NYC’s Largest Colleges and Hospitals Should Pay More Property Taxes

In 1799, Section 420-A of the Rules of Real Property Tax Administration (RPTL) was enacted in New York State, providing tax exemption of real property owned by certain nonprofit corporations and organizations such as religious, hospital, educational, or charitable based on certain use guidelines at a time when “government played a very limited role in providing services directly to citizens.” However, the justification for charitable institution exemptions weakened as governments picked up more of the direct responsibility for funding or providing services, but the model of exempting charities remained firmly in place. Over the years, the loss in taxes to the city’s coffers has continued to increase; and while “many of the more than 200 nonprofits focused on health care and education are small and not well endowed,” the study recently released by the New School’s Center for New York City Affairs calling for an amendment of the state’s constitution to allow the “city’s largest nonprofit colleges and hospitals with real estate that has $500 million or more in exempt market value to pay at least some of what could be collected on their sizable holdings.” New York State lawmakers proposed new legislation in December 2023 that would repeal the “tax exempt status of private universities that received real property tax exemptions of $100 million dollars or more during the prior fiscal year,” such as Columbia University and New York University which according to a December press release by the New York Times, have “expanded to become among New York City’s to 10 largest private property owners;” and saved $327 million on property taxes last year. However, the passing of any proposals to change the tax breaks given to charitable institutions would “require the approval of two consecutive Legislatures and then passage by a state referendum to change what is “enshrined into law by the New York State constitution” for 200 years.