Police patrol their neighborhoods. Firefighters respond to their emergencies. Snowplows clear their streets.
City Hall spends millions of dollars each year on vital services to hospitals and colleges, churches and charities.
And none pays property taxes.
Buffalo's tax-exempt property owners, from the institutional giants to the tiny storefront churches, often struggle to make ends meet. But more and more, they are being asked to shoulder a small part of the city's increasing tax burden.
"It's just not fair when some property owners don't pay," Mayor Masiello said. "Healthy communities have found a way to get everyone to participate in strengthening their tax base."
The Buffalo News conducted a computer-based analysis of tax-exempt property owners in the city and found:
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More than a third of the city's land value -- about $3.2 billion worth of property -- is exempt from taxes. That compares with about 22 percent of the land value in Buffalo suburbs.
The city lost about $35 million in tax revenue last year because hospitals, colleges and other non-profit groups are not required to pay for services they receive from the city. That money could have erased this year's deficit with $10 million left over to cut taxes or spend on schools and other services.
More than half of the $101 million in property owned by Conrail is exempt from city taxes even though the railroad is making record profits.
Roughly $2.5 million in potential tax revenue was lost because because of a drop in the property assessments for National Fuel Gas and other utilities.
The city lost about $4.7 million last year because of exemptions for veterans and senior citizens.
Another $8 million was lost because of tax breaks for businesses. The incentives are offered to companies building or expanding facilities in the city.
The biggest single landowner in Buffalo is City Hall, which controls 4,164 parcels of land valued at $468 million.
Without help from Buffalo's non-profit groups, the tax burden will fall even heavier on homeowners and businesses.
Masiello thinks it's time for hospitals, churches and colleges to help out. Last year, he proposed a user fee on all land owners, including those exempt from paying property taxes.
User fees common elsewhere
Earlier this year, County Executive Gorski waded in with a plan of his own -- a $14.5 million takeover of the city's garbage collection service. Like Masiello, Gorski wants the takeover funded by a new fee.
User fees have become common place in many cities, including Cincinnati, Minneapolis and Rochester.
So far, the Common Council has rejected the idea and Masiello has responded by asking for voluntary contributions. A few Buffalo churches anted up. Two donated $2,500 a piece to the city. A third kicked in $1,500.
"It was the loving and caring thing to do," says the Rev. Jan Hubbard of Central Park United Methodist Church.
The Rev. Hubbard's congregation followed the lead of her husband's church, First Presbyterian Church on Symphony Circle.
"We're planted and invested in the city," says the Rev. Langdon C. Hubbard. "This is a symbolic message that we believe in the city."
And yet, both ministers are adamant in their opposition to mandatory fees.
They see user fees as an unfair burden on poor churches and a violation of the separation between church and state. They also think a voluntary approach will encourage greater urban-suburban cooperation.
Despite the opposition, it's easy to understand Masiello's proposal from a dollars and cents point of view.
Churches wary of fees
City Hall provides services to eight hospitals, six colleges and universities and hundreds of charities and religious institutions. Together, they own property valued at more than $1 billion.
For that reason alone, some non-profits are eager to help.
"We want to be a good neighbor, we're willing to step up to the plate," says Edward Weeks of the Episcopal Church Home, a West Side institution and the most valuable charitable property in the city.
Weeks said the home is willing to pay a user fee but not if it's a "foot in the door." He wants assurances the city will not come back at later date looking for more money.
Others are skeptical.
At Temple Beth Zion, the most valuable religious property in Buffalo, board members recently approved a voluntary cash contribution.
"Obviously, the city needs help," said David Brock, board president at Temple Beth Zion. "Our main mission is in the city, and we feel obligated to respond to the city's needs."
But the 1,200-member congregation may draw the line at mandatory fees.
Brock said a permanent fee could prove to be a burden for an organization already struggling with its bottom line.
"You can't get blood from a stone," said Richard G. Braun, vice president of finance at Buffalo General Hospital.
