City Auditor Raises Red Flags as Providence Nonprofits Ask For Tax Breaks
GoLocalProv News Team
City Auditor Raises Red Flags as Providence Nonprofits Ask For Tax Breaks
City of Providence Internal Auditor Gina Costa is raising concerns over non-profits that are asking the city Council for special tax breaks.
The cost of the requests could add to Providence's already shaky finances. Providence Mayor Brett Smiley and the City Council have already raised taxes two of the last three years.
This week, Costa provided the report to the Council Finance Committee, as they considered the latest round of property tax exemptions requested by nonprofits.
According to Costa, tax-exempt properties account for 5.65% of all city properties (2,489 of 44,062) but comprise the largest category at 29.40% in assessed value ($10.5 billion of $36 billion).
“Fundamentally, I oppose every tax exemption if it does not go on the state PILOT,” said Costa in her five-page communication to committee members. “It erodes [the] tax base, which will eventually cause an increase to the tax rate if other revenue is not found.”
"Most importantly, as the number in the exempt category increases (more organizations receive property exemption status), another category is decreased (in value as well as count), resulting in a potential tax increase in another category," she added.
Currently, nonprofits that have sought tax exemptions this year before the City Council include the Community Action Partnership of Rhode Island, Summer Street Apartments LLC, Community Music Works, the Community Action Partnership of Providence, Blackstone Valley Advocacy Center, and MAP Development Corp - amounting to over $600,000 in property tax exemptions in a single fiscal year.
According to Costa, nonprofits that have already been granted tax exemptions (for Fiscal Year 2025) include Project Weber Renew, Center for Southeast Asians, Codac Inc, and the Rhode Island Business Institute. Those total $221,245, and "could have potential implications for FY2026 if abated retroactive."
This growing trend of requests further shifts the tax burden to residential property owners.
Mayor Issues Executive Order
GoLocal has learned that Providence Mayor Brett Smiley issued an Executive Order this week establishing a "Non-Profit Property Tax Exemption Task Force" - and is asking for a report in six weeks.
Smiley, who has press conferences about new garbage cans, made no public mention of the executive order, but his office did provide a copy after a GoLocal request.
The following Executive Order is Smiley's third of the year and seventh since taking office.
WHEREAS, nonprofit organizations play a critical role in delivering essential services, advancing equity, and strengthening the social, economic, and cultural fabric of the City of Providence;
WHEREAS, the City seeks to foster stronger fiscal collaboration, transparency, and coordination between municipal government and the nonprofit sector;
WHEREAS, nearly 44 percent of property in the City of Providence is exempt from local property taxation due to nonprofit ownership, reflecting both the critical role of these institutions and the resulting impact on the City's fiscal capacity;
WHEREAS, nonprofit organizations and institutions face ongoing challenges related to funding, capacity, workforce development, and regulatory processes that may impact their ability to effectively serve residents;
WHEREAS, uncertainty in federal funding and national policy shifts may further strain nonprofit organizations, potentially increasing reliance on state-level tax exemptions through the Rhode Island General Assembly;
WHEREAS, tax revenue funds critical municipal services, relied upon by non-profits within the Providence community;
WHEREAS, the City seeks to proactively respond to these challenges by strengthening partnerships with the nonprofit sector, improving coordination, including around taxation and PILOT agreements, and aligning resources with Providence's priorities, including housing stability, youth opportunity, public safety, and economic mobility;
NOW, THEREFORE, BE IT RESOLVED, that I, Brett P. Smiley, Mayor of the City of Providence, do hereby order:
1. Establishment: There is hereby established a Nonprofit Property Tax Exemption Task Force
to advise the Mayor on strengthening collaboration with nonprofit institutions, provide predictability in City taxation revenue; and maximizing community benefit.
2. Purpose: The Working Group shall:
Identify strategies to strengthen City-nonprofit partnerships and service delivery; Explore opportunities to expand or enhance PILOT participation and transparency;
Align nonprofit engagement with City priorities, including housing, youth programming, public safety, and workforce development.
3. Membership: The Working Group shall be chaired by the Mayor or designee and include:
The Chairperson for the City Council Committee on Finance; Director of Finance or designee; Director of Housing and Human Services or designee; Up to two (2) Representatives from the Providence General Assembly delegation;
Up to two (2) representatives from community foundations; Up to two (2) representatives with expertise in nonprofit management or community development;
Responsibilities: The Working Group shall:
Convene on a regular basis;
* Solicit input from nonprofit stakeholders and community members;
* Review relevant data, policies, and best practices from comparable municipalities;
* Develop and submit recommendations to the Mayor;
* Provide a written report summarizing findings and recommendations by May 22, 2026.
The Working Group shall remain in effect for a period of six (6) weeks and, upon completion, shall submit a final report on its findings and recommendations to the Mayor and the Providence City Council.