Columbia and N.Y.U. Would Lose $327 Million in Tax Breaks Under Proposal

State lawmakers will unveil legislation on Tuesday that would eliminate enormous property tax breaks for Columbia University and New York University, which have expanded to become among New York City’s top 10 largest private property owners.

The bills would require the private universities to start paying their full annual property taxes and for that money to be redistributed to the City University of New York, the largest urban public university system in the country.

Columbia and N.Y.U. collectively saved $327 million on property taxes this year. The amount the schools save annually has soared in recent decades as the two have bought more properties, and the value of their properties has also increased.

Repealing the tax breaks would face substantial obstacles. The exemptions — which apply to universities, museums and other nonprofits — are nearly 200 years old and part of the state constitution. Overriding them would mean lawmakers would have to adopt the changes in consecutive legislative sessions. Then, voters would have to approve them on a statewide ballot.

“When the constitution of the state was written, there was no idea that such an exemption could apply to two of the top landlords in New York City,” said Assemblyman Zohran K. Mamdani, a Queens Democrat who is introducing the bill in the Assembly. “This bill seeks to address universities that have so blatantly gone beyond primarily operating as institutions of higher education and are instead acting as landlords and developers.”

The proposed constitutional amendment follows an investigation by The New York Times and the Hechinger Report in September that revealed that the city’s wealthiest universities were bigger and richer than ever before, amassing vast real estate portfolios that have drained the city budget.

The investigation also found that as Columbia has grown its physical footprint to become the city’s largest private landowner, it has enrolled fewer students from New York City.

A Columbia spokeswoman said university officials were reviewing the legislation. But she added that Columbia was a driver of the city’s economy through its research, faculty and students, and its capital projects, including $100 million in upgrades to local infrastructure since 2009.

A spokesman for N.Y.U. said that repealing the tax exemptions would be “extraordinarily disruptive” and that the university “would be forced to rethink much of the way we operate.”

“To choose two charitable, non-profit organizations out of the thousands in the state and compel them to be treated like for-profits certainly strikes us as misguided and unfair,” the spokesman, John Beckman, said in a statement. “We are deeply appreciative of those policies, which have been in place for two centuries, but we also take some modest pride in the many, many ways, small and large, that N.Y.U. contributes to the city’s well-being and its economy.”

All 50 states offer property tax exemptions for some private, nonprofit entities, which supporters argue are crucial so that these organizations can provide social, economic and cultural benefits to their communities. But in some cities, officials have pressured private universities to make voluntary payments, known as payments in lieu of taxes, or similar annual donations. Private universities often have billion-dollar endowments and charge annual tuition in the high five figures.

The legislation would only apply to Columbia and N.Y.U. and not other large private universities that own significant land, such as Cornell University in Ithaca. Lawmakers said that other universities would be excluded because their tax breaks are far lower than those of Columbia’s and N.Y.U.’s; the annual real estate tax exemption threshold would be $100 million.

“I don’t fault these institutions for pursuing their tax breaks and using the tax breaks to greatly expand their empires,” said State Senator John C. Liu, a Queens Democrat who is introducing the legislation in the Senate. “But this is a point where we have to look where all revenues are coming from and where all revenues are leaking. We have to stop those leaks.”

The city is facing a series of budget cuts to K-12 schools, libraries and police, among other programs, in part, Mayor Eric Adams has said, because of rising costs to care for an influx of homeless migrants.

CUNY, which is made up of 25 campuses throughout the city and which serves 225,000 students, has also been eyed for city cuts. Most of the university’s $4.3 billion budget is provided by the state, but earlier this year, the mayor proposed a 3 percent cut to the funding the city provides.

If the constitutional amendment were approved, the property tax payments would be directed every year to CUNY. That would make a significant difference in the quality of education students receive, said James C. Davis, the president of the Professional Staff Congress, which represents 30,000 CUNY faculty and staff.

“Would an additional infusion of operating funding affect retention and graduation rates?” Mr. Davis said. “Clearly the answer is yes. Even a relatively small amount of money would make a big difference.”

He noted that 80 percent of first-year CUNY students are graduates of New York City public schools, and a majority are students of color. Half come from families with incomes under $30,000 a year.

“If you’re talking about the city making a commitment to economic equity and social mobility,” Mr. Davis added, “there really is not a wiser investment than CUNY.”

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.