Christine Stuart file photo
A bill that would pave the way for the city of New Haven to be able to tax some of Yale University’s property cleared its first hurdle Thursday when it was approved 28-22 by the Finance, Revenue, and Bonding Committee.

Rep. Roland Lemar, D-New Haven, said the bill seeks to clarify the difference between educational property and commercial property owned by the university.

“This would allow Yale to be treated the same as other institutions in Connecticut and across the country,” Lemar said. 

Yale, in testimony submitted to the state Finance, Revenue and Bonding Committee, said it already invests considerable resources and money in New Haven; tax exemption law has long been settled and the proposed bill is unconstitutional.

In a statement, Yale said it already pays property taxes on its commercial properties and is already the fifth largest taxpayer in New Haven. In addition, the university said it contributes to the community and helped create 60 companies attracting $1 billion in investment to New Haven.

“This legislation is a step backward,” the university said in a statement. “It would diminish Yale’s ability to invest in the community and discourage faculty from launching companies (or staying in New Haven). It is ultimately an attack on nonprofit colleges and universities that are among the best assets in Connecticut.”

Lemar admitted that the bill is controversial mostly because Yale’s tax exempt status is different than the tax exempt status of most universities. However, like those other universities, there’s no intention to tax educational buildings or dormitories, he said.

But Republican lawmakers like, Sen. L. Scott Frantz, R-Greenwich, said it’s a “slippery slope.”

He said he doesn’t believe Yale is profitable without its endowment. He said they operate at a loss every year and make voluntary payments to New Haven and do “incredible things” for the community.

Legislation that would allow the state to tax Yale University’s estimated $25.6 billion endowment was never called for a vote and is essentially dead.

But New Haven lawmakers and New Haven Mayor Toni Harp had been pushing for both pieces of legislation this session.

On the $25.6 billion endowment, Rep. Toni Walker, D-New Haven, said a levy of $78 million would halve the $135 million in cuts to higher education proposed by Gov. Dannel P. Malloy. Walker also has said that Yale’s tax exempt property in New Haven totals $2.5 billion, but the university currently pays, on a voluntarily basis, only about $8.2 million to New Haven.

Rep. Lemar said the voluntary payment amount is negotiated based on the amount of land holdings and student population.

Rep. Chris Davis, R-East Windsor, said if it’s such a great idea then he doesn’t know why the legislature isn’t carving out the rest of the constitutionally protected institutions.

“We’re taxing Yale University because that’s where the money is,” Davis said. “They are the largest employer in the city of New Haven and they own a large amount of real estate so this bill was carved out in a specific way just to target them.”

He said it sends the wrong message to Connecticut and the entire academic world.

Sen. Gary Winfield, D-New Haven, said he’s glad his Republican colleagues are concerned about what the people of New Haven want, but this is what the people of New Haven want.

When Winfield was running for mayor, he said he was confronted about the issue of taxing Yale everywhere he went.

“We’re not stopping them from making more money,” Winfield said. “Businesses pay taxes and they’re still able to make profits.”