Yale’s tax-exempt property value surges by nearly $700 million
Over the last six years, the value of New Haven’s tax-exempt property has risen — but the value of Yale’s has risen faster.
Michael Garman, Staff Photographer
The value of Yale’s tax-exempt holdings has ballooned by nearly 20 percent, or by roughly $690 million, since 2016, according to an estimate by New Haven tax assessor Alex Pullen.
In the same timeframe, the value of Yale’s taxable properties has also increased by around 28 percent to a total of roughly $161 million. But the University’s tax-exempt holdings shot up in value at a rate above that of the average New Haven tax-exempt property. Meanwhile, the value of Yale’s taxable properties climbed slower than average.
The new figures were released in the city’s property revaluation for 2021. A revaluation is an assessment of local properties’ official, taxable values, and it is meant to bring these properties in line with their actual market worth. The state requires that all properties are revalued every five years to reflect the changing market conditions.
The last time a revaluation was completed for New Haven was in 2016. In this latest assessment, New Haven’s taxable grand list, which includes all of the taxable properties in the city, grew by over 32 percent — from $6.7 billion five years ago to nearly $8.9 billion. The city’s tax-exempt properties, which include Yale properties and other properties, also increased by over 16 percent in value from $8.5 billion to $9.8 billion. Of the $9.8 billion valuation of the city’s tax-exempt properties during the latest revaluation, 4.2 billion — or nearly 43 percent — are owned by Yale University.
The value of Yale’s tax-exempt property has been an issue of contention in New Haven, especially among activists in the city’s unions. Both city residents and politicians have repeatedly called on Yale to increase its voluntary contribution to New Haven’s budget. A new town-gown deal introduced in November aims to alleviate the impact of Yale’s tax-exempt properties. For properties taken off the tax roll in the next six years, the deal stipulates, the University will offset some of the lost tax revenue through additional voluntary payments.
Yale is among New Haven’s top three taxpayers, Pullen said. But the University’s tax-exempt properties continue to make up around a quarter of all city taxable and tax-exempt property.
The citywide increase in value of tax-exempt properties during the reevaluation was 16 percent — four percentage points below the increase of Yale’s tax-exempt holdings.
“Yale’s properties went up in value. But that doesn’t mean they took anything off the tax rolls necessarily,” said Henry Fernandez, executive director of LEAP. “It’s that the areas where they are, the quality of the construction [and] the other things that have been built around them mean that their property values went up.”
In the past, New Haven has removed properties from the tax roll due to their purchase by the University. In the 2017-18 fiscal year, six Yale buildings were taken off the grand list. The change meant that the Elm City lost $3 million that year in potential taxes.
In October of 2019, questions over Yale’s tax-exempt status were a talking point in the year’s Mayoral race. Cynthia Netercut, director of special projects at the University Controller’s Office, wrote to Pullen that Yale “has backfilled and acquired” properties in New Haven “to provide stability in the market.” But Ward 7 Alder Eli Sabin, who then represented Ward 1, called the University’s removal of properties from the grandlist “short-sighted,” noting that the decision could lead to cuts to services across the city.
Pullen told the News that an increase in private construction happening near University properties could also be a factor for the rise in property value.
Pullen explained that part of the reason for the difference between Yale’s tax-exempt and taxable property increases is due to how tax-exempt property value is considered. Many of Yale’s properties are tax-exempt and for academic use, which will be valued differently than commercial properties. Taxable properties like commercial properties are valued based on their income, while tax-exempt properties like schools are valued based on their construction costs. For example, while the recently developed Schwarzman building does not generate an income, it can be valued based on its $150 million construction costs. Pullen said that while commercial properties took a bigger hit during the pandemic as businesses closed down or had fewer customers, the value of tax-exempt properties is not as affected.
According to the University, most of its recent developments since 2016 have been on Yale-owned property. Karen Peart, University spokesperson, said that the University added to the city’s taxable grand list when it created the retail space L.L. Bean in 2018. It also developed its nontaxable property such as the project to open the Science Building in 2019.
“Like any taxpayer, the University will pay taxes on its properties,” Peart said. “This will not impact our recent agreement with the City.”
While the new numbers would not affect the details of the agreement, they could affect how much Yale pays under the agreement. Under the Yale-New Haven 2021 agreement, the university agreed to voluntarily offset the city’s loss of tax revenues for any properties that Yale takes off the tax rolls in the next six years. The purpose of the agreement, Fernandez explained, was to ensure that if a property was taken off the tax rolls, it would not negatively affect the city, at least in the short-term. He added that if Yale decided to take a property off the tax roll after the latest revaluation, the amount that the University would have to compensate the city would now be higher than before.
Pullen expects the city’s Mill rate, currently a $43.88 tax per every $1,000 in property value, to fall this year. He said that this is the usual result of a revaluation, but it is too early to tell by how much the mayor and Board of Alders will decrease it.
“Even with the mill rate going down, you may still see tax bills go up in some neighborhoods, and some may be closer to what they paid last time,” Pullen said. “It is all going to be a function of how much your property went up and how much the mill rate went down.”
The last time New Haven did a revaluation in 2016, the city’s taxable grand list increased in value by around 11 percent.