PILOT cuts may deter profits from New Haven

JULIA TIERNAN/YH FATAL ATTRACTION: Professors like the Elm City's affordable housing, but would they still choose New Haven if property taxes were hiked?

When Yale professors head home, they just want a place to unwind--and for many, that place is New Haven.

But the effort to encourage Yale faculty to live in the city may lose some momentum in the near future. In a move that could increase city property taxes and thus affect the city's economic recovery, Connecticut Governor John Rowland reduced state funding for New Haven through the Payments In Lieu Of Taxes (PILOT) program in his proposed state budget drafted in early March.

Through PILOT, New Haven currently receives partial reimbursement for the revenue it would collect from Yale properties were they not tax-exempt. The state paid New Haven approximately 77 cents for every dollar it lost on tax-exempt property last year, but this year it plans to pay the city approximately 60 cents for every non-taxed dollar.

If this reduction passes, New Haven may find itself pressed to come up with sufficient funds to run the city, which could force the city to increase property taxes and decrease school funding when it balances its own budget. City Comptroller Greg Brown explained that if the proposed state budget passes this June and the state offers the city no other compensation, New Haven could lose eight to nine million dollars this year.

City officials would not confirm that taxes would go up in the event of a PILOT reduction. "[The city] could cut expenditures," Brown said, refusing to reveal a specific game plan. "Right now we have no plans to raise taxes," Mike Kuczkowski, spokesman for New Haven Mayor John DeStefano, Jr., said. But a tax hike remains possible. When asked whether the city would increase property taxes, Brown replied, "We'll be looking at ways to bring in money."

If taxes are higher, Yale could have more difficulty drawing faculty to residential neighborhoods near campus. Yale currently offers the Homebuyers Initiative to help staff of modest incomes purchase homes in the city--though professors generally fall into higher income levels and therefore tend not to participate in the program. Yale Vice President of New Haven and State Affairs Bruce Alexander, BK '65, explained that getting Yale faculty and staff to live in the city bolsters New Haven's urban renewal efforts. "Home-owners have a stake in neighborhoods," Alexander said. "This makes for a stronger New Haven community." Jon Daigle, Yale's manager of residential properties, added, "Yale-affiliated people add vitality by supporting local businesses and by walking around the streets. It's good for the economic vitality of the city."

School of Management Professor of Finance and Real Estate William Goetzmann, CC '52, GRD '57, who has lived in New Haven since 1984, sees harmful consequences if PILOT reductions occur. "New Haven has just begun to recover from years of economic recession," he said. "This is the time for the state to help New Haven towards economic recovery, but it's cutting back in subsidies."

Deputy Director of Public Affairs Tom Conroy hoped the PILOT rate would not be lowered, but he played down the potential difficulty that higher property taxes could pose in attracting Yale faculty members to the city. "I don't believe that anyone would chose to live or not live in New Haven as a result of an increase in property taxes as long as it was not too different from those of other places," he said. Still, Craig doesn't want to see the PILOT rate cut. "The municipalities that receive PILOT funds deserve and need that money," he said. "It would be unfortunate if the PILOT funds weren't available, because they are put to good use."

History Professor Gaddis Smith, PC '54, GRD '61, who currently lives in an historic house on Bishop Street and has lived in the city on and off for the past few decades, contended that whether or not taxes increase, reducing PILOT would impact Yale's attempt to bring faculty to Elm City residences. "To attract people to New Haven, the city needs to raise the quality of jobs and quality of education," Smith said. "But with the reduction in PILOT, this will hurt education quality. Traditionally when a town is poor it raises taxes, and its school quality is low."

Despite the potential detriment to New Haven's residential housing efforts if PILOT reductions take effect, Yale faculty are generally enthusiastic about living in the city. Tim Bays, a lecturer in the philosophy department, said that he enjoys living in the city because of the short walk to campus and the low apartment rates. "If you live in the right neighborhoods, New Haven is a very livable place," he said. Goetzmann added, "I believe my fellow academics will be stunned by the quality of housing of New Haven and how you can afford great houses at comparatively low prices."

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