PROVIDENCE -- In a precedent-setting agreement, the four major
tax-exempt colleges in Providence -- Brown University, Providence
College, Johnson & Wales University and the Rhode Island School of
Design -- agreed for the first time yesterday to make voluntary cash
payments to help finance city services.
The deal will give Providence nearly $50 million over the next 20 years,
and roughly $3.9 million for each of the next four years.
Mayor David N. Cicilline, flanked by college presidents Ruth Simmons, of
Brown; Roger Mandle, of RISD; and the Rev. Philip Smith, of PC,
announced the agreement at a City Hall news conference.
"With great wealth and privilege comes great responsibility," said
Cicilline. "What is fair, what feels right to the people of this city,
and to me, is that everyone must do their fair share."
Brown's Simmons -- who had sparred with Cicilline in recent weeks on the
payment issue -- was beaming yesterday. "We're all pleased to be here
today to celebrate our partnership with the city of Providence," she
said.
But it was RISD's Roger Mandle who was catalyst for the move and whose
institution will pay by far the largest sum -- about $6.4 million --
over the next four years.
The money comes to the city in two ways:
The annual cash payments, which are based roughly on the size of each
institution's budget.
The colleges will make payments instead of property taxes for 15 years
on taxable properties they buy in Providence.
The institutions will pay 100 percent of the assessed rate for the first
five years they own a property. That will drop to 66 percent for the
next five years and 33 percent for the next five. After 15 years, the
properties will become fully tax-exempt, according to John Simmons, a
consultant who is acting as the city's administration director.
RISD is paying the biggest slice over the next four years because of a
real estate deal to move its library from the current location on
Benefit Street to the former Rhode Island Hospital Trust building
downtown.
FleetBoston Financial, which owns the former Hospital Trust building,
donated 60,000 square feet in the building to RISD for the library. That
threatened in one fell swoop to remove property worth several million
dollars from the property-tax rolls.
Now RISD will accelerate the voluntary payments to the city over the
next four years -- which coincides with the end of Cicilline's term.
That amounted to enough money to seal the fragile deal.
The money is a small drop in the bucket of the city's roughly
$550-million annual budget, but Cicilline and other city officials
pointed to the new ground it breaks in city government's relationship
with the colleges and the fact that the colleges agreed to pay the money.
City Council President John Lombardi praised the agreement and said the
council will support it.
Providence joins such other New England college cities as New Haven,
Cambridge and Boston in receiving payments instead of taxes from its
private colleges.
The deal also fulfills a Cicilline campaign promise and will probably
give him some political cover when he and the City Council impose a
property-tax increase on hard-pressed city homeowners and businesses --
a move that many in City Hall consider likely in the coming months.
And it gives Cicilline a boast that has eluded Providence mayors for
generations -- that his administration was able to arrange for cash
payments from the colleges. Former Mayor Vincent A. Cianci Jr., for
example, got the colleges to contribute to programs to help city
schoolchildren, but never pushed hard for cash payments.
The deal also keeps the issue from gumming up the legislative wheels at
the State House as the General Assembly heads into the homestretch of
the 2003 session; Cicilline had threatened to take the matter to the
State House if the colleges refused to forge a voluntary deal.
The $3.9 million the city expects from the colleges in the budget year
that begins July 1 drops the deficit Cicilline's administration has
projected from $44 million to about $40 million.
It probably also signals the demise of the colleges' annual $620,000
contribution to the Health and Education Leadership for Providence, or
HELP, a nonprofit coalition of eight colleges and hospitals in the city,
which was established in 1994 in response to pressure from Cianci for
tax-exempt institutions to do more for the city.
Since then, HELP has put $9 million in direct financial support from
member institutions into innovative programs aimed at improving the
health and education of the city's children. At the same time, HELP has
attracted a total of $11 million in government and private financing for
these programs.
The $620,000 the colleges currently contribute to HELP is now freed for
the colleges to put toward city coffers.
While various city political officials have for years looked to Brown's
leafy Ivy League campus as a source of money, yesterday's agreement is
the product of months of battles and intense negotiations among the
colleges and city officials.
Every time a Providence police officer was called to break up a noisy
off-campus student bash or every time the Fire Department responded to a
false alarm pulled at a dormitory, the city's taxpayers footed the bills.
The colleges have been exempt forever; in Brown's case since its
founding in the 18th century.
The colleges in recent weeks hired veteran State House lobbyist Joseph
W. Walsh, the former Warwick mayor, to help in negotiations and, if need
be, to lobby against any attempt to strip tax-exempt status from the
institutions.
Cicilline was represented in the talks by John Simmons, Carol Grant, the
city's chief of operations, and Michael Mello, Cicilline's chief of
staff.
The strictly voluntary nature of the compact means the colleges can
terminate it at any time, with a 14-month warning. It has no force of
law and relies on the good faith of both sides, said John Simmons.
"Few people expected any agreement, let alone this historic agreement,"
said Cicilline. "After so many failed attempts, and with so many
barriers in the way, some people thought we were attempting the
impossible."
-- With reports from staff writer Gina Macris
DIGITAL EXTRA: Read the full
text of the memo of understanding regarding voluntary payments to
the city of Providence by Brown University, Rhode Island School of
Design, Providence College and Johnson & Wales University.
