Friday 08 April 2022
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New battle lines are being drawn in an effort to force nonprofit colleges and universities to pay their host communities.
From time to time, Providence mayors have fought with Brown over payments in lieu of taxes, but the Ivy League institution has always won.
Unlike Brown University, Yale University recently agreed to pay New Haven more than $135 million over the next six years.
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In Rhode Island, a group of lawmakers and supporters are urging passage of two bills currently pending in the Rhode Island General Assembly – one would allow municipalities to tax property owned by colleges and universities and the other bill would allow host communities to impose up to 2% tax on the institution’s endowments. Income from the endowment tax would be used to support public education in the host community.
Rep. David Morales is the sponsor of the property tax bill and Senator Tiara Mack is leading efforts for the endowment tax. Morales and Mack graduated from Brown. Both are Democrats.
Brown announced this summer that his endowment had hit a record $6.9 billion.
According to Morales, Brown’s properties, if not tax-exempt, would generate about $49 million a year for Providence. Providence College is expected $16.2 million; Johnson & Wales University, nearly $12.8 million; and Rhode Island School of Design, $11.6 million. Brown contributes about $4.4 million a year to the city through a memorandum of understanding signed in 2003, but that agreement expires next year.
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“Across Providence, we are grappling with a gap in quality education. While our private higher education institutions hold enormous fortunes in both income-generating properties and endowments, our city lacks the resources to properly support our K-12 students in public schools. Ironically, one of the reasons our city is underfunded is the fact that 40% of our land is tax-exempt, largely due to the ownership of private higher education institutions that have the privilege of be tax exempt,” Morales said.
“Since our thriving institutions of higher learning generate enormous revenues and possess vast wealth and real estate, they should fully support our community through tax contributions, just like workers and small businesses. Now is the time to set accountability standards and finally demand fair investments in our communities,” he added.
Brown opposes both bills
Brain Clark, Brown’s spokesperson, said in a statement:
“Brown continues to believe that taxes imposed through legislative efforts hinder the efforts of higher education institutions to help students, improve education, push the boundaries of knowledge, advance technological innovation, and improve the health and well-being of our local communities. Each year, we spend funds from our endowment to support this essential work that benefits Providence and Rhode Island. We oppose both the effort to tax properties used for academic activity that allows universities like Brown to benefit the local economy so broadly, as well as the charitable tax giving to institutions that contribute to the public good in meaningful and lasting ways. are not kept in reserve to be drawn down occasionally or on a rainy day. In fact, raising thousands of restricted, donor-designated funds , which is an endowment supports a large and growing part of our operations, providing a large portion of annual revenue and enabling us to have a positive impact.
Legislative efforts such as these tend to ignore that Brown is making important contributions to the community we call home in important areas that meet public needs and offset the need for greater public resources. Teacher training, tutoring, mentoring and other programs in public schools; care provided in health clinics, addiction treatment centers and programs for victims of violence; to public health investigations into lead paint and partnerships with the city and state on other community health issues, the University makes a significant impact every day. This is in addition to the millions of dollars in voluntary payments to Providence each year, the taxes Brown pays on all commercial properties, and our role as the largest employer, employing 4,700 local residents. We also inject over $200 million in research spending into the local economy every year and continue to play a transformative role in the jewelry district, having invested over $225 million to bring new economic vitality to this area. part of town. »
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Yale v. Brown
In November, Yale University announced a major increase in payments to New Haven.
“A significant increase in voluntary payments from Yale to the city, totaling $52 million in new funds over six years. Combined with Yale’s existing voluntary payments, Yale will contribute approximately $135.4 million to the city over this six-year period. This amount is unprecedented nationally,” Yale said during the announcement.
In contrast, despite record growth in its endowment and fundraising, Brown University pays only a fraction of the amount of Yale’s contribution.
Prior to the announcement, Yale was already paying New Haven two and a half times more than Brown pays Providence. Now Yale is voluntarily making payments nearly four times the amount.
Neither amount includes fees.
Clark GoLocal in November, “In terms of direct payments to the city (as opposed to funding for PPSD, other programs, etc.) for the most recent fiscal year, Brown paid $6.2 million to the city between both voluntary payment agreements and commercial property taxes on property not used for educational purposes.
Clark said the amounts paid to Providence in direct payments include “$1.4 million in voluntary payments under the terms of the 2003 memorandum of understanding and $2 million under the separate 2012 memorandum of understanding. The balance includes municipal taxes that Brown pays for the real estate we own. and lease to commercial tenants, and transition payments for former commercial properties acquired by Brown and now used for institutional purposes. »
“Both deals will come to fruition by 2023, so there have been informal preliminary conversations about the right approach to consider a next deal,” he added.
Brown’s math, however, can be a bit fuzzy.
Figures provided to GoLocal by the city of Providence put Brown’s contribution at $3.2 million a year.
Regardless of the number, Brown contributes a tiny fraction of the amount Yale invests in New Haven. Additionally, Yale’s payments are focused on investments in the city, while Brown’s payments are fees and, de facto, property tax payments.