New York

‘The Untouchables’: How Columbia and N.Y.U. Benefit From Huge Tax Breaks

As Columbia University puts the last touches on its brand-new campus in Harlem, it has reached a milestone: The university is now the largest private landowner in New York City.

In a city where land is more valuable than almost anywhere in the nation, the school now owns more than 320 properties, with a combined value of nearly $4 billion. The growth has helped it stay competitive within the Ivy League and meet its broader ambitions to become a global institution.

By many measures, those ambitions have also helped lift the city around it, attracting higher numbers of students, producing new jobs and boosting New York’s reputation as an international center of knowledge.

But as Columbia has expanded its footprint, it has also become more of a drain on the city budget because of a state law more than 200 years old that allows universities, museums and other nonprofits to pay almost no property taxes.

The law saves Columbia more than $182 million annually, according to an analysis by The New York Times. The amount has soared from $38 million just 15 years ago as the university has bought up more properties and their value has increased.

Columbia’s property tax savings, which are a fraction of its $14.3 billion endowment, far exceed the tax breaks granted to many high-profile commercial developments, including large-scale sites like Hudson Yards. They are 50 percent larger than those at Yankee Stadium and greater than the combined tax deals for Citi Field and Madison Square Garden.

Even as Columbia has swallowed up more land, it has taken fewer students from New York City. Since 2010, the number of city students enrolled in Columbia’s undergraduate ranks has declined by 37 percent.

Nearly every state has property tax exemptions for nonprofits, including universities, which are exempt from paying taxes on their academic buildings and dormitories. (Universities, including Columbia, pay tax on properties they own that are not used for educational purposes.)

But they are often contentious, and the seven other Ivy League universities pay some property taxes on those buildings or voluntarily pay millions of dollars every year to their local governments and school districts.

Not one university in New York City does, including two of the nation’s wealthiest institutions, Columbia and New York University. N.Y.U., with its sprawling campus in Greenwich Village, had property tax savings of $145 million this year.

“I call them the untouchables: I can’t think of anyone who has been willing to take on this issue,” said Harvey Robins, who worked for Mayor Edward I. Koch and Mayor David N. Dinkins and has followed the issue of tax exemptions for universities. “It’s really important that we begin a conversation finally about who pays what and who subsidizes whom.”

A Columbia University spokeswoman, Samantha Slater, pointed to $170 million in contributions the university had pledged to the community near its campuses starting in 2009, saying the investments “have been a model for similar investments by other universities.”

“The effect is the same — forging partnerships with the city and local organizations to invest in the economic development of the community,” she said in a statement. She did not respond to specific questions about the institution’s property tax savings and whether it had considered making annual payments to the city.

The debate may have been muted in New York because the city has other major revenue streams, such as Wall Street. Columbia has also spent more than $2 million over the last five years to retain some of the city’s most prominent lobbying firms, who meet with officials, including the mayor, on a number of issues, including its real estate interests.

But with financial challenges looming, a growing number of city and state officials are re-examining the longstanding exemptions for private universities. Property tax revenue accounts for more than 40 percent of the city’s total tax collections.

Columbia’s contribution probably would be small in the scheme of the more than $31 billion the city collects every year. But it is also significantly more than some of the expenses that city leaders haggled over during budget negotiations this year. Programs serving inmates at the troubled Rikers Island jail complex were cut, for example, and the budget for free preschool for 3-year-olds was reduced.

In the coming year, federal pandemic funds — which the city has leaned on to shore up public school budgets and other services — are drying up, even as the city says it expects to spend billions to manage an influx of migrants from the southern border. Mayor Eric Adams has asked city agencies to cut their budgets by 5 percent by November and has said the Police and Fire Departments, among others, will need to slice overtime.

Gale Brewer, a councilwoman and former Manhattan borough president, said she was among those the university has lobbied in recent years, mostly in connection with faculty housing. She said she was not sure why city officials have not asked Columbia and N.Y.U. to make annual payments.

“They have a very powerful board, they talk to the mayor,” she said. “I think it should be looked at, particularly in the years coming up. If you look at the budget deficits, they’re massive.”

For nearly a century, Columbia University’s campus was confined to a core area in Upper Manhattan.Credit…Geo. P. Hall & Son/The New-York Historical Society, via Getty Images

‘Civic project’ or ‘land grab’?

The state’s tax breaks for nonprofits date to 1799, long before Columbia and other higher education institutions became vast enterprises with billion-dollar endowments. At the time, the country’s first universities were primarily connected to religious denominations and were deemed charitable enterprises.

