60% Of City Real Estate Now Tax-Exempt

by Thomas Breen | Mar 12, 2020 8:04 am

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Posted to: City Budget

Nearly 60 percent of city real estate value is currently off the tax rolls, now that New Haven’s tax-exempt grand list has climbed by another nearly $200 million last year to reach a new peak of $8.47 billion, the city’s top property-monitor revealed Wednesday night.. City Acting Assessor Alex Pullen gave that update Wednesday night during the latest Board of Alders Finance Committee meeting, which was held not in its usual meeting place on the second floor of City Hall, but instead in the Hillhouse High School auditorium on Sherman Parkway. The meeting was the first public hearing that the aldermanic committee has held since Mayor Justin Elicker submitted his proposed $569.1 million general fund budget for Fiscal Year 2020-2021 (FY21) earlier this month. Pullen explained at the top of the meeting that there is an inextricable connection between the city’s grand list — the total combined value of all real estate, motor vehicles, and personal property in the city—and the city budget. That’s because the general fund budget derives roughly half of its revenue from local property taxes. Handing out two pages’ worth of charts and data to the alders, Pullen said that last year saw the continuation of a grand list trend that has defined at least the past six years in this city: the ratio of tax-exempt properties to taxable properties has tipped, further and further, towards the former. Tax-exempt properties are those owned by the state and a variety of nonprofit entities, including Yale University and Yale New Haven Hospital. Pullen said that tax-exempt real estate in New Haven increased in value by roughly 2.3 percent last year—from $8.28 billion to over $8.74 billion. Pullen said that tax-exempt real estate in New Haven increased in value by roughly 2.3 percent last year—from $8.28 billion to over $8.74 billion. Total taxable real estate in the city increased in value by roughly 0.48 percent during that same time period—from $5.68 billion to just over $5.71 billion. That means that tax-exempt real estate makes up a full 59.7 percent of all real estate in this city. When taking into account automobiles and personal property, which are the other two categories of local property value that that make up the total grand list along with real estate, roughly 56 percent of all city property value is currently tax exempt. “Why is the gap between the tax-exempt grand list and the taxable grand list increasing?” asked East Rock Alder Charles Decker. Is it because tax-exempt nonprofits like Yale University and Yale New Haven Hospital are buying more properties? Or is it because the value of the properties that those types of institutions already own are increasing in value? “The answer is the latter,” Pullen said. “The properties are becoming increasingly more valuable.” He pointed out that the city is home to a large university and a large hospital, both of which “really like to build.” “And when they build things, they build to the gold standard,” he said. The hospital’s planned The hospital’s planned $838 million construction of a new neuroscience center at its Saint Raphael campus is a perfect example of that very kind of project that will likely boost the city’s tax-exempt grand list yet again. Pullen said that Yale University’s tax-exempt properties increased in value by over $163 million last year — from roughly $3.37 billion to over $3.53 billion. The university’s tax-exempt properties make up 42 percent of the city’s total tax-exempt grand list. The hospital’s tax-exempt properties, meanwhile, increased in value by roughly $4 million last year—from $1.208 billion to $1.212 billion. The hospital’s tax-exempt properties make up 9 percent of the city’s total tax-exempt grand list. Yale is also a primary tenant in many large tax-exempt properties that are technically owned by Winstanley. “Is there any hope on the horizon for that gap shrinking?” Decker asked about the ever-growing distance between the city’s taxable and tax-exempt grand lists. “There’s always a way that it can close,” Pullen said. He cautioned that he is not the best person to answer how and when that might happen. “I don’t know what Yale plans to build. I don’t know when they plan to stop building.” There are many brand new apartment buildings being built throughout the city, he said. While many of those are beneficiaries of the city’s tax assessment deferral program, they will ultimately boost the city’s taxable grand list once they phase fully onto the tax rolls. “It looks like people are really building and investing in New Haven,” he said. “I think that there will be a time when the tax-exempt list goes down to 50 percent [of the total grand list], where it was 15 years ago.”

