From The City of Providence-Mayor Brett Smiley:
Today Mayor Brett P. Smiley was joined by City Council President Rachel Miller, City Council Pro Tempore Pedro Espinal, Brown University President Christina H. Paxson, Rhode Island School of Design President Crystal Williams, Providence College President Fr. Kenneth R. Sicard, O.P., Johnson & Wales University Chancellor Mim L. Runey, LP.D, Local 1033 Business Manager Ronald Coia, Narragansett Creamery Owner and Founder Mark Federico, and Providence community members to announce the new proposed Payment In Lieu of Taxes (PILOT) agreement between the City of Providence and the four private higher learning institutions (Brown University, Rhode Island School of Design, Providence College and Johnson & Wales). The proposed new agreement more than doubles the financial contributions the City of Providence will receive over the next twenty years, builds a mutually beneficial agreement with each of the higher education institutions, and serves as a national model for PILOT agreements in other communities.
“I am incredibly proud of the new agreement we are proposing today, which makes Providence a national example for collaboration and positively impacts our city for generations to come,” said Mayor Brett P. Smiley. “Our City needs these funds in order to keep paying our bills on time, and to provide the highest quality city services we all deserve. Our institutions also need Providence to be a city where students, faculty, doctors, researchers and their employees want to be. This proposed agreement sets us all up for long-term success.”
The new local PILOT agreement being proposed by Mayor Smiley has two main components:
- a memorandum of understanding (MOU) with all four institutions, which includes voluntary payments and community contributions.
- a memorandum of agreement (MOA) with Brown University solely which provides additional payments to the City in exchange for support of some key priorities.
When comparing voluntary payments alone, Mayor Smiley’s proposed agreement reaches a total of $223,472,813 between the MOU and MOA — a 138 percent increase from the combined 2003 and 2012 agreements. Additionally, the proposed agreement includes commercial property taxes, transition parcel payments and the estimated value of community contributions, which totals $442 million in contributions from the four colleges and universities over the next twenty years.
“I thank Mayor Smiley and his team and the four non-profit universities for entering earnest, mutually beneficial negotiations,” said City Council President Rachel Miller. “When Providence succeeds, we all succeed. The City Council is consistently concerned about passing costs onto our residents. This agreement helps secure predictable funds so the city can not only maintain exceptional services but lessen any burden on Providence taxpayers.”
City Councilman Pedro Espinal further added, “I am proud to support this deal that recognizes the way both the City and the universities can help one another succeed over the long-term. This agreement more than doubles the contribution the city receives, allowing us to improve the quality of the city services we give our residents, and it includes direct investments into the community. This is the kind of partnership that will help Providence become a world-class city, and I look forward to working to pass this through the City Council.”
First, the MOU outlines voluntary payments from each of the institutions to the City that increase at an escalating rate over the course of the 20-year period. In addition to these direct payments, the MOU formally recognizes the community contributions the colleges and universities make in Providence and that positively impacts the city. Examples of those as defined in the agreement include:
· Tax revenue generated by commercial leases on properties owned by the institutions.
· Services provided by the institutions in lieu of the city services.
· Scholarships and financial aid provided by the institution to residents of the City of Providence (including for summer and high school programs).
- Voluntary contributions to and financial support of K-12 education, including the Providence Public School District, public charter schools serving City of Providence residents, and non-profit organizations supporting K-12 education.
· Voluntary assistance and services provided to City employees.
· Voluntary payments to District Management Authorities and similar entities.
· Voluntary contributions and payments to public spaces, resources and parks and related organizations.
· Voluntary contributions to and financial support of City and public-serving non-profit organizations.
· Voluntary contributions or public safety personnel staffing and dedicated space and facilities provided for the exclusive use of the City.
· In-kind and other forms of non-financial support for programs, services and activities that directly benefit the City of Providence and its residents.
The estimated total value of just the community contributions is $177,472,813 over the life of the proposed PILOT agreement, and all community contributions will now be publicly published in an annual report.
Second, Mayor Smiley’s proposal includes an additional memorandum of agreement (MOA) with Brown University that advances state and local economic growth goals. As part of the MOA, Brown University will contribute additional voluntary payments in the amount of $46 million over 10 years. These payments can be lowered or substituted when Brown University contributes the following to the City:
· Substantially and materially participating in the generation of new tax revenue.
· Returning property to the commercial tax rolls.
· Providing direct investments in development projects, including but not limited to workforce housing, childcare and public parks.
Between the two agreements, Brown is committed to contributing more than $174 million in direct voluntary payments to Providence between 2024 and 2043, increasing its current average annual investment in city finances to $8.5 million.
“Investing in the success of our home city is embedded in our mission of education, research and service,” Brown University President Christina H. Paxson said. “The commitments reflected in these agreements will have a meaningful and positive impact in our local community, and will enable Brown and city leaders to address common challenges, foster community and economic development and improve the quality of life for those who call Providence home.”
In return, through the MOA, the City will support key zoning/planning changes:
· Support the transfer of five blocks of public streets to Brown University where there are major facilities on both sides all owned exclusively by Brown University.
· Extend the previous parking agreement for Brown University faculty and staff.
