You asked whether a five-story building built and owned by a developer is eligible for a full or partial property tax exemption if four of its floors are used by a college for student dormitories and the first floor is rented out for retail space.

As you know, the Office of Legislative Research is not authorized to give tax advice or legal opinions and this report should not be considered as either.

It does not appear that any part of such a building would be eligible for a property tax exemption. Although a portion of the building is apparently used exclusively for educational purposes, the property is neither owned by, nor held in trust for, a corporation organized exclusively for scientific, educational, literary, or charitable purposes, as the exemption law requires.

State law exempts entities organized exclusively for educational purposes from paying property taxes on any real property that (1) they own directly or hold through a trust; (2) generates no profits for the educational institution’s officers, members, or employees; and (3) is used exclusively for educational purposes (CGS § 12-81(7)). If only a portion of the property meets these conditions, that portion is exempt, and the rest of property is taxable (CGS § 12-88).

State courts have found that tax exemptions “must be construed strictly and the party claiming the exemption bears the burden of proving entitlement to it. ” (Fanny J. Crosby Memorial, Inc. v. Bridgeport, 262 Conn. 220 (2001)). Assessors must determine if an organization and its property meet the conditions for an exemption.

College dormitories are generally exempt from property tax. If the college owned the building in question, it appears that 80% of it (four of its five floors) would be tax-exempt. But because a developer owns it, the entire building is likely taxable.

In 1984, the Connecticut Appellate Court ruled that Hartford was correct to deny an exemption to the University of Hartford for an apartment building it leased from a bank for student housing. In that case, because the university did not own the building, the court found it was not necessary to even look at the question of whether the building was used exclusively for educational purposes. The court found that (1) property taxes are normally assessed against an owner, (2) the university’s lease did not constitute an ownership interest, and (3) the bank that owned the building did not meet the statutory exemption criteria. (University of Hartford v. City of Hartford, 2 Conn. App. 152 (1984)).

JL: ts