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posted by: Clarity on March 12, 2020 8:21am Here is a thought… Stop selling properties to Yale!!!

posted by: MotiS on March 12, 2020 9:14am A key point not discussed here is PILOT (Payment in lieu of taxes), a program set up by the State that pays cities and towns a percentage of the lost real estate tax due to hosting a regional asset. This applies to colleges, hospitals and State owned properties. Under former Gov. Rowland we were getting close to the statutory amounts set by the legislature. The range is from 80% of taxes due for hospitals to 50% of taxes due for State buildings. In order to close budget gaps in the State’s budget there have been major cuts to the program and we are funded well below the statutory limits. One way to engage in a positive manner our two largest employers and two largest non real estate tax organizations, Yale University and Yale New Haven Hospital, is for these two institutions lobby for full PILOT funding. They both have an extensive lobbying effort in Hartford and this can be a win win for the city and Yale & YNHH. A stronger New Haven can only help Yale & YNHH it is in their best interests to make this happen!

posted by: SparkJames on March 12, 2020 10:40am I think it’s inappropriate for Alderman Decker to be vaping during Finance Committee meetings.

posted by: Seth Poole on March 12, 2020 10:41am Now is the time to allow accessory dwellings, tiny homes and other housing innovations to be built and added to the grand list. This sweeping zoning reform is well overdue and will not be combated by homeowners who stand to improve upon their properties and increase their revenue streams. It will also help us deal directly with our lack of affordable housing stock and not begging developers and Yale to make concessions for poor people (ie. inclusionary zoning). Inclusionary zoning is a logical ask, but not a very ambitious goal. BTW- #saveGreenPass

posted by: LookOut on March 12, 2020 10:48am So, according to Pullen, the gap is growing NOT bc Yale is buying more property but because they are investing in their properties in ways that make them more valuable. I don’t see why we would want to discourage that (Bernie Sanders may see things differently). Yale increased the value of their properties by a rather modest 2.3%. What if we focused on how we might grow the value of taxable properties by more than 0.5%? (Hint: The biggest drag on the values of real estate in New Haven is the high mill rate)

posted by: Paul Wessel on March 12, 2020 11:16am Alders: What about David Cameron’s proposal for a voluntary PILOT: https://www.nhregister.com/opinion/article/Opinion-New-Haven-needs-a-PILOT-program-of-its-15116781.php

posted by: MotiS on March 12, 2020 11:33am @SparkJames LOL - he is not vaping he is just raising one of the mics to his mouth - but yes it does look like he is vaping!

posted by: 1644 on March 12, 2020 11:50am Here’s Yale’s view of its tax-exemption:

https://news.yale.edu/2016/04/21/faqs-state-legislation-tax-yale-s-academic-property I am perplexed as to why property owned by a for-profit entity, such as Winstanley, would not be subject to tax. My reading of Yale’s charter is that it exempts only Yale-owned property. If statutes have a greater exemption, they should be changed. I doubt commercial landlords rent to Yale for less than they charge commercial tenants, and even if they do, the city needs the revenue more than Yale needs the break on rent.

posted by: 1644 on March 12, 2020 11:58am MotiS: if the state were to increase PILOT payments, the funds would need to be shifted from somewhere. The state needs to honor its obligations to its retirees, including teachers. After the no-layoff period expires, we could shutter some state college campuses and stop subsidizing higher education programs that rarely lead to gainful employment (such as Urn Pendragon’s graduate polisci program). We could end the CTEIC, school construction aid, and the special school programs for failing schools, such as the commissioner’s program. Would you support such a funding shift?

posted by: Heather C. on March 12, 2020 12:07pm I agree with MotiS that Yale and Yale NH should lobby the State to fully fund PILOT. The State has underfunded this program for too long, forcing cities and towns to make up the shortfall from their property taxes.

posted by: mom247 on March 12, 2020 1:57pm While I am not a financial analyst I am perplexed that for any reason other than behind the scenes nefarious dealings why the state wouldn’t be anxious to change the laws in ref to PILOT funding. If the cities were able to recoup more funds from the currently non taxable institutions via a special tax, then the monies that the state gives (PILOT) wouldn’t be given to the cities and could be used to resolve some of the STATE DEFICITS? SO the reality of it is , places like YALE are in behind the scenes deals that make it such that those in power aren’t willing to make the necessary changes because it would probably lessen their personal wealth!

