PROVIDENCE — A city commission is developing a plan to have colleges, hospitals and other large tax-exempt institutions pay a greater share to the city, as recent data show the value of land held by nonprofits more than doubled since the start of the decade.

Tax-exempt properties in the city surpassed $8 billion of assessed value at the close of 2008 and accounted for 37 percent of the city’s $21.7 billion worth of property, according to the most recent city data.

That is more than double the figure from 2001, when tax exempts accounted for $3.8 billion in property and a nearly four-fold increase from 1998, when they accounted for $2 billion.

Universities, colleges and private schools led all categories of tax exempts with $2.1 billion of property. Municipal property, including offices and parks, came in second with $1.45 billion.

That category was followed in third by hospitals, with $1.36 billion. State property took up the fourth largest chunk of tax exempt property with $781 million.

Hospitals and colleges have historically been tax exempt, but, increasingly, residents and city officials have been calling for the largest of them to contribute more as the city faces cuts in state aid and loss of city revenue.

Mayor David N. Cicilline has argued that colleges and hospitals contribute, through various agreements, less than one percent to the city’s annual revenue, yet their tax exempt property represents a potential $88 million in revenue each year that the city cannot collect.

A City Council-appointed Commission on Tax Exempt Institutions has been meeting these past two months in an attempt to address the situation. Its next meeting will be later this month.

“There is universal agreement, even among the institutions, that they owe something –– that they are part of their communities,” Cicilline testified earlier this year as the state House and Senate Finance committee considered legislation to allow cities and towns to assess fees on large tax exempt institutions. “The only question is, What is the proper level of contribution and the system for making that calculation?”

The dramatic rise in the value of land held by nonprofits is typically explained by the acquisition of lands over the last few decades by nonprofit institutions.

Brown University’s purchase of property on College Hill and Rhode Island Hospital and Women & Infants Hospital’s purchase of property on the Southside to expand their campuses are among the most recent and visible examples.

But the greater part of the growth is due to the overall increase in real estate values, according to City Director of Administration Richard I. Kerbel.

“The period from the early 1990s until the last two years was a period of significant increases in the value of real estate,” says Kerbel. “Certainly, the tax exempt institutions have built new properties and acquired properties during this time, but the city has also seen significant development in the private sector” and a significant increase in residential real estate value, he said.

Still, city officials, faced with increasing budget challenges, have frequently pointed to the amount of property held by tax exempt institutions as a source of its fiscal ills.

The City Council’s actions in recent months, in appointing a commission to develop a financial compensation plan for such institutions, are just the latest attempts by the city to take on the issue of tax exempts.

“The current model is unsustainable. We need a new way to coexist with the colleges and hospitals,” says Michael S. Van Leesten, chair of the council’s Commission on Tax Exempt Institutions. “Brown’s growth is good, but it can’t come at the detriment to the rest of the city.”

Comprising representatives of local businesses, hospitals, colleges, labor unions, community groups and city government, the eight-member commission has been meeting since October and hopes to submit its recommendations to the council by March.

Van Leesten, who is president of a local community development firm, says that by having all the parties involved at the table, the commission stands a good chance of developing a uniform city payment in lieu of taxes, or PILOT, program, similar to what other cities have.

“The bottom line is to get the City of Providence financially stable,” he said. “That is something I think all of us, including the nonprofits, can agree is important.”

Van Leesten says one of the first big questions the commission will consider is which nonprofit institutions will ultimately be asked to contributed toward a PILOT and to what degree.

Smaller nonprofits, such as community development corporations and some of the smaller hospitals, he says, should not be lumped in with large nonprofits, such as Brown University, which accounted for more than $1 billion in property value, or more than one-eighth of all the tax exempt property in the city in fiscal year 2008.

The commission will also consider what other cities have done to come up with their recommendations, says Van Leesten.

Yvonne Graf, a policy analyst in the City Council Office, did much of that research last month, and, in a memo to the commission, she noted that:

Boston’s PILOT program equals up to 25 percent of the taxes an institution would have to pay on a property if it were not tax exempt. The 25 percent figure was chosen because fire, police and public works services take up about 25 percent of Boston’s budget. The final payment, though, can be lowered by up to a quarter if a nonprofit agrees to offer certain community services, such as more scholarships and free medical clinics. The PILOT, additionally, adjusts for inflation over time.

Philadelphia’s “Voluntary Contribution Program” mandates financial compensation agreements equal to 40 percent of what would be paid in taxes. Actual amounts, though, are usually lower, since organizations have the option to sign a Services In-Lieu of Taxes agreement, much like in Boston. Revenue from the VCP is divvied up 55 percent to the school department and 45 percent into the city’s general fund.

New Haven benefits from a statewide PILOT program that is the most generous in the country. Connecticut gives communities a lump sum payment equal to 60 percent of the property taxes lost from tax exempt institutions. Yale University also pays New Haven a lump sum based on the number of fire and rescue calls made to the city, the number of students living in dorms and the total number of employees.Tax Exempt Properties in Fiscal Year 2009

*Assessed values have been rounded

BY THE NUMBERSPrivate Colleges $1 billion

Brown University$288 million

Providence College$260 million

Johnson & Wales University$212 million

R.I. School of DesignHospitals $739 million

Rhode Island$176 million

Miriam$157 million

Roger Williams$130.3 million

Women & Infants$130.1 million

Butler$57 million

St. JosephTotal: $3.15 billion

Figure for 2008

pmarcelo@projo.com