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This Week’s Poll

Should Brown and other large nonprofits pay property tax to their host municipality?

Posted:

With Providence Mayor Angel Taveras contending that the city will go bankrupt before the end of the fiscal year in June without increased support from the city’s universities and hospitals, the issue of payments in lieu of taxes has come to the forefront.

The question is, should large nonprofits – coincidentally among the region’s few growing enterprises – increase the amount of money that they pay the towns and cities in which they are located, given that the municipalities have been receiving a shrinking allocation of support from the state?

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dwaugh@mosesafonso.com

I often find that none of the offered poll responses reflects my opinion, and this poll is no exception. From the get-go, we have a problem pursuing payments in lieu of taxes from educational institutions in the City, because Brown's charter pre-dates the case of Trustees of Dartmouth College v. Woodward, wherein the U.S. Supreme Court held that a corporate charter, granted without the the legislature's reserving a right later to amend the charter, could not be unilaterally amended by the legislature. (States reacted to the decision by adopting laws reserving the ability to amend charters unilaterally, but these power-reserving laws had no effect on charters already granted. RI's power-reserving law is § 7-1-13.) Brown's charter grants it an exemption from taxes. Therefore, the City and State can approach Brown only with carrots, not sticks.

Although other colleges in Providence are not protected in the same way Brown is, it seems unfair to require them to make payments in lieu of taxes if Brown is not also making them. Noneducational nonprofits in the city also generally lack the protection that the Dartmouth case provided. (A few are old enough, but their individual charters would have to be examined to see if tax exemption is explicitly granted.) But these other non-profits generally hold less valuable property and may be unable to operate if even modest payments in lieu of taxes are expected. Think of Crossroads. I do not know enough about the nonprofit hospital industry to be able to weigh in on one side or the other on that.

It is reasonable for the City to request that nonprofits contribute an amount that reflects their use of City services (perhaps offset by any benefits provided by the nonprofit that reduces City expenditures) but the legal and financial environment facing non-profits may leave them able to offer much in response to the City's request.

Monday, February 13, 2012 | Report this
dwaugh@mosesafonso.com

My previous comment should have ended "...the legal and financial environment facing non-profits may leave them unable to offer much in response to the City's request." Please substitute "unable" for "able". Thank you.

Monday, February 13, 2012 | Report this
JonHoward

In response to Dan from Providence: You usefully point out the historic legal basis for Brown's freedom from taxation. It may be legal and binding, if you are correct. But in what sense is it fair that Brown remains perpetually free of responsibility for the costs of community? How would it be unfair to impose reasonable compensation on other institutions who just happen not to be shielded by four centuries of class privilege?

What's unfair is having our city go bankrupt, our poor kids in bad schools and our roads and other infrastructure falling apart. Many who study and work at Brown know that it's unfair and more can be persuaded. I salute Mayor Taveras for not backing down and Johnson and Wales University for stepping up for Providence. C'mon, Brown. do the right thing!

Thursday, February 16, 2012 | Report this
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