I n March 2016, as New Haven struggled to balance its shrinking budget, Mayor Toni Harp joined alders and local unions calling for a State Senate bill to help fine-tune Yale University’s property-tax-exempt status. Universities and their medical centers are registered with the Internal Revenue Service as 501(c)(3) charitable nonprofit groups. Because of the public services that higher-education institutions provide to surrounding communities, their property holdings are exempt from taxation in all 50 states. The Connecticut bill, SB 414, would allow the state to tax university properties that generate $6,000 or more in annual income. Another bill, SB 413, which died in committee, sought to tax unspent returns on Yale’s endowment.
In this special report, we look at the role urban universities play — for better and worse — in their communities, new insights into the history and future of cities, and the barriers that get in the way of good research.
Over the past 40 years, Yale had become the single largest commercial power in New Haven, as part of a national urban economy largely driven by universities and hospitals. Harp celebrated Yale’s central role “in the city’s transformation,” but she warned that while cities rely “more and more on eds and meds,” New Haven leaders must “be clear as a policy matter about the fiscal impact of this transition.” New Haven felt the need to adjust its relationship with Yale University, which had gone from an influential urban stakeholder to a tax-exempt municipal powerhouse.
SB 414 did not pass, however, and New Haven continues to struggle with Connecticut’s multibillion-dollar budget deficit while its largest local economic entity remains tax-exempt. (Yale does pay tax on some properties deemed “clearly commercial,” such as stores on campus, and offers “payment in lieu of taxes,” voluntary contributions that make up a small fraction of the estimated taxes it would pay based on the assessed value of its properties.)
Municipalities across the country face a similar tension: They attempt to patch budget holes while watching the endowments and urban footprints of tax-exempt colleges and universities grow. These problems necessitate a sober look at the inflated role of higher-education institutions in shaping urban policy, planning, and economic development — at the rise of what I call “UniverCities.” The quaint notion of the ivory tower is dead, as city schools take on a baronlike stewardship over surrounding neighborhoods to help shore up their fiscal stability in times of economic change. Collectively, these institutions have taken a leading role in shaping the future of urban America. Indeed, urban universities and their attendant medical centers (“meds and eds”) stand as perhaps the most central, and yet profoundly underexamined, social force in today’s cities. The presumption that higher education is implicitly a public good has for too long distracted critics and scholars from getting to the heart of the matter: What makes universities good for our cities?
The enlarged influence of “meds and eds” over city life dates at least to the end of World War II. We are familiar with universities that supplied academic research for military application during the Cold War. The Massachusetts Institute of Technology has generally been the biggest university defense contractor in the country. Stanford used the defense-contract system to propel itself from a regional school into a science-and-technology powerhouse. Research for the Manhattan Project was conducted at the University of Chicago’s Met Lab. But in 1959 a group of city universities lobbied for the “Section 112 credits program” in federal housing legislation that helped make higher education the friendly face of urban-renewal projects across the country. These efforts demolished black neighborhoods and established white residential islands around urban campuses. In 1967 the University of Pennsylvania used the credits program to start displacing approximately 600 low-income and African-American families to build its University City Science Center, the nation’s first inner-city urban research park.
How are flourishing colleges acting in the public good when that public is paying for their economic competitive advantage?
Today, higher education’s tides of influence have spread far beyond the campus. Universities are now the dominant employers, real-estate holders, policing agents, and education and health-care providers in many major cities. The University of Southern California, for instance, is the largest private-sector employer in Los Angeles. Columbia University and New York University are two of the largest private landowners in New York City. The University of Chicago fields one of the largest private security forces in the country, with jurisdiction over 65,000 nonstudent residents on Chicago’s South Side. What happened?
In the middle of the 20th century, there was large-scale economic divestment from urban areas, followed by the flight of largely white urbanites. But starting in the 1990s, municipal leaders began competing to create an attractive “urban experience” to capture the consumer dollars of young professionals and empty nesters venturing back inside their borders. With the decline in manufacturing, the “bell towers” of higher education have become the new “smokestacks” — the signals of a thriving urban economy. In the process, city colleges and universities have recast themselves as institutions that can parcel and repackage “blighted” areas into “destinations” for a safe and profitable urban experience.
After Columbia announced its plans to build a new campus in West Harlem in 2003, President Lee Bollinger acknowledged the university’s fraught history with the neighborhood. He proclaimed, “Columbia is a different neighbor now,” publicly emphasizing the themes of partnership and collaboration. However, students and residents discovered that, starting in 2004, Columbia began working with the city’s Economic Development Corporation, an environmental-consulting firm, and the Empire State Development Corporation to manufacture a “neighborhood conditions” report. This report labeled the West Harlem/Manhattanville area “blighted,” which justified the use of eminent domain to take over and demolish properties on 17 acres of the neighborhood for a $6-billion research campus. In 2009 a court found the use of eminent domain unconstitutional and characterized the evidence for blight as “preposterous” and “egregious.” But the following year, New York State’s highest court upheld Columbia’s use of eminent domain and its plans forge ahead.
