After announcing closing the 2014 fiscal year with a surplus, the city received an extra boost — $7.6 million in permit fees from Yale — on Tuesday.
The fees were paid to secure building permits for the construction of Yale’s two new residential colleges on Prospect Street. The $7.6 million will help to alleviate stress in the city’s budget, including the pressure of the upcoming winter, said City Budget Chief Joe Clerkin.
The money will be funneled into the city’s general operating fund, according to City Hall spokesperson Laurence Grotheer.
“This is good news for the University in that it can move ahead with its plans,” Grotheer said. “And the revenue is good for the city, too.”
Clerkin noted that this would be the largest single piece of revenue the city would receive from building permits this fiscal year. The $7.6 million nearly matches the $7.8 million the city collected in permit fees during all of last year. What is more, the fees from the new colleges are just over $1 million short of the $8.7 million total deficit the city saw in the 2013 fiscal year. Last month, Mayor Toni Harp announced that the city saw a surplus in the 2014 fiscal year.
Still, New Haven cannot rely on the boost Clerkin said. The city depends more on sources of revenue that are recurring, such as property taxes or parking.
“It’s a really big project, a great project, but in some ways it’s a one-time revenue too,” Clerkin said. “Projects of this scale just don’t happen every year.”
The new residential colleges — which the University estimates will cost $500 million — are among the largest construction projects in Connecticut history.
Clerkin said that, with so many months left in the fiscal year, the New Haven’s finance department cannot foresee future costs. He added that the city cannot determine whether or not Yale’s permit fees will translate to a surplus that can be added to its “rainy day fund” — an emergency operating fund — in June. As of now, the city can only hope to balance its budget, he said.
Ward 4 Alder and Board of Alders Finance Committee Chair Andrea Jackson-Brooks agreed with Clerkin, saying she was not yet sure how the $7.6 million would be used.
The city was aware of Yale’s intention to move forward with construction, but the timing of the payment was uncertain, Grotheer said. Clerkin echoed Grotheer, saying that the mayor had projected $8 million in permit fee revenue for the 2015 fiscal year when drafting the budget in January because it was unclear when Yale’s project would materialize.
Later in the year, the Board of Alders added to the projected revenue, pushing it to $10 million dollars.
While the University plans to officially break ground on the colleges in February, work is already under way at the site along Prospect Street.