Providence, R.I., calls on Brown University to pay property tax

Brown University would owe Providence about $38 million per year in property tax if it weren't a nonprofit. (Photo Credit: CC BY-SA/chensiyuan/Wikipedia)

Providence, R.I., needs money, and Ivy League Brown University seems like a natural target for property tax payments. However, Brown’s long-held status as a tax-exempt nonprofit has shielded the university, Providence’s largest land owner. Mayor Angel Taveras has singled out the university for “failure to sacrifice,” reports the Wall Street Journal.

What Brown could do for Providence

Taveras has reportedly raised taxes and fees on Providence residents and business, renegotiated labor contracts and closed four public schools in efforts to close a $22.5 million budget hole for the fiscal year that ends in June. In lieu of property tax that Providence cannot legally collect, the mayor has urged Brown University to make additional voluntary payments to the City of Providence. He has stated that he will approach the state legislature if negotiations with the university fail.

Currently, Brown pays Providence about $4 million per year, which consists of $2.5 million in voluntary payments and $1.6 million in lease fees for land not used for educational purposes. Taveras seeks $40 million more from the university of the next decade, doubling Brown’s payments.

Brown is willing to pay more

Brown’s media relations department has noted that the university is willing to give Providence more money, but there has been no small amount of dispute over the $40 million figure. The university owns 200 total buildings in Providence, valued at over $1 billion. Potential property tax has been estimated at $38 million annually, according to city officials.

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Brown University’s $2.5 million endowment lost approximately one quarter of its value between 2008 and 2009, and it was only in fiscal 2011 that the school began to show significant return, registering 18.5 percent.

City services for colleges are costly

Experts close to the situation note that college campuses are expensive for cities to extend services. Providence, which used to depend upon manufacturing jobs, now relies upon hospitals and colleges as economic engines. As it stands, city officials claim that half of the land upon which such organizations are situated is tax-exempt. Providence currently spends over $36 million annually providing service to non-profits that hold over $3 billion in tax-exempt property.

‘Significant minority’ pay voluntarily

According to visiting fellow Daphne Kenyon of the Lincoln Institute of Land Policy in Cambridge, Mass., a “significant minority” of colleges and universities extend voluntary payments in lieu of property tax. However, six of the eight Ivy League schools do. Yale University pays New Haven, Conn., over $8 million to make up for a lack of property tax. That is in addition to $4 million paid on non-exempt property, according to New Haven officials.

Sources

Associated Press

Huffington Post

Wall Street Journal

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