Columbia opened in 1754 and moved in the early 20th century to its core Morningside Heights campus, where it confined itself for nearly a century. In 1968, it abandoned its move to construct a gym on the edge of Harlem — a project that was derided as “Gym Crow” — after enormous protests. Then, in the early 2000s, Columbia administrators, led by its president at the time, Lee C. Bollinger, said the university could no longer remain competitive without a larger campus.

To help Columbia expand, New York State condemned land in 2008 in the West Harlem neighborhood of Manhattanville and used eminent domain to seize properties for the university. The university made promises to be a good neighbor and hire local workers.

“There was a time when Columbia really turned its back on where it was located,” Mr. Bollinger said in a 2006 interview with The Times. “I wanted to take exactly the opposite approach.”

Mr. Bollinger, who declined to comment for this article, told community leaders and neighborhood groups that the university had changed since the 1968 upheaval.

Lee Bollinger, the president of Columbia when it began its expansion, promised the university would work closely with the community.Credit…Fred R. Conrad/The New York Times

A lawsuit briefly halted the Bollinger plan because judges agreed it was not a “civic project.” Nick Sprayregen owned self-storage warehouses in West Harlem and fought Columbia’s efforts to buy his properties. “This is a really nothing more than a land grab of the most extreme type,” Mr. Sprayregen said in 2007. He died in 2016.

A higher court allowed the project to go forward. Columbia moved several dozen residents to a 12-story condominium building and gave them $7,000 each.

As it expanded, the university said that it spent at least $600 million with local firms, many of them owned by women and people of color, for construction, maintenance and repairs at its campuses — approximately 16 percent of the total it spent during that time period.

The university has also paid out about $104 million of the $170 million it pledged to the community — to local organizations, an affordable housing fund and city agencies like the Parks Department. The university also said it had spent more than $100 million in upgrades to local infrastructure since 2009 and that it would soon pay to replace two escalators at a subway station on 125th Street.

“Columbia continues to prioritize engagement with our local community — from Morningside Heights to Harlem, Washington Heights and beyond,” Ms. Slater, the Columbia spokeswoman, said in a statement. “We focus on meaningful investments that provide local jobs and economic opportunity, along with sustainable community partnerships.”

Maritta Dunn, the former chairwoman of Community Board 9 who lives across the street from the new campus, praised it. “It gives the local community a nearby pretty park with trees, benches and tables,” she said.

But some residents said the university ultimately hired few local residents, overlooked local companies for much of the work and has not been as welcoming to neighbors as promised.

“It didn’t happen the way I thought it should have happened,” said Walter J. Edwards, the founder of the Harlem Business Alliance whose company, Full Spectrum, helped renovate a 1920s building on the new campus. “If you are displacing us, give us something.”

Altagracia Hiraldo, who runs the Dominican Community Center, said she had hoped for more, including the chance for neighborhood nonprofits like hers to work on campus.

“They forgot about us,” Ms. Hiraldo said.

Since the expansion, Columbia’s new properties in West Harlem have more than doubled the market value of the neighborhood, and they are now valued at $644 million. The centerpiece of the campus is the Jerome L. Greene Science Center, a massive glass and steel structure. Additional buildings are under construction, including a 34-story residential tower for graduate students and faculty.

Because Columbia took over properties that had been paying taxes, the city now collects half the annual property taxes that it collected on that land in 2008, The Times found.

Jerome Furman, a counselor at East Side Community School, has had students accepted to every Ivy League college except Columbia. Credit…Amir Hamja/The New York Times

Taking more space, but not more students

Local public schools have questioned Columbia’s commitment to its surrounding community. As recently as 2010, a quarter of Columbia’s undergraduate students came from New York City: 2,236 students. By 2022, that number had decreased to 1,416, or about 15 percent of the student body.

Several administrators at local public schools said that the university, which has been vocal in supporting diversity and affirmative action, has shown minimal interest in recruiting local students, especially children from low-income families.

Its overall student body is 7 percent Black and 15 percent Latino, and 22 percent of students receive Pell grants, which are aimed at low-income students. The racial breakdown is similar to other Ivy League universities; a higher share of Pell-eligible students attend than at some of its peers. (Columbia declined to share demographic data for its New York City students.)

Jerome Furman, a counselor at East Side Community School in the East Village of Manhattan, where about two-thirds of students are low income, said he has had students accepted to every Ivy League college except Columbia in his seven years at the school.

He said his calls and emails about college fairs or students who apply go unanswered.

“The relationship has been nonexistent,” Mr. Furman said.

Columbia would not say how many New York City public school students are enrolled, but said that the number had increased in the past five years and that students from 45 of the city’s public high schools entered Columbia last year.

