State College Borough Council approved a new 20-year agreement with Penn State to provide funds in lieu of property taxes that the university is exempt from paying.

The agreement is in the approval process at the municipalities involved -- Centre County and Patton, Harris and Ferguson townships. Each must accept the new 20-year agreement, which requires the university to pay the municipalities a total of $761,870.

The university is exempt from paying property taxes, said Dan Sieminski, assistant vice president for finance and business. "We're not a taxable entity, but at the same time, there was general recognition in State College that the university would serve in the communities," he said.

State College would be getting more than $400,000, but that is not nearly enough, said Council President Tom Daubert. "The university is good, and we get along pretty well, but it's pretty bad that we're getting $400,000," Daubert said. "If the properties were taxable, the property taxes at university would be $6 million, but we can't expect anything even close to that."

In 1992, the university agreed to pay funds in lieu of taxes, after eight years of negotiations with the county. In March 1993, the university, Centre County, the municipalities and the State College Area School District came to an agreement that involved a $6 million tax settlement. Penn State agreed to pay $600,000 a year for 10 years, giving the county $200,000 in services.

On Jan. 28, 1997, the Centre County Commissioners approved an amendment to the 1992 tax settlement agreement over a period of 20 years.

The new agreement will take effect next year, Sieminski said. The payment due at the end of December will follow the existing agreement, he said.

The increase in the funds provided by Penn State to the borough is welcome, but it's still inadequate, Daubert said. "This helps, but you know it costs a lot of money to run the borough because the university is here," he said. "It would be nice if they contributed more money."

In the past five years, Penn State has bought three to four buildings downtown, making the university tax-exempt. "State College is a wonderful place, and we wouldn't exist without the university, but the problem is that it's land blocked -- we can't expand, the space is taken," Daubert said.

State College Mayor Bill Welch said the borough gains business in retail, restaurant and parking revenue from those working or attending Penn State.

Students are wonderful, but there wouldn't be as many problems and as much of a need for funds if it were a town of 60-year-olds, Daubert said.