Brown University agreed to a deal with the city of Providence, R.I., that would double the amount the Ivy League college currently pays to the financially troubled city.
The agreement, announced by University President Ruth J. Simmons, came after many months of discussions with Providence Mayor Angel Taveras. The deal increases the university’s payments to the city to $31.5 million over 11 years. As a nonprofit, Brown is exempt from property taxes but has made more than $4 million in “voluntary payments” to the city. The school will pay $3.9 million over the next five years, a figure that will fall to $2 million from 2017-2022.
The city of Providence is in the midst of a fiscal crisis, and Taveras asked for help to stave off potential bankruptcy. In May 2011, Taveras called on nonprofit hospitals and universities to make additional payments of $24 million to help reduce a $110 million budget deficit. That would have effectively negated an agreement made in 2003. That plan, which Brown, Johnson and Whales, Rhode Island School of Design and Providence College signed onto, called for payments of $50 million over two years.
Before agreeing to the announced deal with Providence, Brown officials sought assurances from Taveras that the 2003 agreement would be honored, and that the school’s status as a tax-exempt institution would be preserved.
“Our agreement today builds on a history of commitment to Providence and Rhode Island by Brown,” wrote Simmons. “Together with our faculty, staff, students and area alumni, Brown contributes in myriad and significant ways to the vitality of Providence and Rhode Island.”
In exchange for their assistance, Brown will receive 250 on-street parking spaces on College Hill for use by Brown employees. The city also agreed to give Brown ownership of several streets adjacent to campus property.
Simmons ended her letter by addressing the relationships nonprofits have with cities. She mentioned that this has been a topic of great debate not only in Rhode Island, but across the country. “Such questions are valid and must be explored more thoughtfully and deliberately in the coming years to ensure that we are maximizing our substantial assets across the city and state.”
Payments in lieu of taxes are deals being struck more and more between nonprofits and local governments. Some 63 percent of nonprofits paid these kinds of fees. These have come in the form of “other payments” or specific taxes. For example, Washington, D.C. Mayor Vincent Gray in 2011 proposed a plan to implement a 6 percent tax on tickets to art institutions. Boston had also demanded payments from nonprofits.