INVESTIGATION: Universities Win Big in Tax Agreements
Thursday, February 07, 2013
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.)
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.
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
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.)
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.
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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