City: Duke should pay $20M more

In the latest pull in Duke and Durham's financial tug-of-war, city officials have asked the University to volunteer a 10-year, $1 million annual payment for service and $10 million for a planned downtown events center.

University officials indicated they were willing to discuss an annual contribution for city services but that the sum requested for the theater was "not realistic."

In a May 7 letter to President Nan Keohane, City Manager Marcia Conner outlined more than $15.7 million of costs the city absorbs due to Duke's tax exempt status, including more than $14 million in would-be taxes. The city's request comes as Duke and Durham officials continue to spar over $1.2 million in impact fees that Duke says are unreasonably steep. Conner explicitly removed impact fees, which are levied for construction, from the discussion of the most recent financial requests.

The disputed impact fees, however, will play a significant role in the University's negotiations with the city, University officials said. "To the extent that we're paying one thing, we are less amenable to paying for other things," Executive Vice President Tallman Trask said.

University officials met with Mayor Bill Bell Wednesday morning to discuss Duke's financial contributions to the city. Nothing was resolved, but John Burness, senior vice president for public affairs and government relations, said the impact fee dispute may be settled within the next few weeks so that the voluntary contribution can be negotiated.

Duke said it is willing to reevaluate its contribution for fire service, which is currently $300,000 per year. It may even be willing to pay a larger sum, but "we would have to have an understanding that... for the next 10 years, they're not going to come after us every year with a new fee," Burness said.

Several years ago, the University pledged to support building a new theater downtown that would potentially serve as a venue for the American Dance Festival, which bases its summer performances at Duke.

ADF has complained that the stages and house sizes of the University's theaters are "not exactly adequate," and it has discussed relocating, said Brian McCormick, a spokesperson for ADF. In an effort to keep the festival at Duke, the University agreed to fund the cost of upgrading the already-planned events center to accommodate ADF's needs at an estimated cost of $2 million.

The price tag for the events center rose, however, because of an orchestra pit, ornamentation and several other add-ons.

"There's a question about what ADF needs to have and ADF wants to have," Trask said, adding that Duke will still contribute to the $42-million theater but not at the $10-million level.

Officials said the University, which just finished a $2.36-billion dollar fundraising campaign, is being unfairly singled out as a funding source because of its large size.

"Even though every dollar that was raised in the Campaign for Duke goes to specific purposes," Burness said, "to the outside world it looks like money that would be easy to get."

Meanwhile, the city is facing what Conner called a "very difficult year" for the budget. The proposed budget for the coming year includes a 5-cent increase in the property tax rate.

At Tuesday's City Council meeting Conner said Durham is "looking at moving toward fees rather than property taxes as a revenue source."

The money requested is not factored into the proposed budget, which is set for approval June 21, but increased financial help from the University would alleviate long-term financial issues the city faces.

"These are just first steps in us laying out what we believe are the appropriate contributions that Duke could make to the city for the services we provide," Conner said.