Like many institutions, Buffalo General is faced with a tight budget. The hospital ended last year $1.4 million in the black, but Braun said the surplus could disappear because of $7 million in state reimbursement cuts and a $2.5 million gross receipts tax.
Braun also is quick to note that Buffalo General already helps the city by providing free medical care at a cost of about $9 million last year.
Special exemptions
Like many cities, Buffalo's inability to collect property tax revenue is not limited to non-profit groups. The city also suffers because of state-mandated exemptions largely out of its control.
The News' analysis identified more than $7 million in lost revenue because of special exemptions for veterans, senior citizens and Conrail.
Another $2 million will be lost this year because of a $70 million drop in the assessments on property owned by 10 utilities serving the city. The biggest was a $30 million drop in value on land owned by National Fuel Gas.
"On one hand, they record big profits and, on the other hand, they enjoy reductions in their assessments," said Joseph Sole, the city assessor.
City Comptroller Joel Giambra blames state lawmakers and the real property division -- the state department that sets property assessments on railroads and utilities.
For years, the state has adopted or continued exemptions without regard for the impact on local taxpayers, he said.
"It's extremely disturbing," Giambra said. "The state real property department is an ineffective, inefficient state bureaucracy with no regard for local taxpayers across the state."
National Fuel assessment
The New York Conference of Mayors, in a recent report, echoed Giambra's criticism and called for an end to some of the exemptions.
"Cities are at the bottom of the food chain," said Edward C. Farrell, executive director of the mayors' conference.
The drop in National Fuel's assessment was part a settlement of a five-year legal battle over the assessed value of transmission lines, cables and gas mains. The agreement lowers assessments gradually each of the next four years.
"It was a whole lot easier to settle this than lose it and have cities pay back five years of overpaid taxes," said Joseph Hesch, spokesman for the state Office of Real Property Services.
National Fuel also defended the outcome and said it should ultimately lead to savings for consumers.
"We have to do everything possible to keep our rates as low as possible," said Donna DeCarolis, a National Fuel spokeswoman.
Buffalo, meanwhile, struggles to balance its budget.
Conrail's exemption
Adding to the city's woes is the state's long-standing exemption on railroad property. In Buffalo, it amounts to $2 million in lost tax revenue.
Again, the mayors' conference is leading the campaign to repeal the exemption for Conrail and others.
The state's mayors point to the railroad's record profits -- $400 million last year -- and what they claim is a 43 percent return to shareholders in 1993 and a combined 130 percent return in 1991 and 1992.
Conrail says the figures are wrong and notes that half of its property tax bill, about $37 million last year, went to New York state. The other half was divided among 11 other states. The railroad also claims higher taxes will lead to less service.
"If you're a company and you feel your taxes are too high, you take your business elsewhere," said Rudy Husband, a Conrail spokesman. "We can't do that."
The tax-exempt landlord
Even if the railroad carried its full weight, Buffalo would still lose tax money. And one of the biggest reasons is City Hall itself.
The city, according to the News analysis, is Buffalo's biggest landowner. And all of its land is tax free.
The city's biggest holdings are vacant land and the lion's share is on the city's East Side. The city owns more than 4,000 properties and one out of every four is in the Fillmore and Masten districts.
"Most of the land we get are tax foreclosures that are in pretty bad shape, the ones nobody wants," said John P. Hannon Jr., city real estate director.
Hannon said more than half of the vacant parcels are targeted for new housing.
City Hall also loses potential revenue on companies that seek tax breaks before building or expanding in the city.
And yet, development officials stress that most of these properties were vacant or unused and that, ultimately, they will return to the tax rolls.
"Many of these properties were owned by the City of Buffalo and generated no taxes at all," said Ronald Coan, executive director of the Erie County Industrial Development Agency.
There's no campaign to end tax breaks for businesses or cease the exemptions for senior citizens and veterans.
However, Masiello is pushing user fees.
"I sympathize with the churches and charities that are struggling," Masiello says. "But over the long run, it's what's best for the city."
