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Yale President Defends Ivy League School’s Tax-exempt Status

NEW HAVEN, Conn. ― Yale’s president defended his school’s tax-exempt status Wednesday as Connecticut lawmakers consider allowing New Haven to tax some university buildings.

A bill before the state legislature would allow real estate taxes on buildings at the Ivy League school that house activities generating more than $6,000 in annual revenue.

An amendment would exempt buildings that generate revenue from athletics and entertainment, such as Woolsey Hall, which hosts numerous concerts, and the Ingalls Ice rink.

But Yale, which has an annual budget of $3.2 billion, said the bill also would allow lawmakers to tax any building in which academic research occurs if that research results in an idea that becomes a commercial application.

President Peter Salovey said the bill would discourage top researchers from coming to Yale and have a negative impact on the region’s biotech companies and other research-based businesses, many of which were spawned by Yale research.

The legislation “will discourage investment in Connecticut,” he said. “It’s bad policy, and I believe it’s bad for New Haven’s future.”

The legislature already has rejected a bill that would have allowed the state to tax Yale’s $25.6 billion endowment.

State Senate President Martin Looney, D-New Haven, said the property-tax legislation is needed to update a 19th-century law and help distinguish Yale’s commercial real estate holdings from its educational real estate holdings, which would remain tax-exempt.

He said Salovey’s comments are “alarmist and untrue” and that nothing in the bill would discourage research at Yale.

“The exemption that Yale has was created in a context when technology transfer of academic research was not even contemplated,” he said. “What we are looking to do is make sure that Yale is operating under the same standards the institutions such as Stanford and MIT operate under in their states.”

Salovey said the school already pays more than $4.5 million in real estate taxes on its commercial properties and more than $8 million annually to the city in voluntary payments in lieu of taxes.

“I think the thing we can do for the city and for the state that is potentially more lucrative with respect to revenue creation is create jobs ― whether we create jobs here at the university or whether university research is spun out of the university and located in commercial spaces that pay taxes and are run by employees whose income is taxed at the state level and buy homes in New Haven and pay property taxes on them,” he said.

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