Yale is currently engaging in preliminary discussions with New Haven officials over a possible increase in its voluntary payments to the city, which would be the first major change in the University’s financial relationship with city government in over a decade.
Sparked by the city’s recent fiscal difficulties, the talks are still in an early stage, according to officials at both the University and City Hall. But while University Vice President and Director of New Haven and State Affairs Bruce Alexander said Yale was “open to the notion” of an increase in its financial contributions, neither he nor Mayor John DeStefano Jr. said how much the additional payments would be if an agreement is reached.
Both city and University officials said over the past month, talks concerning the contributions have emerged out of a broader dialogue over Yale’s role in New Haven.
“The city administration has had an ongoing discussion with the University on this matter, and has not come to any conclusion,” DeStefano said. “I don’t think anything is imminent, but we’re talking about it.”
Alexander said New Haven’s budgetary troubles — which have resulted in three tax increases in three years — have pushed the topic of voluntary contributions to the forefront.
“I think that the issues in New Haven are no different from issues across the country,” Alexander said. “As resources are constrained from time to time, a community needs to pitch in to help make ends meet.”
Alexander has played a primary role for the University in the talks, although Yale President Richard Levin said he has been “keeping close” to the issue.
Yale’s financial impact on city government has long been a sticking point in town-gown relations, since New Haven relies heavily on property taxes and Yale — like other Connecticut colleges and universities — is largely exempt from such levies. Yale does, however, pay taxes and fees on property used for commercial purposes as well as about $2.2 million per year for fire services, and New Haven is reimbursed by the state for about 65 percent of the money that would otherwise have been collected from tax-exempt institutions.
In 1990, when New Haven was also facing fiscal challenges, then-Mayor John Daniels reached an agreement with former Yale President Benno Schmidt Jr. under which the University agreed to voluntarily pay New Haven for fire services, submit the Yale Golf Course to taxation and offer short-term loans to the city.
As in 1990, the University’s tax exemption has recently come under increased scrutiny by some local politicians. In July 2003, the Board of Aldermen passed a resolution asking Yale to increase its payments to the city. Earlier this year, State Rep. Toni Walker co-sponsored a bill that would have modified the University’s tax status under state law.
But Alexander said the city’s budgetary difficulties — and not the political challenges — played a much larger role in Yale’s willingness to consider additional voluntary payments.
“Frankly, efforts to bring pressure on the University has a counterproductive effect, as you might expect, because we do so many positive things in the city that we don’t feel the need to respond when people approach us in a negative or adversarial way,” Alexander said.
At the same time, Alexander said the settlement of a new contract between the University and its two largest unions last year has helped make discussions on the topic of voluntary contributions more “productive.”
DeStefano said that while he intends to discuss voluntary contributions with other nonprofits in New Haven, the “principal discussions” have been with the University. While the city is home to several other large tax-exempt nonprofits — including Yale-New Haven Hospital, the Hospital of St. Raphael and Albertus Magnus College — Yale is by far the city’s largest private employer and property-owner.
Both DeStefano and Alexander said that while they expect any new payments to supplement the 1990 agreement, a potential framework for additional contributions has not been firmly established. The mayor has been an outspoken critic of Connecticut’s reliance on local property taxes, leading him to avoid any approach that would link voluntary payments from Yale to the value of its property.
“We wouldn’t necessarily want to tie it to a tax system that is problematic,” said top mayoral aide Robert Smuts ’01, who has been involved in the discussions