posted by: John Champion on March 12, 2020 3:51pm I agree with mom247. Yale and it subsidiary “non-profits” are actually major corporations benefitting from legal loopholes. It is hard to believe that the original dispensation from taxes afforded by the state constitution could have anticipated that a large multi-national corporation would bring a municipality and the state to the brink of financial ruin by their avaricious use of tax loopholes. Yale and the hospital wrap themselves in the cloak of philanthropy while deliberately avoiding their fair contribution to the jurisdiction they share with city and state residents. Simply adding the amount of money that Yale and the hospital have pocketed would produce more than enough to balance the budget and to decrease the mill rate. Yale is acting from a favored position enacted in colonial times and gloats over its ROI. Sooo charitable.

posted by: missthenighthawks on March 12, 2020 4:41pm Why don’t we just stop providing services to tax-exempt properties? No police response, no fire response, no FD medical response, no public works services to fix sidewalks, street lights, etc.? Maybe their students and staff aren’t allowed to access government office services. Maybe the parking meters on their streets cost a little more. Maybe broken traffic lights, crosswalk buttons, benches, and bus stop shelters, get moved to the bottom of the repair list behind Dixwell, Newhallville, and Whalley. Maybe that would get their attention.

It might happen anyway because we may not be able to afford those services ourselves.

posted by: obsrvr on March 12, 2020 7:38pm Another thought: Tax Yale.

posted by: Kevin McCarthy on March 12, 2020 8:13pm 1644, the tax exemption statutes (primarily CGS Sec. 12-81 et seq.) are a mish mosh. In some cases, the exemption is tied to ownership. For example, property owned by federal government is tax-exempt. In other cases, the exemption is tied to the use of the property, e.g., property used for a public purpose. Several types of property owned by for-profit entities are tax exempt, e.g., several types of real and personal property owned by manufacturers. Having said that, I too am unclear about the Winstanley exemption. IMO, the personal property Yale owns in the Winstanley buildings is covered by CGS Sec. 12-81. But Winstanley presumably owns the real property, and I don’t see the statutory exemption for it. I’m sure there are lots of smart Yale lawyers who can show me the error of my ways.

posted by: 1644 on March 12, 2020 9:36pm Kevin McCarthy: Well, a lot of tax-exempt property is tax exempt regardless of state statutes. Federal property is tax exempt because the sovereign cannot be taxed without its consent. The supremacy clause protects federal property from state taxation. Yale’s academic properties are exempt because of its charter, which is protected by the contracts clause, and so cannot be changed by the state without Yale’s consent. mom247: As per above, the state cannot change the university’s tax status without the university’s consent. As far the hospitals, the state just entered into an agreement with the hospitals to maintain their property tax-exempt status for seven years.

https://www.ctnewsjunkie.com/archives/entry/20191218_overwhelming_support_for_seven-year_hospital_settlement/

https://www.ctnewsjunkie.com/archives/entry/20191206_state_hospitals_reach_agreement/

posted by: Kevin McCarthy on March 12, 2020 10:24pm 1644 you are of course correct on the Supremacy Clause. But the federal exemption is also in state statute. And Yale property is exempt for the reasons you describe. But if Winstanley owns the building, how is it, as distinct from its contents, Yale’s property?

posted by: 1644 on March 12, 2020 11:51pm Kevin McCarthy: I do not know. All I can think of is that the city agreed not to tax Yale used floors when the building was in the concept stage. The original plan called for Yale to use several floors of a smaller building. The city is not shy about giving away tax abatements “to make the numbers work” even when the public purpose of the project is dubious.

BTW, I was wring about the Montgomery v. Branford case. The Supreme Court ruled that since the fee of the land was owned by the First Society, and rents used for the propagation of the Gospel, per a 1702 statute, the Society could not be taxed, but neither could the long-term tenant, at least on the value of the land owned by the Society, even though the tenant did not use the land for a public purpose.

https://casetext.com/case/montgomery-v-branford-1

posted by: ISeeRacism on March 13, 2020 7:53am The Board of Aders should pass a law requiring Yale to pay property taxes. They can do it! If they don’t pay, foreclose. Simple.

posted by: Elmcitydude1 on March 13, 2020 8:57am Learn to live within your means. Many people don’t get annual increases, and manage to put aside money for their retirements, live well, and enjoy the occasional vacation. As a city, New Haven will be collecting MORE taxes (income) than the year before, because the taxable property has increased. Learn how to control your spending - because the reality is this is just an attempt to shift “blame” to Yale so that Elicker can go ahead and raise taxes on everyone else. The time to speak up is now, and say no to city government taking advantage of us. Elicker promised he was going to make difficult decisions, and has already shown how he will do it. On the back of taxpayers by raising taxes. What he should be doing is Cut the Police Department, Cut the Fire Department, Control their OverTime spending, and have someone actually look at the finances of the Board of Education which are highly suspect, and laced with cronyism.

