City sets legislative priorities for state action, eyes nonprofits, hotels for more tax revenue

PROVIDENCE MAYOR JORGE O. ELORZA's administration has set its priorities for the current state legislative session, with two key efforts aimed at bringing the city more tax revenue from nonprofits and the hotel tax. / PBN FILE PHOTO/STEPHANIE ALVAREZ EWENS
PROVIDENCE MAYOR JORGE O. ELORZA's administration has set its priorities for the current state legislative session, with two key efforts aimed at bringing the city more tax revenue from nonprofits and the hotel tax. / PBN FILE PHOTO/STEPHANIE ALVAREZ EWENS

PROVIDENCE – Providence Mayor Jorge O. Elorza was scheduled to meet with state legislators Monday to discuss legislative priorities, which included a bill to tax certain properties owned by nonprofits and another aimed at increasing the hotel tax.

City officials met with Providence Business News to go over its legislative priorities in the current General Assembly session. Increasing revenue from a number of sources is a key piece of the city’s approach.

A bill to tax nonprofits has already been introduced by members of the city’s state delegation, and would allow municipalities to impose a property tax on some nonprofit properties, including vacant and unused lots, certain parking lots and non-mission-related properties.

Early estimates suggest the city could realize an additional $2.2 million to $4.4 million in revenue each year. The city is challenged financially, and tax revenue is muted by the fact that 40.3 percent of all city property is held by nonprofits that don’t pay property taxes. At the same time, 21 of the most valuable commercial properties are subject to lucrative, long-term tax-shielding agreements called tax-stabilization agreements, according to PBN research.

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The city does receive some cash payments from the six largest nonprofits called “Payments in Lieu of Taxes,” or PILOT, but the revenue source is inconsistent as it fluctuates over time.

The nonprofit tax bill marks the third consecutive year the Elorza administration has advocated for such legislation, but so far it has not received enough support from House leadership to be made into law.

The mayor is also supporting a bill that would raise the local hotel tax rate from 1 percent to 2.5 percent. Local hotel taxes are collected by the state and redistributed to participating municipalities based on occupancy rates and other metrics.

Last year, the city received $1.9 million from the hotel tax.

State legislators already have introduced legislation to raise the tax in the House, which includes a provision that would exempt guests of the current 5 percent occupancy tax, if renting for more than 30 consecutive days. Providence is still assessing whether it supports this portion of the bill, according to city officials.

Like the nonprofit bill, any increase to hotel tax revenue could give a boost to city coffers, especially since there are five new hotels at varying stages of development in Providence.

The mayor is also supporting other legislative priorities, including:

  • An increase to state PILOT funding, included in Gov. Gina M. Raimondo’s proposed fiscal 2018 budget
  • An increase to funding for distressed communities, included in the governor’s budget
  • More educational funding for English Language Learners, introduced in the House
  • An Early Childhood Innovation Fund, introduced in the House
  • An increase to the amount of time traffic tickets can be issued based on evidence received via red light traffic cameras
  • Any plan to lower the car tax, as long as any lost revenue for municipalities is covered by the state
  • A modification to caterers’ licenses, which would close a loophole that allows alcohol to be sold at makeshift nightclubs

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