Resignation, not celebration: Providence Council begrudgingly approves tax deals with universities

You can’t get everything you want.

So concluded the Providence City Council on Thursday, begrudgingly approving a pair of agreements outlining a schedule of annual, voluntary payments from four, higher education institutions within the capital city over the next two decades. Despite the 9-1 vote – with five council members absent from the meeting – it was hardly a decision characterized by celebration. Instead, many of the council members who voted in favor of the deals did so with resignation that, despite their concerns, it was the best they could get.

“If we were to seek more, who would have known,” Deputy Majority Leader James Taylor said. “It’s voluntary. There’s nothing we can do legislative-wise or council-wise.” 

Indeed, as tax-exempt institutions, the four schools – Brown University, Rhode Island School of Design, Johnson & Wales University and Rhode Island School of Design –  don’t actually have to give any money to the city. That the schools agreed to pay more than double what they gave in a prior, 20-year agreement is a “historic” victory for the city and its residents, according to Mayor Brett Smiley.

“This new agreement sets Providence on a stronger financial path forward and it makes our city a national example of what is possible when communities and their major anchor institutions work together,” Smiley said in a statement after the council vote. “Together, we are laying the foundation to make Providence the world-class city that the brightest students, faculty, doctors, researchers and employees want to live, work and learn in.”

Under deals inked in 2003 and 2012, the four universities paid $94 million over the last 20 years. The new agreements, which include a 20-year deal with all four colleges and a separate, 10-year memorandum solely with Brown University, would funnel $223.5 million to the city in payments-in lieu-of-taxes over the next 20 years, starting in fiscal 2024. 

Council President Rachel Miller also praised the agreements, which include more than just cash to replace a part of what the schools would otherwise pay in property taxes. The four institutions have also agreed to make “community contributions” valued at $177.4 million, according to the city. These in-kind donations include public services like snow removal and trash pickup, student scholarships and support for Providence Public Schools. 

The city also benefits from $3.4 million in commercial property taxes from the schools, previously subject to voluntary agreements, over the next 20 years, thanks to legislation approved in the 2023 General Assembly requiring commercial uses of institutional spaces be subject to regular city tax rates.

Together, the payments in lieu of taxes, in-kind contributions and new commercial tax payments amount to $442.4 million over the next 20 years, according to the city calculations. 

“The approval of these landmark agreements marks an extraordinary moment for the city and its higher education institutions, and we’re proud to have cemented Brown’s investments in the success of Providence for decades to come,” Brown President Christina H. Paxson said in a statement. “The agreements are rooted in a spirit of partnership and a commitment to helping the city and its residents thrive. We’re excited to expand significantly upon the myriad ways in which Brown makes a meaningful and positive impact in our local community.”

‘We can’t make them do anything at all’

Yet critics, including dozens of Brown University students, wanted more, pointing to Brown’s $6.5 billion endowment and rapidly growing real estate portfolio across the city as evidence that the Ivy League could and should pay more.

“It might look good for now, but it’s really pennies on the dollar when you look at the bigger picture,” warned Council Majority Whip Miguel Sanchez, who cast the sole vote against the deals. “In my opinion, signing this is going to make it very tough not to increase the residential [tax] rate.”

Councilwoman Althea Graves also criticized certain provisions of the agreements, including the condition that the city cannot push to increase the financial contributions over the next 20 years. But, Graves concluded, “we can’t make them do anything at all.”

Isaac Slevin, a student organizer at Brown University who opposed the tax deals, disagreed. He denounced the council members who did not attend the meeting, as well as those who voted in favor of it.

“To call it a cop-out is light,” Slevin said. “We’re a climate group and we took time away to speak on this because it’s a once-in-a-generation opportunity.”

Slevin added, “I don’t think the council recognized the leverage it has.”

Even if the city council rejected the proposed negotiations, Smiley, who negotiated the deals with the schools, could have just approved them anyway. 

Yet Miller insisted that the council’s review and public vetting of the deals was not futile.

“This is our job,” she said in comments after the meeting.

Miller pointed out that the public process, as well as the content of the agreements, also lay the groundwork for recently begun negotiations with Lifespan Corp., which also is tax-exempt and has not made a voluntary payment to the city since fiscal 2021.

Council members Sue AnderBois, Helen Anthony, Shelley Peterson, Justin Roias, and Ana Vargas did not attend the meeting.