Fred Raphael, the college and career counselor at Boerum Hill School for International Studies in Brooklyn, where a majority of students are Black or Latino, said that acceptances have become so rare that he doesn’t see Columbia as a realistic option, even for his highest-performing students.

“If New York is such an asset to them,” he said, “then it makes sense to make sure that New York students are represented in a real capacity in the student body.”

Other urban Ivy League universities declined to share enrollment from their home cities, except for Brown University, located in Providence, R.I. A Brown spokesman said on average between 20 and 30 undergraduates from Providence public schools enrolled in a given year — slightly more than from comparably sized cities outside Rhode Island.

Other major universities in the city have a larger percentage of New Yorkers. At Fordham University in the Bronx, 23 percent of undergraduates come from New York City, a percentage that has been stable for the last decade. At N.Y.U., about 17 percent of undergraduate students are New York City residents.

Like Columbia, N.Y.U. has sought to transform itself into a national and global powerhouse. It has been expanding since the 1980s and recently began to build out itscampus, for the most part on land it already owned, including a 23-story glass and steel academic building in the Village that cost $1.2 billion to construct. After community backlash, the expansion has been scaled back, but the university will pay no property taxes.

“I would bet my life that they are nowhere near the end of their growth,” said Andrew Berman, the executive director of the nonprofit advocacy group Village Preservation.

An N.Y.U. spokesman pointed to the contributions the university makes to the city, including its students who assist in public school classrooms and its relatively large Higher Educational Opportunity Program, which provides college access for low-income New Yorkers. It also noted that the majority of its graduates stay in New York for work and that its thousands of employees pay in excess of $100 million in payroll taxes.

“We recognize the budget challenges the city faces. Nevertheless, we feel the charitable status that derives from N.Y.U.’s educational mission — and the attendant tax policies — is not a one-way exchange,” said an N.Y.U. spokesman, John Beckman. “We are deeply appreciative of those policies, but we also take some humble pride in the many, many ways, small and large, that N.Y.U. contributes to the city’s well-being and its economy.”

N.Y.U. built a 23-story glass and steel building in Greenwich Village for $1.2 billion as part of its expansion plans. It pays no property taxes.Credit…Amir Hamja/The New York Times

New York’s exceptional exceptions

New York is among 49 other states with property tax exemptions for private, nonprofit entities, which supporters say allow them to provide crucial social, economic and cultural benefits to their communities. In the case of universities, they conduct often costly research and public-policy studies and employ people who pay income taxes.

But in other cities, officials have pressured universities to make voluntary payments, known as payments in lieu of taxes, or PILOTs, or similar annual donations. Even within New York State, other cities have charted a different course.

In upstate Ithaca, Cornell University started making annual payments decades ago that have now grown to $1.6 million and are expected to climb to $4 million in October.

Columbia has sought to maintain close ties to many of the people who might put pressure on it to contribute, spending more than $2.2 million since 2017 on firms that lobby city and state officials. The university said that the firms that it employs provided other services in addition to lobbying and spent most of their lobbying efforts on education, research and health care.

A spokesman for Mayor Adams, Jonah Allon, said that the city’s financial problems meant “every option is on the table to ensure we continue to fund city services we rely on.” But he did not directly respond to questions about whether the city had considered asking the universities to make voluntary payments.

Recently, calls for the universities to pay more have been growing.

After then-Gov. Andrew Cuomo proposed a $485 million cut in 2016 to CUNY, the city’s public university system, the union that represents its professors began calling for private universities to help offset the cuts.

“CUNY is the higher education institution that serves the working people of New York,” said James Davis, the president of the union, “and those same working people are effectively subsidizing these tax breaks for Columbia and N.Y.U.”

Assemblywoman Deborah J. Glick, a Democrat who represents an area that includes New York University’s Manhattan campus, has spent a decade questioning the tax exemptions. In a recent interview, the city’s comptroller, Brad Lander, praised the universities, but said they should “step up” to help CUNY.

“There’s just more urgency than ever,” he said.

During the 2021 mayoral campaign, candidates including Andrew Yang and Curtis Sliwa called for ending the property tax exemptions altogether.

But forcing the universities to pay property taxes would require lawmakers in Albany to change state law.

Zohran Mamdani, a state assemblyman who represents parts of Queens, has said he plans to try this year, with a bill that would end property tax exemptions for higher education institutions that own more than $50 million in real estate.

The only private universities that meet that threshold are Columbia and N.Y.U.

Liset Cruz and Emma G. Fitzsimmons contributed reporting.

This story was produced in collaboration with The Hechinger Report, a nonprofit news outlet that covers education. Hechinger is an independent unit at Teachers College, Columbia University.

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