Decades after the Board of Alders nixed Yale’s plans to build new colleges, city officials say that the Elm City will reap benefits from the two new colleges currently under construction.
The new colleges — slated to cost $500 million — have added $7.6 million to city coffers through building permit fees, an amount nearly equal to the total that the city brought in through permit fees last year. And while the $7.6 million is a one-time payment and Yale will not owe the city any other comparable sum to move ahead with construction, the influx of students from the colleges could stimulate the local economy, said City Hall spokesman Laurence Grotheer.
“There will be that many more students to frequent the city’s shops and restaurants,” he said.
Grotheer added that the new colleges could specifically produce increased sales tax revenue through more student shoppers and increased income tax revenue from flourishing local businesses.
While Grotheer said that the project may not bring any more direct revenue to the city, he also noted that Yale may owe the city additional fees to connect to the sewage system or to access fresh water from the Regional Water Authority.
Despite the potential benefits to the Elm City, Budget Chief Joe Clerkin said the city’s Finance Department cannot yet predict whether or not any portion of the Yale’s payment will be used up to ensure a balanced city budget, or if it will be funneled into the city’s “rainy day” emergency fund.
“At this point, I wouldn’t go beyond saying that we are going to balance the budget,” Clerkin said. “There are a lot more factors that will go into determining whether it will be a good fiscal year or a bad one.”
While the construction of the new colleges will be the largest building projects in the Elm City during this fiscal year, Clerkin underscored that the city relies on property taxes and parking revenue because both are recurring, while the gain from the permit fee is a “one-time revenue.” Yale does not pay property taxes to New Haven because University property is exempt.
Nonetheless, due to the 2005 voluntary payment agreement, Yale’s contribution to the city will increase as the total number of beds and employees on campus increases..
Clerkin said that the $7.6 million dollar addition to the general fund could also help alleviate some of the budgetary pressures that arise during a harsh winter. He said that the funding could potentially help pay for Fire Department overtime hours — a budget pressure the city faced last year. He also specifically cited snow removal as an area that could benefit from the additional funding, especially considering the unpredictability of winter weather conditions in the area.
However, Deputy Director of Operations of the Emergency Operations Center Rick Fontana said that he is optimistic that his center, which supervises snow removal in New Haven, would operate within the mayor’s proposed budget for snow clearing this winter.