· Support changes to improve access, delivery and service to the new Integrated Life Sciences Building project.
· Support uniformly zoning a Brown-owned parcel (northeast corner or Power and Brook streets) with the rest of the Institutional Zone.
· Relocate the Providence Police substation from 172 Cushing Street.
These changes would better support Brown’s continued investment, create new jobs, create new tax revenue for the City, and overall better support the City’s ability to provide high-quality city services to all of its residents.
“These increased contributions go directly towards maintaining and improving the multitude of city services that Providence residents and local businesses depend on every day,” said Local 1033 Business Manager Ronald Coia. “This is great news for the men and women of Local 1033, who are proud to be the backbone of these critical services. I am strongly supportive of this proposal and I want to thank all of the partners for producing a better deal for Providence and our membership.”
Mayor Smiley’s proposed agreement has the potential to become one of the most generous in the country. When looking at similar-sized cities, the agreement between Yale University and the City of New Haven is the closest comparison and is often recognized as a generous agreement. In FY24, Yale University provided New Haven with $24.1 million in voluntary payments. However, when comparing endowment sizes to voluntary contributions, Yale University’s voluntary payments are 3.5 times smaller than what the four institutions will pay. When comparing the projected 20-year tax payments in both agreements, Yale pays 10.6 percent of the total value, and the institutions would pay 11.2 percent. When comparing percentage of real property value in both agreements, both stand at 7.9 percent, but Yale’s proportion of property owned in New Haven is 2.4 times the size of the proportion of property owned by the 4 educational institutions in Providence. Additionally, Yale’s payment is only 1.6 times larger than what is being proposed in Mayor’s Smiley agreement—occupying more property in their city at a lower proportion of payment. Whether comparing based on the value of the property, voluntary payment to estimated taxes, or the value of the endowment, Providence’s new agreements exceed those between Yale and New Haven.
“Not only do the city’s colleges and universities help to make Providence the dynamic city it is culturally, they are instrumental in using their purchasing power to support the growth of small, family-owned businesses like mine,” said Mark Federico, founder and owner of Narragansett Creamery in Olneyville. “The voluntary payments in these agreements are tremendously important in supporting the city financially. Just as important is the role the universities play as economic engines, injecting tens of millions of dollars into the local economy each year and providing the steady source of business that allows companies like mine to invest in growth, employ city and state residents and thrive in a vibrant Providence community.”
Lastly, improving the local quality of life for Providence residents is a top priority for the Administration. That’s why Mayor Smiley’s proposed agreement includes the formation of a bimonthly “Quality of Life” working group between the Administration, the City Council and each of the four private higher learning institutions. Through this working group, City Departments and the institutions can better work together to address quality of life concerns reported by neighbors of the institutions and other issues and concerns of common interest raised by the City and the institutions.
“As an institution dedicated to fostering the next generation of artists, designers and creative thinkers, RISD is committed to ensuring Providence remains ‘The Creative Capital’,” said RISD President Crystal Williams. “We look forward to continuing to partner with the city—home of many of our faculty, students, staff and alumni and alumni owned businesses—to keep Providence the culturally vibrant and civically engaged hub it is.”
Mayor Smiley’s proposed local PILOT agreements with the colleges and universities builds upon the previous agreements made in 2003 and 2012. The first PILOT payment agreement was established during the 2003 recession, when Providence’s private higher education institutions (Brown University, Johnson & Wales University, Providence College, and Rhode Island School of Design) voluntarily entered into a 20-year local PILOT agreement with the City to increase their financial contributions to the municipality and the community. Subsequently, in 2012, the City entered into 10-year individual agreements with the institutions to provide additional payments for certain institution-specific benefits and services. As of this year, both agreements expired, which is why Mayor Smiley prioritized negotiating new local PILOT agreements with the institutions during his first year in office.
“Providence College has long recognized the need to be a collaborative partner with the City of Providence,” said Providence College President Fr. Kenneth R. Sicard, O.P. “We share Mayor Smiley’s vision for our host city to be financially strong, artistically vibrant, and able to provide the necessary services that its residents expect and deserve. It is certainly in the best interests of the College and of our many faculty, staff, and students who live in the city for us to participate in this historic agreement. We look forward to working with Mayor Smiley and his administration, as well as the members of the Providence City Council, to continue to shape our city’s future and help put it on a firm path for success in the years to come.”
Johnson & Wales University Chancellor Mim L. Runey, LP.D. added, “The higher education landscape has changed dramatically and so has Johnson & Wales since the university committed to provide voluntary payments to the City of Providence twenty years ago. What hasn’t changed is our deep commitment to being a good neighbor and community partner in our capital city that is home to thousands of Johnson & Wales’ students, faculty, staff and alumni, all contributing to the vibrancy of Providence. From providing financial aid to students from Providence to sharing our facilities and athletic fields and offering hundreds of hours of community service annually, there are so many ways we give back to the city. We are proud to renew our 20-year pledge to continue to support the City of Providence both financially and in service.”
The proposed PILOT agreement will go to the Providence City Council on Thursday, September 7 for introduction and then is subject to further review by the Council Finance Committee.
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