But what does the University owe the city for the public services it uses, for, among other things, firefighters responding to fires and false alarms at dorms, police officers chasing down suspected lawbreakers, and snowplows clearing the streets bisecting campus? This year, for the first time in University history, Brown will make direct payments to Providence as compensation for such services.
In June, after months of contentious negotiations, the University, along with RISD, Providence College, and Johnson & Wales University, agreed to pump nearly $50 million into city coffers over the next twenty years. Under the pact, Brown’s share will start at $1.065 million this fiscal year, growing to $1.413 million in the deal’s final year. Providence agreed not to challenge the schools’ tax-exempt status, and the schools promised to pay taxes on all newly acquired properties, with the payments gradually shrinking to zero after fifteen years. Brown will also make a one-time payment of $1.3 million for two buildings the University has bought or is trying to buy and which therefore will be removed from the tax rolls.
“This agreement is the most complete and generous in the country,” Mayor David Cicilline ’83 declared at a City Hall news conference in June while flanked by presidents from Brown, RISD, and PC. Just weeks earlier, with the city facing a $59 million deficit, Cicilline had threatened to have legislation filed compelling the schools to make so-called payments in lieu of taxes. Though he now claims he “never supported the idea of taxing private colleges,” Cicilline used the potential bill to drive the schools to the bargaining table.
Not surprisingly, higher-education officials throughout Rhode Island reacted angrily, vowing to protect their tax-exempt status. “A great university does not write checks to local government because [that government has] not been able to manage its resources,” Brown President Ruth Simmons told the BAM in May. At the same time, Simmons acknowledged, “it may well be that it’s appropriate to pay for some of the resources that we use.” Brown officials argued that the University already contributes to Providence by stocking its nonprofits with student volunteers as well as by providing brainpower through its graduates and municipal expertise through its faculty and staff. Simmons says that Brown paid $22.2 million in taxes, fees, and “avoided costs” to the city and state in 2001–02 and generates $400 million in “total economic output” annually.
Providence is not the only cash-strapped city eyeing universities, hospitals, and other nonprofits for fiscal relief. In July, New Haven asked Yale to increase its current $7 million yearly subsidy to the city, and this spring, Boston Mayor Thomas Menino hectored Harvard and other tax-exempt institutions to boost their donations to that city. In addition to a $1.5 million payment in lieu of taxes to Boston this year, Harvard gave $1.7 million to Cambridge and $950,000 to Watertown, Massachusetts.
Executive Vice President for Planning Richard Spies, who negotiated on Brown’s behalf, says two unintended benefits of the process were to open up communication with the city and to improve the colleges’ and universities’ ablility to work with one another. Most importantly, he says, the agreement clears the way for University growth by softening its drag on city finances. “The health of the universities is very important to the City of Providence,” he says. “They shouldn’t have mixed feelings about our success.”