posted by: obsrvr on March 13, 2020 9:05am Yes, tax Yale. A thought, an idea whose time has come. Here is what law professors have said about Yale’s arguments against it quoted in the New Haven Register:

“As lawyers and professors who practice and teach community and economic development, land use, state and local government, and constitutional law, we have examined Yale’s constitutional concerns and conclude that they are significantly overstated. The legislature is fully empowered to clarify, by legislation, that university property on which certain commercial activities occur is not exempt from real estate taxation. In fact, we believe the legislature has the authority to go substantially further than the proposed legislation in providing for the taxation of university property,” the 11 professors argue in a letter sent Monday to State Senate President Martin Looney and State House of RepresentativesSpeaker Brendan Sharkey. The group includes four current Yale law profs — Munner I. Ahmad, Jonathan Brown, Amy Kapczynski, and MichaelJ. Wishnie — as well as a former faculty member there, Robert Solomon (who currently teaches at the University of California). “Yale’s primary contention – that the language of pending legislation is unconstitutional – is without merit,” they wrote.

posted by: 1644 on March 13, 2020 4:58pm obsrvr: The letter referenced in the Register,

https://www.nhregister.com/connecticut/article/Law-professors-Tax-changes-for-Yale-11330695.php

seems mostly nipping about the edges of what is “commercial” activity. The activities engaged in are, however, no different than those engaged in my state schools, all of which also maintain their property tax exemption. I am sure Mansfield would be interested in taxing UConn laboratories if UConn patented discoveries made in those laboratories, and generated income from those patents.

posted by: Kevin McCarthy on March 13, 2020 8:37pm 1644, going back to your comment last night, that is a plausible scenario. But the state Supreme Court has noted that “First, statutes that grant exemptions from taxation are a matter of legislative grace [sic] that must be strictly construed against the taxpayer. Second, any ambiguity in the statutory formulation of an exemption must be resolved against the taxpayer.” Plastic Tooling Aids Laboratory, Inc. v. Commissioner, 213 Conn. 365, 369 (1990). (I haven’t shepardized the case, but would be surprised if it has been superseded.) If Winstanley in fact owns the real property, I don’t know that the city has the statutory authority to grant an exemption. ISeeRacism et al. the BOA cannot simply “pass a law requiring Yale to pay property taxes.” At a minimum, this would require a change in state law and probably the state constitution. FWIW, I have no connection to Yale; I’m a Cornellian.

posted by: THREEFIFTHS on March 13, 2020 11:03pm You all keep crying and talking about Yale University’s tax-exempt properties.Most of these Ivy League Universities across this country own tax-exempt properties.Take a look. Ivy League Universities or Real Estate Kings? The net worth and impressive real estate assets of these Ivy League A-listers prove that they can be both.

Harvard now owns more land in Allston than in Cambridge.

Yale University is New Haven’s largest landlord.

Yale is the largest employer in the New Haven area.

Yale University owns an Apple Store.

Princeton University owns over 60 acres of land in Texas.

Princeton University owns roughly 160 nearby residences that can be purchased by eligible faculty and staff.

The University of Pennsylvania is Philadelphia’s largest private employer.

Columbia University has spent $6.3 billion on the new Manhattanville Campus expansion.

Cornell University has real estate interests in 24 states and 4 foreign countries.

Dartmouth College maintains a portion of the Appalachian Trail.

Brown University owns an Insomnia Cookies, housed in a historic building near the school. (Insomnia Cookies was founded by a student at the University of Pennsylvania) https://www.reonomy.com/blog/post/ivy-league-universities-or-real-estate-kings N.Y.U., Columbia Make A Mint on Real Estate Private universities, especially N.Y.U. and Columbia, are engaged in “real-estate empire building,” Ms. Brower said.The problem comes, according to City Project, when these private institutions buy property and take them off the property-tax rolls, depriving the city of funds to pay the Police Department, the Fire Department, the public schools https://observer.com/2006/05/nyu-columbia-make-a-mint-on-real-estate/ Part One

posted by: THREEFIFTHS on March 13, 2020 11:15pm Part Two. How NYU Plans To Expand In The Village: The Struggle For The Superblocks. The plan

By 2031, NYU intends to add 6 million new square feet to the university, in chunks spread out around Manhattan, Brooklyn, and possibly Governor’s Island. Of that, 2.45 million square feet of expansion — or nearly half the total — is imagined in the form of 4 new high-rise buildings and a swath of below-ground development, all penciled into an area that encompasses roughly six square blocks.

