nothin Tax Yale Effort Revived | New Haven Independent

Tax Yale Effort Revived

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Harp announcing support for bill.

Mayor Toni Harp pointed to Yale’s recent purchase of 350 George St. and the university’s travel agency as examples of why she supports a State Senate bill to clarify a 182-year-old statute that governs the city’s ability to tax the university’s real estate holdings.

Harp joined alders and local unions at City Hall Tuesday afternoon to support State Senate bill 414, which would clarify an 1834 state statue that says certain colleges, including Yale, shall not hold in this state real estate free from taxation affording an annual income of more than six thousand dollars.”

What does this mean?” Board of Alders President Tyisha Walker said of the language. I don’t know.”

She and others said the bill would answer that question — and potentially put more tax money in city coffers as Yale helps lead New Haven’s eds and meds” economic development.

Walker, a longtime Yale dining hall worker who has a leadership role in Yale’s UNITE HERE Local 35, which pushed for this Senate bill, said the 1834 statute provides a loophole for colleges and universities earning profit on its activities.

Does it separate commercial from education? No,” she said. The law is not clear which of Yale’s commercial properties should be taxable. In practice a Yale property becomes taxable only when Yale agrees not to contest it. The city needs to know what rules separate Yale’s taxable, from its tax-exempt property.”

Yale responded that it already pays lots of taxes to New Haven, along with millions of dollars in voluntary contributions that set it apart from other universities.

Yale spokesman Tom Conroy pointed out the university pays property taxes on all its nonacademic properties and is one of the largest taxpayers in the city. He said all of that was in addition to making the largest voluntary payment of any university in the nation to any city in the nation.”

It is the single largest local economic force in New Haven – larger than fellow nonprofits or any private corporation,” according to a fact sheet provided by Conroy.

Yale University, with annual budget expenditures of $2.8 billion, including salary and benefits expenditures of $1.7 billion, is a major catalyst for New Haven’s prosperity.”

He noted that Yale was one of the city’s top five taxpayers last year, ponying up $4.5 million on its non-academic property, along with an $8.3 million voluntary payment.

With $108 million in assessed real estate, Yale is the city’s fourth largest property owner, after United Illumination, Carter Winstanley’s development firm, and the Fusco Corporation, according to the most recent available figures.

Different Times, Familiar Call

Walker and Greenberg.

Tuesday’s press conference echoed a political moment that happened in New Haven in 1990 — with a new twist.

Then, amid a recession and city budget crisis, community groups rallied behind a state bill, written by New Haven State Rep. Pat Dillon, that targeted the same 1834 statute, which provides extra tax exemptions to Yale and five other universities beyond those already afforded by law. The effort was part of a tax Yale” community campaign.

But then, unlike now, New Haven’s mayor led the charge the kill the bill. John Daniels had just been elected mayor then. A former state senator, Daniels called his colleagues in Hartford to tell them he opposed the bill, which then died. He struck a deal instead with Yale as part of that lobbying effort, in which Yale purchased two downtown streets and began making annual voluntary payments to the city.

This time New Haven’s mayor, also a former state senator, led the community charge in favor of the bill.

Harp pointed out Tuesday that Yale has grown from a mere 90 acres in New Haven to 1,000 acres, making it one of the city’s primary property holders.

Senate Bill 414 would update a 182-year-old statute and set guidelines to distinguish between a college’s commercial and educational real estate holdings,” she said. Since taxing real estate and other property is the only form of municipal taxation allowed by state law, more modern guidelines as to what is taxable and what is exempt is essential.”

Part of the confusion centers on how to calculate the percentage of a building owned by a college or university that goes toward educational versus commercial purposes. In the past three decades — in part at the urging of the city, which envisioned more local job creation as a result — Yale has promoted the commercialization of its research, which is otherwise a noncommercial activity.

Harp said need for such clarification became apparent when Yale recently purchased 350 George St. (Yale Vice-President Bruce Alexander said the building will probably become offices for the medical school, which is moving chess pieces around.”)

Harp said depending on how Yale decides to use the once privately held building, it could be taken off the tax rolls. Should the building come off the tax rolls, city revenue would be reduced by $275,000 annually,” Harp said. State taxpayers would pick up roughly a third of that through the PILOT [Payments in Lieu of Taxes] program, but the city would have to absorb the rest.”

Harp said Yale’s Travel Management office at 2 Whitney Ave. is also a gray area that might have commercial aspects, but operates out of a building that is not on the city’s tax rolls.

She emphasized that the city has never had any trouble getting Yale to pay for what the tax assessor has said are clearly commercial properties.

