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INVESTIGATION: Universities Win Big in Tax Agreements

Thursday, February 07, 2013

 

The voluntary tax agreements Providence has struck with four colleges will pour an additional $44.5 million into city coffers over the next two decades, but those deals came at a price—the selling off of all or portions of nine city streets, granting licenses for hundreds of parking spaces, and at least one land deal.

Brown University gains at least 250 parking spaces and ownership of three streets, with another 42 spaces on car-cramped College Hill. Johnson and Wales will acquire nearly 200,000 square feet of streets, allowing it to move forward with plans for a new 746-space parking garage. RISD is licensing 70 parking spots and Providence College is taking over three streets, including one major neighborhood artery where there is a RIPTA bus stop. (See below tables.)

Three of the deals were hashed out last year, but only now are just beginning to take effect. The fourth agreement, with Providence College, is now working its way through the city council.

Council members question tax deals

Councilman Luis Aponte said it was disingenuous for the city to claim the four colleges had stepped up to the plate to help the city in its time of need when those colleges were expanding their footprint in Providence and increasing their potential for revenue.

“Doesn’t sound like much of a sacrifice,” Aponte said.

He contrasted the deals with others who had been asked to sacrifice in order to help the city weather the fiscal storm. Homeowners and businesses, he noted, have been asked to swallow higher taxes without receiving any benefit in return, such as increased city services. Likewise, union employees have made concessions in salaries, health benefits, and pension pay without receiving anything in return, Aponte said.

“All types of sacrifice aren’t equal,” he concluded.

Councilman Michael Correia said he disagreed with the administration’s decision to sell city streets and license parking spaces, but he still backed the deals. “I did support it because we’re in a jam,” Correia said.

He said the city had few options available to it since the colleges were tax-exempt under state law. Brown University had an even stronger legal firewall against any effort to challenge its tax-exemption—a royal charter pre-dating the state and the U.S. constitutions, he noted. Absent a court-challenge or intervention from the General Assembly, he said the four voluntary deals were the only way to avoid even more tax hikes on residents.

“It’s not a win-win for the city, but it’s a win-win for the taxpayers,” he said.

Councilman John Igliozzi, chair of the Finance Committee, described the deals as reasonable transactions. “Giving a voluntary payment of … millions of dollars and the city allowing them to utilize parking spaces in an exclusive manner—it’s a reasonable transaction that gives assurance to both sides,” Igliozzi said.

A spokesman for Mayor Angel Taveras refused comment.

Brown could draw revenue from tax deal

Brown is netting nearly three hundred parking spaces, when the spots on the three street areas it is purchasing are counted. A university spokesperson said the spaces would be used for faculty and staff parking. Annual permits for the spaces would cost $600, resulting in $3.5 million in potential revenue for Brown over the 20-year life of the agreement.

Asked to respond to criticism from city councilmen, a university official noted that Brown had provided more than Taveras had asked.

“Recognizing Brown’s need to have a safe and secure campus that accommodates its role as one of the state’s [and] city’s largest employers, the agreement included provisions designed to support Brown,” said Marisa Quinn, the vice president of public affairs and university relations. “The 2012 Agreement is critical for the city, and offers value to Brown as it seeks to fulfill its mission as a research university and major employer.”

“Providence and Rhode Island benefit from having a thriving research university like Brown that, through education and research, provides opportunities, spurs ideas, innovation and is a source of direct and indirect employment and economic activity,” she added.

She noted that Brown continues to make payments under the original agreement on payments in lieu of taxes (PILOTs) reached in 2003, under the David Cicilline administration. Over the last two fiscal years, Brown’s total payments to the city were $8 million, a figure which includes all tax and voluntary payments, according to Quinn. (See below table for annual breakdown.)

The university has yet to determine the best use of the three purchased streets. For now, they boost Brown’s parking holdings by 42 spots. The remaining licensed spots are for all-day employee parking, but the public can use those spots for two hours after noon. “The additional on-street leased parking is part of a comprehensive approach to transportation management that we have been pursuing for nearly a decade designed to reduce congestion on and around College Hill,” Quinn said.

