Yale Property Tax Bill Dies in Connecticut

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

By Martha W. Kessler

May 5 — Legislation that would have revoked the tax-exempt status of certain parcels of land owned by Yale University failed to pass before the Connecticut Legislature adjourned its 2016 legislative session.

If the measure had been adopted, it would have made Connecticut the first state in the U.S. to tax academic property of nonprofit colleges and universities.

The legislation (S.B. 414) wasn't taken up by lawmakers during May 4, the final day of session, and isn't expected to be included in a fiscal year 2017 budget proposal that will be considered during a special session scheduled for May 12.

An amendment was introduced May 4 that would have eliminated language revoking the tax-exempt status of certain properties and instead called for a study of the issue, but because the underlying legislation wasn't brought up for a vote, the amendment wasn't considered.

Yale Thanks Governor

Yale had adamantly opposed the bill, saying earlier this year that passage would diminish the school's ability to invest in the community and discourage faculty from launching companies or staying in New Haven. Yale also said the bill was unconstitutional, and if it was enacted, the university would be forced to “defend its constitutional right of non-taxation” (2016 Weekly State Tax Report 27, 4/29/16)).

In an e-mail to Bloomberg BNA May 5, Yale said it is encouraged that the General Assembly chose to set aside the bill and is particularly grateful for Gov. Dannel Malloy's (D) “constructive engagement in this issue.”

“The proponents of S.B. 414 maintained that they have only sought a clarification of how technology transfer affects property taxes,” Yale said. “The University hopes that a dispassionate, fact-based review of other universities’ approaches to property taxes in the context of technology transfer will provide that clarification.”

“We have also said throughout this process that the spirit of partnership that has prevailed in New Haven for more than two decades enabled us to achieve far more for New Haven than either the City or Yale could achieve on its own,” the university continued. “We look forward to affirming that spirit of partnership.”

To contact the reporter on this story: Martha Kessler in Boston at mkessler@bna.com

To contact the editor responsible for this story: Ryan Tuck at rtuck@bna.com

For More Information

Text of S.B. 414 is at http://src.bna.com/eJv.