Leaders of Providence’s colleges and universities say they are close to a deal to make voluntary payments to the city, which would bring to an end a drawn-out negotiation process between the capital city and the institutions.
As of press time, the city and schools were still in negotiations, but officials say that there are still one or two sticking points that are holding back a resolution including the agreement’s longevity.
Neither side has given specifics as to what formula will be used to determine the compensation, or how the contributions would vary among the schools.
After nearly two months of fleshing out opposing view points on the deal’s structure, Roger Mandle, president of the Rhode Island School of Design and spokesperson for all of the schools, said the institutions have come to a consensus.
“We are more in the (line) of a consensus at this point than we thought we would reach,” Mandle said.
“It’s been complicated,” he said of the initial talks among the schools. “Each of these institutions have a different charter, different history, different personalities, different boards of trustees and different operating budgets.
“Some of us are more – to be perfectly blunt about it – some are more liberal about our feelings on our need to participate and some are more conservative.”
Other issues include the schools’ different sizes and the number of properties each owns. For example, Providence College’s endowment is less than one-tenth that of Brown University. Brown owns more than 230 properties in Providence alone. In comparison, Johnson & Wales owns 44 properties in the state and RISD owns 61.
While it’s been difficult to arrive at a resolution that would make all of the schools happy, Mandle said, “it’s entirely possible that the agreement we reach will be quite creative.”
Mayor David N. Cicilline said in an interview last week that whatever solution emerges should mimic that of other states where some amount of money would be paid to city government by colleges and universities for services provided.
Mandle said the schools agree that arrangements between cities and colleges elsewhere should be seen as a benchmark.
“We favor and hope the city and state find it appropriate for us to make voluntary contributions at a level which is consistent with what other colleges and universities are doing in voluntary contributions in other parts of the country,” Mandle said.
Harvard University makes various payments each year to the cities of Cambridge and Boston including payments in lieu of taxes or PILOT — payments that the university voluntarily makes on property that is exempt from taxation. MIT, which owns property in eight Bay State communities, makes payments in lieu of taxes for property that is legally tax-exempt. In 2002, MIT said it contributed $1.2 million in PILOT and $15 million in other real estate taxes.
In some cities such as Watertown, schools continue to pay taxes on property that is converted from commercial entities to properties used for academic purposes.
That, says Cicilline, is just one example of a model that has been discussed.
But there does not appear to be any prevailing formula for how colleges and universities compensate their host communities, according to Martin Van Der Werf, an editor at the Chronicle for Higher Education magazine.
“There doesn’t seem to be any best practices that have emerged in terms of how colleges deal with their host communities,” Van Der Werf said. “It seems like most colleges are willing to pay something so they don’t end up having to pay the whole thing.”
Last month, the Rhode Island Public Expenditure Council reiterated its long-held view that the state’s PILOT program is the most effective way to balance the economic and social benefits of the schools against the cost of providing them services. It warned against any attempt by the state to legislatively require colleges and universities to pay property taxes or make mandatory payments.
RIPEC’s board includes Rev. Philip A. Smith, president of Providence College and John Yena, president of Johnson & Wales.
Last month, Cicilline came close to introducing legislation dubbed the “Fair Share Act” that would enforce the colleges to pay the difference between the state’s payments in lieu of taxes (which are currently 25 percent of the property taxes that would be received by a municipality) and the total amount of property tax that would be levied on their property holdings.
The mayor, however, delayed having the legislation introduced just hours before he had planned to and agreed to continue negotiations with the institutions.
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