Look how Columbia University’s is buying up Harlem Columbia Buys Harlem Building For $33M, Report Says

The building is located blocks away from Columbia’s Harlem expansion campus on West 125th Street and Broadway. HARLEM, NY — Columbia University will acquire a full-block property in Harlem that’s located minutes from its expansion campus in a deal valued at $33.6 million, according to reports and city records. The Ivy League school is buying 3,300 Broadway — located between West 133rd and 134th streets — from the family of the late self-storage business owner Nick Sprayregen, Commercial Observer first reported. The deal was recorded with the city earlier this month. https://patch.com/new-york/harlem/columbia-buys-harlem-building-33m-report-says Who are the biggest landowners in New York City? Columbia University easily owns more addresses than any other private entity in New York City. In fact, the university’s 206 properties easily trump both second-place finisher NYU, which owns 95 addresses, and for the purposes of comparison, the New York Public Library, which has 72—almost a third as many. Read the rest of the list.Like I said a lot of you will not be able to afford to live here and will be gone. https://www.residentmar.io/2016/05/27/biggest-landowners-nyc.html

posted by: obsrvr on March 14, 2020 7:24am Not crying, suggesting a solution: tax Yale. Yale was granted a tax exemption to teach students, not run businesses and impoverish the city of New Haven. Other business owners do not enjoy tax exempt status. This is unjust. When the law is unjust in America we can change it to make it more just, all it takes is lawyers, time, and the support of the voters. Tax Yale.

posted by: 1644 on March 14, 2020 8:33am obsrvr: FYI, Yale still educates students, more than ever, both on the undergraduate, graduate, and professional levels. Much of Yale’s expansion is due to the expansion of its student body, particularly the new colleges. In large part, this expansion was due to an equalitarian desire to make Yale accessible to more people, admitted hundreds more to the College every year. The other aspect of Yale its its research, particularly in life sciences. All of this is for the betterment of mankind. Yes, its is run with a business-like approach, i.e., an eye on the bottom line. When institutions spend more than they get in revenue, they eventually go out of business. Think of St. Raphael’s Hospital, rescued from bankruptcy by YNHH, or the Church of the Redeemer, or the Q House. The university itself ran deficits in teh 1970’s and 1980’s, with resultant degradation to its physical plant and reductions in employee head-count and academic offerings.

posted by: obsrvr on March 14, 2020 12:55pm If you see it as a choice— all Yale does for the betterment of mankind, OR Yale pays its fair share to its home town that allowed it to amass its great wealth— then I say you are selling Yale short. Yale can do both, but not without some persuasion.

posted by: 1644 on March 14, 2020 2:20pm obsrvr I was responding to your claim that Yale should pay taxes because it no longer educated students, but, instead, was a business no different from any other business, and therefore should not enjoy a tax exemption. As for Yale’s wealth, initially, yes the college was supported by the state. Its great wealth, however, came after direct state support was severed. The biggest donations have come from New York, drawing wealth from throughout the country and now the world, and spending it in New Haven. Yale location in New Haven is single biggest negative, teh reason why most of my secondary school classmates chose to attend other schools. As for New Haven’s poverty, it is not caused by Yale. New Haven is poor for the same reason Bridgeport, Waterbury, New London and Hartford are poor: the exodus of industry and the bourgeois to the suburbs and to other states and countries. Today, changing bourgeois tastes give New Haven an opportunity to be less poor. Yet, New Haven is resolutely closing to resist gentrification and wants to make poverty a requirement for much of its housing. As far as “fair share” is concerned, “fair” has no objective meaning. What is fair to one may be unfair to another.

posted by: THREEFIFTHS on March 14, 2020 4:12pm posted by: obsrvr on March 14, 2020 7:24am

Not crying, suggesting a solution: tax Yale. I do not disagree that yale should pay taxes.My point is just crying is not going to get it.