The legislature’s tax-writing committee Thursday approved a bill that would allow New Haven to begin taxing commercial property owned by Yale, but let die a controversial bill backed by the leader of the state Senate that would have allowed the state to tax the earnings of the Ivy League university’s multi-billion-dollar endowment.
Yale has opposed both bills.
Yale in recent years has become the landlord for dozens of nearby commercial properties along Broadway, Chapel Street and Whitney Avenue. While Yale has voluntarily agreed to pay about $5 million a year for those commercial properties to the city, they are under no legal obligation to do so given their tax-exempt status.
The bill approved by the Finance, Revenue and Bonding Committee 28-22 would clarify how much of Yale’s $2.5 billion in property the city could tax. It would not allow taxing any college-related property, including student dorms. The legislature’s nonpartisan fiscal analysts were unable to say whether the bill would result in more revenue for New Haven. If all of Yale’s property were taxed, it would generate $65.2 million.
“This bill seeks to clarify what those exemptions are, and it does so in a pretty reasonable way, which is to outline what the line is between academic and untaxed property and what is commercial property that is owned and operated by the university,” said Rep. Roland Lemar, D-New Haven.
A separate bill – backed by Senate President Pro Tem Martin Looney and Appropriations Committee Co-chair Toni Walker, both Democrats from New Haven – which would have required Yale to spend more of its endowment’s annual earnings or have those earnings taxed – failed to make it out of the committee before its deadline. That proposal drew national scrutiny, and Connecticut Gov. Dannel P. Malloy opposed it.
While the approved bill would impact only Yale since it applies to institutions that own property worth $2.5 billion, several Republicans voiced opposition, saying that it would pave the way for taxing other nonprofits.
“We all know this is going on a slippery slope,” said Sen. Scott Frantz, R-Greenwich. “Where do you draw the line?”
“It seems to be an attack on the nonprofit sector,” echoed Sen. Toni Boucher, R-Wilton.