College gift to town announced
March 2, 2004
MIDDLEBURY, Vt.-Middlebury College and the Town of Middlebury have announced a voluntary monetary contribution to be paid by the College to the Town in recognition of services provided by the Town to the College, a tax-exempt institution. The gift agreement was announced at the annual Middlebury Town Meeting on Monday, March 1.
Part of the gift consists of a yearly payment to the Town that will change up or down annually at the same rate as changes in the municipal tax rate. An additional payment will consist of an annual distribution of investment earnings from a portion of the College's endowment. Total value of the gift over the term of the agreement could be in excess of $6.5 million over a 20-year period, depending on economic conditions and other factors.
The new agreement follows a previous 10-year agreement concluded in 1994 that provided for a gift from the College to the Town of $1.2 million. That agreement expires this year.
Under the terms of the new agreement, the College will make initial payments totaling $200,000 to the Town in January and February 2005, $50,000 of which represents a five percent distribution from $1 million of the College's endowment. The portion of the payment from the endowment may vary slightly depending on the performance of the College's investments.
The dollar amount of payments made in subsequent years covered by the agreement will change in relation to changes in the municipal tax rate and changes in the growth rate of the College's endowment. Under this scenario, following the first year, three quarters of the $200,000 will increase or decrease annually at the same rate as the change in the municipal tax rate. The remaining $50,000 will increase or decrease in relation to the investment performance of the College's endowment.
The initial duration of the rolling agreement is 10 years, beginning July 1, 2004. The pact calls for an automatic renewal each year unless either party decides to discontinue it, in which case the agreement would expire nine years later. If not terminated earlier by either party, the agreement will expire on June 30, 2024.
A team of four College representatives and four Town representatives met over a period of several months to develop the gift agreement. The group's discussions were guided by a list of principles determined by both parties. The principles acknowledge the basic interdependence of the College and the Town, and state that the agreement should provide the basis for an ongoing dialogue of ways the College and the Town might work together on projects of mutual benefit. In addition, it was stated that the agreement should provide a predictable contribution to the Town that covers a specific period of time.
"This historic agreement is the product of a process that is a model of how the College and Town can work together to arrive at mutually satisfactory solutions to issues that affect both of us," said John M. McCardell, Jr., president of Middlebury College. "The cooperative and collegial tone that characterized these discussions demonstrated the value of a process in which both parties are open and honest with each other, and receptive to all perspectives," said McCardell.
McCardell said the gift recognizes the importance and value the College attaches to its relationship with the Town of Middlebury. "We believe that this gift will make a significant contribution to the Town's ability to continue to provide a high quality of life for its citizens and to attract people to the area to live and work," he said. "A healthy, vibrant community is an asset to the College that is beyond measure. Both the Town and the College will be the beneficiaries of this gift," said McCardell.
The agreement stipulates that all currently taxed College properties will remain on the Town's tax rolls. Middlebury College-the largest taxpayer in the Town of Middlebury-currently pays more than $530,000 a year in taxes on the property it owns. Added to the funds to be paid under the terms of the gift agreement, the College's annual payments to the Town and school district will total nearly $750,000.