Loss of Non-profit Access to Non-taxable Bond Funding Will Affect Socially Important Investments
In 2016 Metropolitan College of New York moved all of its facilities to two beautiful new campuses, one near the World Trade Center in Lower Manhattan, the other in the South Bronx. The Manhattan Campus was financed by a $68 million triple tax-exempt bond issue. Tax-exempt bonds historically have interest rates between 1.5% and 2.5% lower than taxable bonds. For our college, a small non-profit that serves a high proportion of economically disadvantaged, non-traditional students, the difference between taxable and tax-exempt bonds made the new Manhattan Campus possible. The percentage difference would have killed the purchase. Likewise, the Bronx Campus was subsidized by about $2 million in New Markets Tax Credits, a federal program targeted to stimulate economic development in economically distressed areas. For us, the ability to benefit from New Market Tax Credits was important in making the purchase and building of our new Bronx Campus financially feasible. In both cases, it has helped us keep our tuition low.
The House tax bill kills both these programs – the first by abolishing tax exemption for so-called “private activity bonds”, the second by eliminating the New Markets Tax Credit program. If these provisions pass in final form, they will take away two of the important means that colleges and universities have to finance new construction and renovation at an affordable cost. They will also reduce investments that lead to construction jobs and long-term increases in local spending and employment.
Loss of non-profit access to non-taxable bond funding would affect not only colleges and universities but many other socially important investments. For example, it is estimated that about one-third of the affordable housing initiatives currently planned for New York City depend on non-taxable bond financing. Similarly, new Markets Tax credits have been an important incentive for both non-profit and private sector investment in economically challenged areas. Our Bronx project was tied to a New Markets subsidized mixed commercial development that resulted not only in a new college campus, but a new full-service supermarket, a sit-down restaurant, a coffee shop, a vision care shop, and two new health clinics, all in a neighborhood in sharp need of new investment.
The Senate tax bill does not alter these job-creating, community-enhancing, tuition moderating programs. I urge the House-Senate conferees to adopt the Senate version, for the good of our communities and the non-profit institutions that give them strength.
Dr. Vinton Thompson was named President of Metropolitan College of New York (MCNY) in May 2008. Under his leadership, the College purchased two new campuses in Manhattan and the Bronx giving MCNY its first permanent homes. Prior to coming to MCNY, Dr. Thompson was Vice President for Academic Affairs at Kean University in Union, NJ, and Provost at Chicago’s Roosevelt University where he played an important role in the renaissance of their downtown Chicago Campus and the promotion the multi-institution Chicago Loop Education Corridor. Dr. Thompson and his wife Ruth Moscovitch reside in Lower Manhattan, where Ruth maintains a labor/management arbitration practice. They have two grown children, Isaiah and Owen.
