PROVIDENCE – Mayor Brett P. Smiley on Tuesday announced his administration has reached tentative payment-in-lieu-of-taxes deals with the four private higher education institutions based in the city – Brown University, Rhode Island School of Design, Johnson & Wales University and Providence College – that will more than double the contributions previously received over the next 20 years.
The voluntary payments are made by nonprofit entities exempt from property taxes on noncommercial properties, which previously amounted to $94 million to city coffers annually. Property taxes are the city’s largest revenue source.
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The proposed agreements unveiled Tuesday require still final approval from the Providence City Council, which is set to take up the proposal on Sept. 7, though the deal is subject to review by the finance committee.
The last agreement reached in 2003 with the four universities expired in May.
Details of the multi-party agreement, the result of months of negotiations between city and school officials, were first made public during a press conference Tuesday in City Hall attended by Providence City Council President Rachel Miller; City Councilman Pedro Espinal; Brown University President Christina H. Paxson, Rhode Island School of Design President Crystal Williams; Providence College President Fr. Kenneth R. Sicard; Johnson & Wales University Chancellor Mim L. Runey; and Local 1033 Business Manager Ronald Coia.
The proposal would net the city $223.5 million in PILOT payments, a 138% increase and more than double the previous agreements, according to Smiley’s office, which called it “one of the most generous agreements in the country.”
In addition, the proposal includes $177.5 million of in-kind “community contributions,” such as tax revenue generated by commercial leases, scholarships and financial aid provided by the institutions to Providence residents, or financial support of city and public-serving non-profit organizations, among others examples.
All told, the proposal totals $442 million in contributions from the four institutions over 20 years, including $223.5 million in direct voluntary payments between 2024 and 2043.
In a separate agreement, Brown University would make additional payments in the amount of $46 million over 10 years, subject to being lowered if, according to the proposal, the university generates new tax revenue.
“I am incredibly proud of the new agreement we are proposing today, which makes Providence a national example for collaboration and positively impacts our city for generations to come,” said Smiley. “Our city needs these funds in order to keep paying our bills on time, and to provide the highest quality city services we all deserve. Our institutions also need Providence to be a city where students, faculty, doctors, researchers and their employees want to be. This proposed agreement sets us all up for long-term success.”
In return, according to the executive summary, the city will support zoning changes to assist Brown, including the transfer of five blocks of public streets to the university “where there are major facilities on both sides all owned exclusively by Brown University; extend the previous parking agreement for Brown University faculty and staff; and support changes to improve access, delivery and service to the new Integrated Life Sciences Building project.”
Currently, about 44% of city properties are tax-exempt, accounting for $8 billion in assessed value, a majority of which are owned by large nonprofit organizations like universities and hospitals. The state reimburses up to 27% of lost taxes to municipalities due to tax-exempt status.
In a statement, Paxson said “Investing in the success of our home city is embedded in our mission of education, research and service,” adding that the agreements “will have a meaningful and positive impact in our local community, and will enable Brown and city leaders to address common challenges, foster community and economic development and improve the quality of life for those who call Providence home.”
Absent from the announcement Tuesday was the city’s two major hospital systems, Lifespan Corp., which owns Rhode Island, Miriam and Hasbro Children’s hospitals; and Care New England Health System, which controls Butler and Women and Infants hospitals.
The city currently does not have any formal agreements in place with Lifespan, which would be paying roughly $30 million annually were it not tax-exempt.
While Lifespan made no voluntary tax payments to Providence last fiscal year, spokesperson Kathleen Hart on Tuesday said the organization paid $2.7 million in city taxes and was the first ever health system to make a PILOT contribution, amounting to more than $4 million since 2012.
Hart added that Lifespan provided over $50 million in charity medical care and losses from Medicaid to city residents in 2022.
“Lifespan remains committed to continuing to support the city of Providence and its residents. Our first and foremost responsibility is to our patients,” she said. “We are in discussions with the mayor’s office on ways Lifespan can provide strategic assistance that benefits city of Providence residents and the economy of the state as a whole.”
A three-year agreement with Care New England expires in 2026, but Smiley previously said he would like to revisit that agreement, which includes payments between $375,000 and $400,000 annually.
A spokesperson for Care New England, Raina Smith, said Tuesday that “negotiations are currently ongoing.”
“Care New England enjoys its partnership with the City of Providence and looks forward to that continuing well into the future,” she said.
(Updates comments from Lifespan added in 15th and 16th paragraphs.)
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