We have a really good relationships with Yale,” she said. Yale is now one of our largest taxpayers, but we need to make sure we are getting all that we need given the economic conditions of the state.”

The state is grappling with how to absorb a $900 million budget deficit. Harp said she is worried that the state might walk away from PILOT commitments. Our budget it balanced now, but I can’t guarantee that if we get a huge cut from the state,” she said. Even if we got this clarification, we would still need the payments in lieu of taxes to make ends meet.”

The Post-Industrial Landscape

James calls for more Yale tax revenue.

Wooster Square Alder Aaron Greenberg said New Haven has changed over the last 40 years: Instead of factories, universities and hospitals are at the center of the city’s economy and the law should reflect that.

These changes have provided a strong foundation for New Haven, but state law has not caught up,” said Greenberg, a Yale graduate student who also serves as a leader of UNITE HERE Local 33. Currently Yale university operates under a 19th century state law that grants it a blanket tax exemption. Under that law, Yale can run commercial businesses on its tax exempt property. Independent businesses mean while do pay taxes.

As alder for the Eighth Ward, I think about the businesses in my ward — the many family owned merchants and restaurants on Wooster Street that have been serving New Haven for generations,” he added. Things work differently for Yale, and SB414 would update and clarify the law making sure that Yale plays by the same rules as everyone else.”

Jackie James, director of the city’s small business academy and a deputy director of economic development, said that what small businesses contribute in the way of taxes to the city makes a difference.

We clearly understand that small business are very important to the economic health of this city, in particular to communities of color,” she said. These businesses have one thing in common: They pay property taxes if they own their own building. They have to pay property taxes. Small businesses do their part to contribute to the tax base of this city we call home. That’s why we want to make sure that everyone is playing by the same rules. We don’t want one set of rules for us and another for Yale.”

Mayor Harp said that no one is looking to tax Yale’s or any other postsecondary institution’s educational property. The bill would in fact protect that exemption, she said. But she said the state’s economy is changing, relying more and more on eds and meds, as you’ve heard — colleges and hospitals that create good jobs that lift thousands from poverty.

Yale’s growth in New Haven has been a source of pride, a pillar of the city’s strength and a driving force in the city’s transformation. But we also need to be clear as a policy matter about the fiscal impact of this transition,” she said. One unintended consequence of the current situation is an uneven playing field for businesses where it certainly becomes more difficult to attract private capital to compete in an environment where only new businesses must pay taxes. We want to encourage Yale’s growth and we want to avoid doing so at the cost of local businesses.”

Text of the Senate Bill 414

Following is the text of the bill, titled An Act Concerning The Tax On College Property”:

Be it enacted by the Senate and House of Representatives in General Assembly convened:
Section 1. Subdivision (8) of section 12 – 81 of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2016 and applicable to assessment years commencing on or after October 1, 2016):
(8) (A) The funds and estate which have been or may be granted, provided by the state, or given by any person or persons to the Trustees of the Berkeley Divinity School, the board of trustees of Connecticut College for Women, the Hartford Seminary Foundation, Sheffield Scientific School, Trinity College, Wesleyan University or The President and Fellows of Yale College in New Haven, and by them respectively invested and held for the use of such institution, with the income thereof. [;provided none of said corporations shall hold in this state]

(B) Such exemptions shall not apply to any (i) real estate [free from taxation] affording an annual income of more than six thousand dollars; or (ii) real estate where such institutions holds real estate consisting of land, buildings and equipment valuing more than two billion dollars in the aggregate and the activities on such real estate afford the institution an annual income of more than six thousand dollars. Such [exemption] exemption shall not apply to any real estate which said Trustees of the Berkeley Divinity School own, control or hold in trust, and which is situated in the city of Middletown. For the purposes of this section, activities” means (I) rents or other payments for the use of all or any part of real estate exempt from taxation pursuant to the subsection (a) of this section, or any fixtures or equipment permanently installed thereon, received or due from any for-profit entity, but not including individuals for persona use; (II) fees collected for admission or use from faculty, employees, or enrolled students, or events in which substantially all of the athletes or performers are faculty or enrolled students; (III) fees, charges, or royalties for any goods designed, produced, manufactured or generated on all or any part of such real estate, provided such goods are for sale to the public and to for-profit entities and (IV) fees or charges for any services rendered on, or from all or any part, of such real estate to the public or any for-profit entity; and for-profit entity” means corporations, partnerships, joint ventures, sole proprietorships or other business entity.

(C) No other provision of this section concerning exemption of property used for education purposes shall be construed to affect any provision of the subdivision;

{Proposed deletions are enclosed in brackets. Proposed additions are indicated by italics.}

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