesn’t play a major financial role in the community. The University pays about $7.3 million a year to Evanston in non-property taxes and fees. A 2012 report estimated that the University also pays about $590,000 in non-tax payments yearly to the city, thanks to irregular payments like the purchase of a $550,000 firetruck in 2009. That figure is echoed by Northwestern’s Vice President of University Relations Al Cubbage, who estimates the University’s non-tax and fee contribution to the city at about $500,000 a year.

“Our position always has been that the University is certainly willing to provide financial support on a project-by-project basis,” Cubbage says. “What Northwestern has not been willing to do is PILOTs.”

In this, Northwestern is relatively unique among wealthy universities. The only private university with a larger financial endowment than Northwestern that does not make a PILOT contribution is Columbia University. Unlike Evanston, though, New York City’s budget is measured in the billions, not millions—more importantly, its budget is balanced. The University of Notre Dame pays less than Northwestern, but it’s located in unincorporated land. Even Northeastern University in Boston—our mirror universe double—makes a larger direct contribution to its municipality, and its endowment is only a tenth the size of Northwestern's.

Pilot Contributions of Other Schools
Princeton	$1,751,000
Harvard	$10,088,273
Yale	$8,100,000
Stanford	$7,100,000
MIT	$1,787,780
Dartmouth	$1,900,000
Johns Hopkins	$1,672,658
Northwestern	$590,000
Cornell	$1,643,000
Boston University	$5,718,122
Northeastern	$886,000

For many students and officials who think tuition is high enough and that Northwestern does enough for its community already, this may seem like the correct decision. After all, Evanston as we know it would not exist without Northwestern.

Former Senior Vice President for Business and Finance C. William Fischer may have summed up that line of thinking best in a 1992 letter to the Chicago Tribune. “Who is the overall beneficiary in this relationship?” Fischer wrote. “As our students say: ‘Let’s get real.’”

Conversation and beyond

So how have Evanston and Northwestern put to rest their contentious relationship over money? If you ask officials, the answer is simple: talking it out.

“My sense is a lot of it has to do with communication,” says Evanston City Manager Wally Bobkiewicz. “When [Northwestern] President [Morton] Schapiro came in 2009, he understood that there were issues and he went out of his way to be very forthright and communicative with the city.”

From the University’s end, Cubbage agrees. “President Schapiro has made a real effort to improve relationships with the community,” he says.

That’s true on both sides of the relationship. Schapiro and Tisdahl now meet at least once a quarter to discuss town-gown issues, and relations are strong all the way down the line.

“Our facilities management people work really well with the city zoning folks, our University police are an incredible resource for Evanston police,” Cubbage says. “I think there’s that kind of professional respect for one another at the staff level.”

That respect seems to have paid dividends, at least metaphorically. Barring student-centric controversies like the death of The Keg and Evanston’s abandoned plan to more strictly enforce the “three-unrelated” ordinance (the brothel law, as students know it), public relations between the University and city have been relatively warm these past few years. Northwestern hasn’t taken the city to court, and Evanston hasn’t tried to extract revenue in new and exciting ways from the University and the student body. Though there are occasional minor brouhahas—the construction of the new visitor’s center and arts buildings along the lakefront caused some consternation for residents near south campus—it feels as though relations between Evanston and Northwestern are humming along in a way they haven’t in the past. “I think the war is officially over,” as Mayor Tisdahl put it to The Daily Northwestern last year.

Part of that has to do with funding. Under Schapiro, Northwestern has favored an approach that moves from project to project, making large and concrete donations. Along with the fire engine mentioned above, the University purchased an ambulance for the city. Northwestern has also partnered with Evanston to cultivate area startups, and invested heavily in relations with the local public education system.

“What Northwestern has done, to a great extent, is support financially the school districts,” Cubbage says. Through its “Project EXCITE” program, Northwestern offers math and science enrichment for minority elementary school students all the way through high school. The “Good Neighbor, Great University” program offers significant financial aid to students coming from Evanston and Chicago high schools. Northwestern even has a full-time employee who works as a liaison between Evanston Township High School and Northwestern.

The campus is also involved in the community in countless other ways. Northwestern students frequently choose Evanston-area charities as targets of philanthropy. Most notably, Northwestern University Dance Marathon has for 17 years donated a portion of its proceeds to the Evanston Community Foundation, a partnership that topped $1 million in total in 2014. Northwestern also employs more than 1,700 Evanston residents on the undergraduate campus. The slew of students, faculty, visiting scholars, families and assorted other travelers that NU brings to the area spend huge sums in the area, too. In a 2006 study commissioned by the University, an urban economics consulting firm estimated the monetary benefit to the Evanston economy from Northwestern’s presence to be somewhere between $145 million and $175 million annually.

Still, student philanthropies and economic activity aren’t the same as taxes, and the financial disparity between the University and city remains vast. Northwestern’s contributions to its community are valuable, but they pale in comparison to its own vast income. Take that $550,000 firetruck from 2009, for example. That same year, Northwestern brought in more than 50 times that cost in unrestricted private donations alone.

As We Will and campaigns like it add to Northwestern’s endowment, the disparity between the University and its community will only grow. Communication eased that tension, but a quarterly conversation isn’t quite the same as a PILOT. Almost 160 years ago, Northwestern was declared forever free from property taxes. The controversy surrounding that clause and the tone it set for financial relations with Evanston, even if it goes quiet occasionally, seems likely to last just as long.

Athletic Event Tax	$918,645.58
Electricity Tax	$578,427.54
Gas Tax	$360,406.69
Liquor	$1,764.00
Parking Tax	$677,108.88
City Stickers	$14,165.00
Easements	$311,510.00
Elevator Inspections	$11,950.00
False Fire Alarms	$8,680.00
Lodging Estab. License Fees	$156,627.00
Miscellaneous Charges	$402,658.48
Permits	$1,927,050.79
Salt Payments	$41,164.83
Water Payments	$1,877,089.84
TOTAL	$7,287,250.00

Putting on a Happy Face

The economic relationship between Northwestern and Evanston has never been better, but it's still threatened by lingering problems.

by Sam Niiro

A brief history of money

Unbalanced Relationship

Conversation and beyond