Yale unfazed by proposed tax increase

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Photo by Brianna Loo.

In 2012, Daniel Juárez MUS ’02 decided that the benefits of living in New Haven outweighed the costs of the city’s relatively high property taxes.

Juárez – who is the assistant director of communications and outreach for the World Fellows Program – questions whether others would make that same decision if property taxes go up by 3.8 percent next year, as Mayor Toni Harp requested in the budget she submitted to the Board of Alders in March. Under her proposal, tax payments would increase from $40.80 to $42.36 for every $1,000 of property value. But while individual taxpayers like Juárez might consider the city less attractive because of high taxes, Yale University – one of the five highest taxpayers in the city – does not intend to decrease its investment in taxable properties in the city just because of a tax hike, University officials said.

Although Mayor Harp’s tax hike could increase Yale’s tax payment by over $100,000, University spokesperson Mike Morand ’87 DIV ’93 said that the tax increase would not alter Yale’s investment strategies.

“Tax hikes are nothing new,” University Properties spokesperson Carin Keane wrote in an email to the News. She added that its tenants of commercial properties pay their proportionate share of the taxes and that lease agreements are revised annually to reflect changes in the city’s property taxes.

With over 80 retail units and 500 apartment units in the areas surrounding campus, University Properties – the office managing Yale’s commercial and real estate holdings – makes the University one of the city’s five highest taxpayers. Although it does not pay taxes on educational buildings, Yale shells out over $4 million in taxes for its commercial and real estate properties.

When taxes increase, therefore, tenants see an increase in overhead costs. Tom Maloney, who has run the Chapel Street clothing store Raggs for the past 30 years, said that tax increases in overhead costs typically trickle down to affect prices for consumers. If taxes increase next year, he said, clothing prices might increase slightly as well.

Maloney said that the question that business owners must answer is whether his location at the heart of New Haven’s downtown is worth the higher property taxes. For Maloney, it is.

“I think New Haven is a good place to do business, and I don’t think that businesses thinking about moving [to New Haven] would be deterred by higher taxes,” Maloney said.

Juárez purchased his home in Beaver Hill through Yale’s Homebuyer Program – an initiative that subsidizes homeownership in the Elm City for Yale employees. Without the subsidy, Juárez said that New Haven’s high property taxes would make purchasing a home in the city less viable.

Juárez said he has several friends who have decided against moving to New Haven precisely because of the already-high taxes. One of them instead opted for Madison, a suburb with much lower tax rates, he said.

“The proposed tax hikes would probably be a $150 increase for the average New Havener,” Juárez said. “I don’t think 150 bucks a year is going to make me move out of New Haven right now, but I do think it will make things look more unattractive for potential movers.”

SOM Professor Doug Rae told the News earlier this month that if property taxes get too high, people will start selling their homes, ultimately causing a “death spiral.”

The new budget will go into effect on July 1.

A previous version of this article mistakenly referred to the Beaver Hill neighborhood as Beaver Creek.

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