T he university has gone from one small, noble part of the city to serving as a model for the city itself. It is precisely the commercial amenities historically associated with “university life” — concerts, coffee shops, foot-traffic congestion, fully wired networking, high-tech research — that are being sold as a desirable urban experience. Residents have flocked back into cities looking for these university-styled urban experiences at the same time that rapidly shrinking state budgets have led universities to seek new ways to generate capital in the for-profit realms of labor, health care, and land control.
It may be the case that urban universities have been saved by gentrification, or are even the drivers of gentrification. Readers can draw their own conclusions. But what we can say with certainty is that at the same time universities were looking for new revenue, municipal leaders were seeking to remake their cities in the high-tech and high-density model of the university. UniverCities emerged when the interests of higher-education administrators, government officials, business leaders, and young professionals converged in the new service-and-information economy.
In the past, urban-renewal schemes attempted to push poor and nonwhite residents away from campus neighborhoods through primarily residential development. The irony, today, is that colleges and universities are left with few amenities to sell and little commercial development — a problem when it came to attracting what a University of Chicago student called higher education’s most “precious set of imported individuals,” its students. Now the urban development of impoverished neighborhoods has been handed over to the for-profit arm of higher education. This convergence between money-hungry colleges and the attractiveness of “university life” for new urbanites has given rise to UniverCities.
The urban-planning model of UniverCities provides needed capital to institutions of higher education. University-based urban planning is also celebrated for creating a vibrant kind of public life that attracts wealth-creating entrepreneurs and the workers they employ. In 2009 promotional material in an airline magazine championing economic development in Ithaca, N.Y., went so far as to tout colleges and universities as key weapons for counteracting what it called, with no racial irony, the “bright flight” of the creative class from America’s biggest cities. Everyone wants to build a UniverCity.
In 2006, Phoenix passed a $223-million bond to build Arizona State University a downtown campus, with the hopes of converting undergraduates into a ready-made consumer base to energize urban retail and nightlife. Cornell University collaborated with Technion-Israel Institute of Technology and won a 2011 international competition to build a campus in New York City, hoping to spark a boom in the local high-tech sector. Furthermore, the growing faith in higher education as an urban growth engine has gone global. Consider the audaciously named Education City, in Doha, Qatar, or the controversies surrounding NYU’s franchising of its university brand in Shanghai and Abu Dhabi.
Many, like the “prosperity expert” Richard Florida, celebrate colleges’ and universities’ capacity to spark neighborhood vitality by providing museums, lectures, and public-safety protections while also creating new economic opportunities. The University of Pittsburgh, Carnegie Mellon University, and the city government came together to transform an abandoned steel mill into the Pittsburgh Technology Center, a site for advanced academic and corporate research. Saint Louis University instituted the Hometown SLU mortgage-loan-forgiveness program for employees and opened the boutique Hotel Ignacio in the newly revitalized Midtown Alley district. Even during the Great Recession, urban leaders all over the country rushed to pay Richard Florida’s consulting firm up to $250,000 for tactics hoping to transform their location into a potentially lucrative “Creative City.”
Despite all the triumphalist rhetoric surrounding higher education’s expansive reach across American cities, black and Latino communities that surround campuses are left especially vulnerable. These neighboring communities of color frequently sit in zones of relatively cheap and sometimes abandoned land, and hold little political influence. Richard Florida, for instance, has since pulled back on his grand claims, after facing vigorous critiques that an increased creative class can, in fact, increase inequalities.
To be sure, higher-education institutions can deliver positive urban outcomes, but a central question remains: What are the costs when colleges and universities exercise significant power over a city’s financial resources, policing, employment, and real estate?
Higher education’s noneducational investments in real estate, policing, and labor can carry negative consequences for neighborhoods of color. Urban schools have become islands of wealth amid a sea of poverty. And this uneven geography rapidly gives way to an extension of the campus as a planning model for larger swaths of the city. The result? Poorer neighbors are pushed to the periphery of “meds and eds” prosperity. Large-scale university acquisitions of prime real estate (such as in New Haven, Philadelphia, New York City, and Chicago) lead to housing and land values that skyrocket beyond the reach of community members. The University of Southern California pushes ahead to replace the ancient University Village shopping center with a $900-million complex of stores and dormitories. As related changes quickly follow, including a nearby Expo train line, residents watch landlords convert family-friendly dwellings into student-oriented rentals with rates increased by almost 50 percent.
Many of these same residents may be shunted into the low-wage sectors of higher-education labor: janitors, cooks, groundskeepers, and other kinds of support staff. Harvard wields its $38-billion endowment to continue rapid campus growth into the Allston-Brighton neighborhood, while its food-service workers recently went on strike to protest low wages and rising health-care costs. South Side Chicago residents championed the extension of campus-police jurisdictions into their embattled neighborhoods, but “security,” it turned out, largely meant protecting white students amid increased complaints of racial profiling and harassment. Black students at USC have alleged excessive force and racial profiling by the LAPD.
