City and University officials announce six-year commitment, increases to Yale’s voluntary contribution
On Wednesday, Yale and City officials gathered at City Hall to announce a $52 million increase in the school’s voluntary contribution over six years and other new initiatives that would channel Yale resources to the city.
Jessie Cheung, Staff Photographer
Yale and New Haven will launch several initiatives to build up the University’s commitment to the city, including an increase to Yale’s voluntary contribution, the establishment of a new Center for Inclusive Growth and a new expectation that the University will offset city revenue lost on properties it takes off the tax roll.
Officials gathered on Wednesday afternoon to announce the changes, which follow years of advocacy from unions and local organizations. Yale’s voluntary contribution is slated to rise $52 million over the course of six years, which will bring the total contribution during that time period to $135.4 million. The Center for Inclusive Growth will “seek to identify economic and social development initiatives that will bolster growth throughout our community,” according to a press release. Officials also announced that the stretch of High Street between Elm and Chapel Streets — which passes between Old Campus and Harkness Tower — will be redeveloped through Yale funding and guidance as a City-owned pedestrian walkway.
The commitment follows recent news that the University’s endowment has increased $11.1 billion to a total value of $42.3 billion in the 2021 fiscal year. At the same time, the city projected a budget deficit of $66 million for fiscal year 2021-22 before it received additional funding from the state and Yale. City officials and advocacy organizations have long called on Yale to increase its voluntary payments to the city, including an ongoing Yale: Respect New Haven campaign that has called on the University to pay the full amount of the tax break it receives for its nonprofit status.
“Yale and New Haven have a bond that has been tested by time and strengthened by shared purpose,” University President Peter Salovey said in a press release. “As a New Haven anchor institution and the city’s largest employer, the university is proud to do its part in building a community that creates sustained inclusive growth across every neighborhood in the city. New Haven is poised for accelerated growth with increased funding from the federal government, the state and the university.”
The University currently pays $13 million for its annual voluntary contribution to its home city. Yale will add $10 million per year to its voluntary contribution for the next five years and $2 million in the sixth year. Salovey said on Wednesday that this commitment will take effect during the current fiscal term, which runs from July 2021 to June 2022. The expected voluntary contribution for this period will be $23.2 million, according to the press release.
According to Henry Fernandez, executive director of the local nonprofit LEAP and head of the city delegation in joint negotiations with the University, “Yale’s annual contributions do not have anything close to them” under the new plan. He said that he hopes that this will set a “new standard” for institutions across the country.
“This is an historic moment for the relationship between the City of New Haven and Yale University,” Mayor Justin Elicker said. “Yale has contributed in many ways to the city, but with today’s announcement, Yale has committed to contribute more financially over the next six years than it has over the last 20 combined.”
Negotiations for the details of this new agreement took more than a year, according to Fernandez. They involved a large team of officials from the city and the University. Elicker said the “real lively dialogue” during the negotiations has helped build trust and understanding of each other’s goals and set the stage for future collaborations. He added that while there was no linkage to the new union contract deal, working on the union deal during the pandemic created “a spirit of mutual cooperation” that also helped to conclude the New Haven deal.
In addition to the specifics of the voluntary contribution and Yale’s property tax exemptions, both sides also focused on how to address long-term issues of inequity in the city. Fernandez said the work of the newly-created Center for Inclusive Growth could make progress toward this aim.
The Center will be established through an additional $5 million from Yale in the coming six years. Kerwin Charles, dean of the School of Management, will help manage the Center. Charles’ area of expertise includes wealth inequality and the consequences of housing bubbles.
Although the specific framework and programs for the Center are still under development, Charles shared his hope to engage both Yale affiliates and New Haveners in conversations about how to encourage sustainable economic development in the city. Elicker said that as the city experiences growth and launches new opportunities, the Center will also help guide policy and create opportunities for New Haven residents.
Salovey described the Center as “a collaborative center that will work on the problems and challenges of urban centers like the city of New Haven in the current age.” He said that the Center will also allow Yale students and New Haven students to serve as interns, research assistants and in other positions.
Another initiative of the agreement is that Yale will temporarily increase contributions should it build new property. For years, local organizations and politicians have objected to the University’s tax-exempt status. On Wednesday, officials announced that for properties taken off the tax roll in the next six years, Yale will offset some of the lost tax revenue through additional voluntary payments. The University will also offset the loss for any existing commercial properties that it converts into an academic space.
The new tax offsets will be in addition to the state’s Payment in Lieu of Taxes Program, or PILOT. Through the program, the state reimburses cities, towns and municipalities for the loss in revenue due to tax-exempt properties. President Salovey said that the reworking of PILOT last year, when the state legislature changed how municipalities receive aid for tax-exempt properties based on a new need-based formula, was “an enabling change.” It allowed the University to step up its contribution since Yale would not be the only player addressing the city’s financial challenges, he said.
Also as part of the agreement, the parties will establish a new public walkway in the center of Yale’s campus, on High Street between Chapel and Elm. The roadway will no longer be open to vehicular traffic other than emergency cars. Instead, that section of the street will be converted into a pedestrian-friendly walkway, similar to Wall Street. Yale will lead the walkway’s design, subject to the approval of the City Plan Commission and New Haven Traffic Authority.
Although Yale will fund the renovations and maintain the public space on High Street, the city will retain property rights. Speakers at the press conference emphasized the importance of welcoming all New Haveners into this new space, which is also intended to promote pedestrian safety in the area. Elicker said that keeping High Street in the public domain “sets the right tone that Yale is a part of our community.”
The four-pronged commitment is subject to a vote by the Board of Alders, for which a date has not yet been set, according to Board President and Ward 23 Alder Tyisha Walker-Myers.
After five years, Yale will pay an additional $2 million, rather than $10 million, to its baseline voluntary contribution.
At Wednesday’s press conference, Fernandez advised the mayor to “start negotiating” before they reach the sixth year of the agreement.
Fernandez called it, “The big red light in year six.” After the event, Salovey added that he expects the city and University to begin a new conversation in year five about what happens after the six-year period.
“The drop in year six is really kind of a reminder that we need to get down to business and do that,” Salovey said. “I fully suspect that will be done in good faith, and you will start hearing about that five years from now.”
Walker-Myers spoke about the importance of ongoing “uncomfortable” conversations between Yale and New Haven about community needs. She said the agreement’s most encouraging implication is that “residents finally have an opportunity to see that Yale actually heard what they were saying.”
“This is historic because we actually had unions, elected officials and community members all working together over a number of years saying, ‘Yale, please hear our cry,’” Walker-Myers said. “Yale stepped up and said ‘we’re hearing you, we’re listening’. But a partnership is not over once an agreement is signed. It goes far beyond that.”
Local activist groups — many of whom have spent years pushing for Yale to increase its contribution to the city — celebrated the announcement, but emphasized the importance of continued collaboration.
In a joint statement, Rev. Scott Marks of New Haven Rising and Barbara Vereen of Local 34 – UNITE HERE wrote on behalf of a coalition of local unions and advocacy organizations that “this campaign is decades in the making” and called the new initiatives “historic victories.”
“Members of our union and community coalition have marched, rallied, testified, risked arrest in civil disobedience, put signs in our yards, and have enjoyed thousands upon thousands of conversations with our neighbors,” they wrote in their joint statement. “Today’s announcement does not solve all our city’s problems, but it is a significant step in the right direction and a historic recognition that New Haven and Yale University’s fates are inextricably linked.”
In March 2020, 60 percent of New Haven’s grand list was tax-exempt.
This story has been updated with additional sourcing and details of the agreement.