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According to a Lincoln Institute study in 2009, universities in Boston were sitting on more than $12 billion in real estate, which if taxed would have generated more than $340 million for the city. Through voluntary contributions in lieu of taxes, colleges and hospitals in Boston sent the city about $14 million that year. Tom Murphy, the former mayor of Pittsburgh, says this is the predicament cities who play host to major research universities invariably confront. "You want the universities to grow, you need the jobs they provide," Murphy says. "But as they grow, you lose property off the tax roll."

Gifted with its huge endowment, Yale has created an urban center that would not exist without its money and influence. Each summer, parents, prospective students and tourists flock to the city to lay eyes on an institution older than the country itself, and to spend money in the Yale-controlled business district. This is the New Haven that nearly all the visitors see. But it is not the only New Haven. Once a manufacturing hub where the rifle maker Winchester Repeating Arms employed more than 15,000 workers, the industrial core of the city has been hollowed out over the last 40 years. Poverty has followed and persisted. Currently, 1 in 4 New Haven residents lives at or below the poverty line. 

For many years, as the town struggled and the university grew, Yale remained an island seemingly cut off from the ills of the city. A statewide fiscal crisis in the late 1980s began to change that. New Haven was on the verge of bankruptcy in part because the state was underfunding aid meant to compensate cities for the taxes lost to large nonprofit landowners like Yale and the university's hospital. Douglas Rae, who teaches management and political science at Yale and was chief of staff to the mayor in the early 1990s, helped broker a deal where Yale would voluntarily pay New Haven a fee each year to offset the cost of public services that benefited the university. It wasn't so much a partnership; it was the university throwing the city a lifeline that would in turn help Yale. "The university," Rae says, "was willing to make modest concessions to the city, but wanted wherever possible to justify it through direct self-interest that alumni would understand." 

Yale was slowly acknowledging that its fate was tied to New Haven. The "Yale bubble" was pierced for good in 1991, when a varsity lacrosse player, Christian Prince, was murdered walking to his apartment near the campus. "The Prince murder," Rae says, "was the event that caused Yale University and the Yale Corporation to say we have to give the highest priority to the community around us."

Former Yale President Richard Levin took office in 1993, shortly before DeStefano became mayor. They each served nearly 20 years. And it was under the leadership of the two that town and gown would enter a marriage of sorts. 

 

Under Levin, the university began to aggressively extend its real estate footprint both commercially and in residential real estate. Yale purchased the financially challenged Chapel Street Historic District and became landlord to the businesses in that district. It began to extend its reach into the residential neighborhoods through handsome housing subsidies offered to faculty and staff. Yale offers $30,000 in cash assistance to employees who buy in the city, with an additional $5,000 for those who purchase homes in the long-blighted Dixwell neighborhood. In all, the program has invested $31 million since it was launched. "Certainly, there are pros and cons when the university and its students and faculty expand their footprint in the city," says the Lincoln Institute's Adam Langley. Yale employees buying homes are contributing to the city's tax base. But the investment has come at a cost. 

The housing cash incentive has helped fuel gentrification in places such as East Rock, a traditional Italian enclave where rising home prices and corresponding spikes in property taxes have pushed out working class white residents. The Dixwell and Dwight neighborhoods have also felt the impact of Yale's homeownership program in the form of displacement.

DeStefano and Levin's transformation of New Haven resembles events in other cities with powerful universities. The neighborhoods surrounding the University of Pennsylvania in Philadelphia have seen similar shifts in the housing market thanks to home-buying subsidies and major investments by Penn in the nearby University City neighborhood. Housing prices have tripled there in the last 15 years, while the black population in University City has declined by more than half. 

As Yale has reshaped -- and in many ways, revived -- its host city, it has left a gaping hole in the city budget. Thanks mostly to the university, a full 54 percent of all the property in New Haven is tax exempt. Student housing, academic buildings, research facilities and Yale's sprawling hospital complex all escape taxation. Despite these exemptions, Yale is still the fourth-largest property taxpayer in New Haven, because of the size of its retail presence. But of the $3 billion in real estate Yale owns, it pays property tax on roughly 3 percent -- the commercial space it rents out in the city. Since 2014, Yale has invested $700 million in new construction, all of it tax exempt.

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