Hacibey Çatalbaşoğlu (J.D. 2024, NYU), Note, Why Is University Housing Tax-Exempt?, 99 N.Y.U. L. Rev. 1721 (2024):

In this Note, I challenge three dominant theories behind property tax exemptions for university housing—the “Quid-Pro-Quo,” “Sovereignty,” and, what I call, “Oxbridge” theories—and propose that only undergrad housing should be taxexempt. My proposal would recognize the unique educational value of undergrad housing, help reduce town-gown tensions, and be easy to apply.

Introduction
Picture two charming Brooklyn brownstones side-by-side. They’re identical: They offer the same amenities, look the same, cost the same, and both house university students. But one is owned by the local Davenport University and the other by lifelong Brooklynite Benjamin Butler. Yet, come the end of the year, the City of New York can charge property taxes only on Mr. Butler’s brownstone. The students in both homes can use the city’s services—for example, they can all enjoy Central Park or, if they have kids, send them to Brooklyn Tech—but Mr. Butler’s tenants pay for the city’s services, through property taxes in their rent, while the university’s tenants don’t.

In 2018, one year into my term on New Haven’s city council, the Yale Political Union invited me to debate whether Yale should abolish its dorms, also known as residential colleges. I spoke in favor of abolition. Rather than cloister students in ivy-covered castles, I argued, Yale should turn its residential colleges into mixed-use real estate, with shops on the first floor and dorms on top. The retail would bring much-needed property taxes to a city with mostly tax-exempt land. In defense of the resolution, I speculated that Yale didn’t pay taxes on its residential colleges because each housed a classroom. And since classrooms have always been exempt from property taxes, I said, attaching one to a dorm let the university exempt the whole building. After the debate, the Yale Daily News corrected me: “[A]lthough Yale does receive tax exemptions for its student residences, it is not because the University holds one class in each college to exploit a nonexistent legal loophole.” Since then, I’ve wondered: Why is university housing tax-exempt?

This Note tries to answer that in five parts: Part I explains why property tax exemptions matter so much to cities and their residents. Part II dusts off the history of property tax exemptions for universities. Part III questions the exemption’s theoretical foundations. Part IV describes what courts look to when upholding exemptions for certain kinds of university housing. And Part V proposes that only undergrad— not graduate, staff, or faculty—housing should be tax-exempt.

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