Brown Spends $44 million Buying Property
Saturday, May 21, 2011
Brown University is unwilling to step up to the plate and help the city of Providence in its time of need despite purchasing more than $44 million worth of property in the last year, according to the Taveras administration.
The large land grab, which includes six properties, has the city calling for Brown and other tax exempts to contribute more to the city. Taveras spokeswoman Melissa Withers said the burden placed on the city has become “unbearable.”
“For many years the City has provided city services to the large tax-exempt institutions without asking for payment, passing the costs of delivering these services on to homeowners and taxpayers,” Withers said. “As these organizations have grown to the point where they now own vast amounts of the City's property, the burden for the families and small businesses who must fully subsidize City services has become unbearable.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTBrown Bought Building From Itself
Brown University president for public affairs and University relations Marisa Quinn didn’t dispute that the University paid 8,960,000 for five properties and made it clear that the University “has or will” pay taxes on them. But Quinn says the largest purchase, a building located at 222 Richmond Street (the new medical school), was purchased four years ago.
The City Disagrees.
According to information provided to GoLocalProv, the building was sold early this year to Karing Inc. for $35,407,182. The corporation’s mailing address happens to be a University-owned building on South Main Street and the company’s mission, posted in the Providence Business News last summer, is to “advance, promote and support the educational purposes of Brown University.”
Quinn acknowledged that Karing Inc. is a “Brown-related entity.” She said the University transferred ownership to Karing “in order for Brown to conclude financing for the Medical Education Building project with our lender.”
Growth Is Positive
Quinn contends that the public, private and nonprofit sector have all encouraged the University’s growth as part of expanding research and growing the “knowledge economy. “ She said growth is positive for the economy throughout the state.
“One idea behind the MOU we entered with the city in 2003 was an acknowledgement that colleges and universities need to grow and that this growth can be positive for the economy of our city and state,” Quinn said. “In addition to a steady, predictable source of funds, it provides a formula in the event a property is removed from the tax rolls. It was intended to allow us to move forward, building a constructive partnership for the good of Providence and our institutions, and ensuring the city had a stable source of funds.”
Quinn: We’ll Strengthen Our Partnership
Still, Quinn says the University has expressed interest in helping the city on top of the $3.3 million in direct payments it makes by supporting public schools the economic development infrastructure.
She said the University is committed to strengthening its partnership with the city.
“We have conveyed our interest to Mayor Taveras in being part of the solution, offering to enhance the $3.3 million in direct payments we already make annually to the city through the MOU and property tax payments, by providing additional support for the Providence public schools and economic development infrastructure,” Quinn said. “Brown has an important stake in the success of Providence, and we are hopeful we can find productive ways to strength our partnership.”
No More Blank Checks
While the additional support could help, the city still needs more in the form of direct payment. Withers claims the value of the city’s large nonprofits have more than doubled since 2000. She said if the tax exempts like Brown were to pay the full assessed value on the property they own, the city could expect to realize $100 million in new tax revenue. She says all the city wants is a small percentage of that money.
Dan Egan, who serves as President of the Rhode Island Independent Higher Education Association, maintains that Brown has already helped the city. He argues that all four private colleges and universities in the city, have been more than willing to partner with the city.
Egan said they just aren’t willing to raise their cash payments to the city when other tax exempts have been unwilling to step up.
“The reality is we’re a proven partner to city for the past eight years,” Egan said. “We’re the only [tax exempt institutions] that have made cash money payments to the city. Mutually beneficial partnerships are always on the table. An additional blank check is not on the table.”
Others Need To Step Up
Egan maintains that universities have continued to make payments even during the recessions and that paying any more will only hurt students’ financial aid. He said it is counterintuitive to ask the tax exempts to pay more the city.
“We didn’t walk away from the city [during the recession],” Egan said. “We continued to support. Others need to step up too.”
Large Scale Expansion Not Sustainable
But with city currently in a “category five” fiscal storm, Withers says all the large tax exempt institutions in the city need to come back to the table. She contends that for too long, the nonprofits have been allowed to receive all the benefits from investing in real estate while often not having to pay taxes.
“The large tax-exempts have amassed huge real estate portfolios over the years,” she said. “Real estate property portfolios of this scale are effectively commercial real estate holding companies, and are operated as such – with all of the benefits of investment in real estate - combined with the added benefit of not paying real estate taxes to the community that serves these massive portfolios.”
Bottom line: The city can’t afford to allow the tax exempts to grow if they are unwilling to contribute.
“Such large-scale expansion is not sustainable and not what our predecessors had in mind when granting these institutions tax exempt status to advance their respective missions,” Withers said.
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