Brown University agrees to double payments to hometown Providence

Reuters News
Posted: May 01, 2012 4:58 PM
Brown University agrees to double payments to hometown Providence

By Jason McLure

(Reuters) - Brown University agreed to nearly double its payments to Rhode Island's cash-strapped capital city, answering the Providence mayor's plea for help and staving off a municipal bankruptcy.

With more than $1 billion of property in the city and a $2.5 billion endowment, Rhode Island's sixth-largest employer had come under pressure to increase its almost $4 million annual payments to its hometown city, most of which are ‘voluntary contributions' because Brown is exempt from most property taxes as a non-profit.

The pact represents a "renewal of our shared willingness to work together to make both Brown and Providence successful," Providence Mayor Angel Taveras said in a statement on Tuesday.

Under the new agreement, the Ivy League school will pay the city an additional $3.9 million over the next five years, a figure that will fall to an additional $2 million from 2017-2022. The deal must be approved by the City Council.

"During this challenging period, the relationship of nonprofit institutions to their municipalities has been much debated not only in Rhode Island but also around the country," said Brown President Ruth Simmons in a letter released after the announcement.

"Such questions are valid and must be explored more thoughtfully and deliberately in the coming years to ensure that we are maximizing our substantial assets across the city and state," Simmons said.

Brown's agreement comes on the heels of a deal announced on Monday that the city struck with Lifespan, the state's largest hospital system, to pay $2.4 million over the next three years. Another university, Johnson and Wales, agreed in March to triple its contribution to Providence.

Cities including Boston and Chicago have sought to raise funds from non-profits in recent years by increasing so-called payments in lieu of taxes, or PILOTS.

As part of the deal Brown will get an additional 250 parking permits and the city will turn over to Brown ownership of several streets adjacent to campus property.

Taveras warned earlier this year that Providence faced bankruptcy amidst a $110 million budget shortfall. Since then tax increases and budget cuts have closed the gap to about $22 million.

Last week the city council passed an ordinance suspending cost of living increases for municipal employee pensions. Some retirees had enjoyed annual increases of up to 6 percent annually, and the city released data showing some retired firefighters and police received more than $110,000 per year.

The city has also trimmed its workforce by 200 people while teachers, firefighters and police have all agreed to lower pay or benefits.

(Editing by Barbara Goldberg and Eric Walsh)