A RISD official said the school also intends to use its 70 licensed spaces for employee parking over an 11-year period. The spaces will be for faculty and staff, who pay an annual parking fee on a sliding scale based on salary, but spokesperson Jaime Marland rejected the possibility that the school might gain any real revenue from the new parking, noting that the school subsidizes parking for its employees.

Schools payments tied to market value for streets

What the other two schools—Providence College and Johnson and Wales University—did not get in licensed parking, they made up in street purchases. Under the current version of its agreement, Providence College would absorb 80,850 square feet of street space, a dozen times more than what Brown bought. And Johnson and Wales is getting more than double that amount.

Both schools paid at least fair market value for those streets. A spokesman for Providence College said the school and the city came to an agreed upon fair market value for the three streets: $30 per square foot for Huxley Avenue and a rate of $22 for Cumberland Street and Wardlaw Avenue.

Providence College has offered the city $3.8 million in voluntary tax payments. But when the fair market value of all streets it is getting in return is deducted, the college’s remaining contribution is $1.6 million.

The two smaller streets will be used for parking, but the college will not be charging for permits, according to Steven Maurano, the vice president of public affairs and community relations.

The college wanted Huxley Avenue, he said, for safety reasons. The avenue is a major local street, but it also runs through the middle of the campus. Over the years, Maurano said a number of students and staff had been hit by cars. The college has not decided what it will do once it owns Huxley, but closing the street, which has a RIPTA stop on it, has not been ruled out as a possibility. (The college is in talks with RIPTA about a possible relocation of the route.)

Johnson and Wales deal includes I-195 development

Johnson and Wales is paying $1.4 million for three streets, with no additional amounts beyond the fair market value, according to spokesperson Lisa Pelosi, the director of communications and media relations. Read Street, a street that exists on paper only in downtown Providence, is worth $65 a square foot. The other two streets, in the Allens Avenue area, are valued at $7 a square foot, according to Pelosi.

The school is, however, also making $500,000 annual payments to the city associated with two parcels it purchased in the former Interstate 195 land. Pelosi said the school has not decided what to build on the land.

Pelosi said Johnson and Wales agreement with the city was unrelated to the construction of a new police substation on its campus, which officially opened on the same day that university and city officials announced the voluntary tax payment deal last winter. The substation is located where campus dining used to be. Johnson and Wales is renting the space to the city for one dollar over a five-year period, according to Pelosi.

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Comments:

which are the affected streets in Prov?

Comment #1 by tony tolbert on 2013 02 07

You can see (and download) the agreements and maps in PDF format from this link:

http://brown.edu/web/providence/2012-agreement.html

Comment #2 by James Berling on 2013 02 07

You know $44.5 million dollars sounds like a lot of money but that is "over the next two decades." So we are talking about a little over $2 million a year and that is between the four colleges. I would say that helps but it ain't much especially since we are giving up property and streets. Good deal but not for the City.

Comment #3 by James Berling on 2013 02 07

When we go to Providence, we just expect to have to pay big bucks to park. Definitely affects our choices whether or not to go to Providence.

Comment #4 by Charles Beckers on 2013 02 07

I just posted at 11:31 AM, but the posting is shown as "1:31pm". Does anyone know why?

Comment #5 by Charles Beckers on 2013 02 07

If the city has to split hairs over parking spaces, in order to pay its bills, perhaps its time a take a REAL hard look at the budget.

Comment #6 by David Beagle on 2013 02 07

It's certainly a shame that the voluntary taxes came at a cost of losing control over our streets. As a resident of the East Side and a graduate student at Brown University, I certainly find it extremely annoying that our cramped streets are essentially used as a massive parking lot for Brown. It would be better for all concerned if street parking were moved to the nearly empty parking garage and a new parking garage constructed in one of the on-campus parking lots. Driving or biking through College Hill, as we all know, is a nightmare because of congestion. There's really no reason for this.

Comment #7 by Samuel Bell on 2013 02 07




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