Univercities are taking over, and yet we fail to examine the consequences of their embracing an increasingly for-profit approach to their urban surroundings. A growing body of work, including Derek Bok’s Universities in the Marketplace (Princeton University Press, 2003), Henry A. Giroux’s University in Chains (Routledge, 2007), and Jeffrey J. Selingo’s College (Un)Bound (New Harvest, 2013) has examined the state of universities today. Soaring tuition costs, staggering student debt, and the inroads of business interests and the defense industries seem to confirm fears of a “corporate university.” While insightful, few of these works turn their eyes beyond the campus walls to scrutinize higher education’s nationwide expansion across our cities. Our blind spot to the rise of UniverCities comes largely from the assumption that higher education, while hypnotized by corporate power, is still an inherent public good, most clearly marked by its tax-exempt status for providing services that would otherwise come from the government.
A public-good paradox arises: Nonprofit status is precisely what allows for an easier transfer of public dollars into higher education’s urban developments with little public oversight or scrutiny. Colleges and universities pay virtually no taxes on their increasingly prominent downtown footprints. They also reap the benefits of police and fire protections, snow and trash removal, road maintenance, and other municipal services while shouldering little financial burden. Homeowners and small-business owners ultimately carry the weight of inflated property taxes caused by urban campuses, and the cost of rental properties skyrockets.
Such unfair taxing rates caused residents in the historically black neighborhood of Witherspoon-Jackson to sue and win an $18-million settlement from Princeton University in 2016. Residents argued that while local property taxes increased, the university maintained its exemption for buildings where research had generated millions of dollars in commercial royalties. The public-good paradox creates a lucrative higher-education “shelter economy,” in which tax-exempt status helps generate significant private profits with little public benefit. Donors’ gifts to endowments are tax-deductible, the investment income earned by endowments is tax-free, and so higher education has a competitive edge over businesses that pay taxes in, say, biotech or property management.
One plaintiff in the Princeton case described the university as “a hedge fund that conducts classes.” We must no longer evaluate colleges and universities simply by their stated aim of knowledge production and dissemination. They have become rapacious pro-growth behemoths that discuss students as consumers, alumni as shareholders, and the world beyond the campus walls as either prime real estate or a dangerous threat to their brand.
They also oversee a vast payroll of white-collar and low-wage contingent workers. They maintain cheap workshops where exploited graduate students secure lucrative patents for corporate research. Campuses expand across cities, often choosing to bank land, awaiting its appreciation, rather than invest in services and infrastructure that would aid the local community. Higher education is a key growth machine in today’s cities because it has been given the keys to drive the urban economy forward by reorganizing urban space to serve its institutional desires as much as or more than its educational interests.
Caricatures of colleges as ivory-tower bastions of tenured radicals and young “snowflakes,” out of touch with reality, abound. But higher education’s footprint across the nation’s cities tells a different story. How are flourishing colleges acting in the public good when that public is paying for their economic competitive advantage? Has the very notion of the public good been perverted when it is used to justify multimillion-dollar tax-exempt endowments, an enormous contingent and low-wage labor force, the elimination of affordable housing in campus neighborhoods, and increased racial profiling?
Colleges and universities are where we should be able to pose and begin to answer those tough questions. Yet while universities set themselves the task of solving humanity’s most difficult problems, they have failed to question their own impact right outside their gates.
There is reason to hope for a better ending to this story. Activism against higher education’s urban expansion goes back at least to the 1960s, when residents and students in New York City led protests with the shout “Gym Crow!” after they learned that Columbia University planned to build a gymnasium in Morningside Park that would serve as a physical barrier between the campus and Harlem. More recently, students, workers, neighborhood residents, and even municipal leaders have found innovative ways to rally against higher education’s growing hunger for control over today’s cities. In 2012 the college-heavy city of Boston asked nonprofit groups with more than $15 million in tax-exempt property to volunteer 25 percent of the property taxes they would owe if not exempt (though many of the institutions involved, including Harvard, have fallen short in their contributions).
At the University of North Carolina at Chapel Hill, the University of California, and many places in between, students have joined forces with campus workers to demand union recognition, living wages, and better health care. Since 2013 the Campaign for Equitable Policing has been fighting to ensure just treatment and end racial profiling in the expanding jurisdiction of the University of Chicago Police Department. Students continue to fight alongside residents against Columbia’s use of eminent domain and NYU’s rewriting of zoning laws to control large sections of West Harlem and Greenwich Village, respectively.
A new city is emerging before our eyes. City campuses sit at a critical crossroads between their educational mandate and their economic footprint. If colleges and universities are going to be the new company in our “company towns,” then campus stakeholders, neighborhood residents, and city leaders must be at the table, in an equal way, for transparent discussions about how higher-education institutions can best serve as a public good.
Davarian L. Baldwin is a professor of American studies at Trinity College, in Hartford, Conn. He is working on a book version of this “UniverCities” research.
