Payne Whitney Gym, the Yale Repertory Theater and the Yale Center for Genome Analysis could all be subject to a controversial proposed state tax, according to University spokespeople.
S.B. 414, which aims to clarify how much of Yale’s $2.5 billion in properties across 12 state municipalities is taxable, moved forward by a 28 to 22 vote in the General Assembly’s Finance, Revenue and Bonding Committee last week. In an email to University management and professional staff April 8, Associate Vice President for State and Federal Relations Richard Jacob criticized the bill, calling the proposal a “dramatic departure from bedrock policy toward charities.” The email is another step in a series of attacks the University has lobbed against the bill, which surfaced to public attention in a March 22 hearing before the finance committee. While S.B. 414’s supporters say the bill seeks only to clarify which of Yale’s properties are commercial as opposed to academic and tax-exempt, the University has alleged that the bill would indeed tax academic property. In fighting the bill, the University has repeatedly cited its contributions to New Haven — many of which are voluntary — and stressed its tax-exempt status under state law.
“In Yale’s view, this bill misses the point,” Jacob wrote in the message. “Connecticut needs to grow its economy, and the partnership between New Haven and Yale shows that investing in education, neighborhoods and research creates jobs. Taxing Yale won’t create jobs.”
Jacob wrote that the University, in conjunction with groups such as the American Council on Education and the National Association of Independent Colleges and Universities, has recognized bills such as S.B. 414 as threats to independent higher education and to “Connecticut’s ability to attract partners for economic growth.”
As defined by the bill, commercial activities include any of the following occurring on University property: rents or other payments; fees collected for admission or use of any sports or entertainment facility; fees, charges or royalties for any goods designed, produced, manufactured; and fees or charges for any services rendered to the public or any for-profit entities.
Jacob told the News that S.B. 414’s proponents have cited the University’s Center for Genome Analysis and mentioned laboratories of faculty who are involved in launching start up companies as potential sources of tax revenue.
According to the state’s nonpartisan Office of Fiscal Analysis, the bill targets only Connecticut universities with real estate valued at $2 billion or more, effectively singling out Yale.
If the bill is passed, Connecticut would become the first state to tax the academic property of a nonprofit university, Jacob wrote.
Dixwell Alder Jeanette Morrison, who has backed the bill alongside the rest of the Board of Alders and Mayor Toni Harp, said the bill has been mistakenly perceived as an attack on the University. She and other supporters have stressed that the bill is not a new tax, but merely a clarification of current state law, which allows municipalities to tax commercial college and university property generating $6,000 or more income annually.
Before the finance committee voted on the bill April 7, Rep. Roland Lemar, D-New Haven, one of the bill’s most vocal supporters, said the bill would “absolutely” not tax Yale’s academic properties.
In preliminary notes released April 7, the OFA reported that if not for its tax-exempt status, the University would have paid $65.2 million in taxes to 12 municipalities in 2013, with New Haven receiving $62.8 million of that revenue. But the OFA was unable to determine how much of that $62.8 million would be from properties affected by the bill in 2013. Likewise, Jacob told the News that the University has not calculated the incremental property tax burden the bill would impose.
As of fiscal year 2015, the University had 171 taxable properties, paying $5.8 million in property taxes that year, according to the University Controller’s Office. Since 2008, when Yale paid a record $6.6 million on 193 properties, the University’s number of taxable properties has fluctuated between 166 and 193.
In his message, Jacob acknowledged that the bill would not touch how Yale pays taxes on commercial properties, such as the Shops at Yale on Broadway. Currently, the University pays $4.5 million annually on these properties.
Jacob told the News Sunday that the University continues to reach out to legislators and other interested parties. The University does not anticipate that the bill will pass, he said.
“Furthermore, the scope of Yale’s right of nontaxation has been upheld by the courts in five cases, including two Connecticut Supreme Court cases,” Jacob told the News. “Should S.B. 414 be enacted, we expect that the courts will uphold it for a sixth time.”
Other private institutions publicly against S.B. 414 include Connecticut’s Fairfield University and Trinity College.
In public testimony March 22, Yale graduate and undergraduate students alike testified in favor of the bill, alongside members of national labor union UNITE HERE and BoA members Fair Haven Alder Santiago Barrios-Bones and Beaver Hills Alder Evette Hamilton.
Yale’s charter was established in 1701.