May 8, 2011; Source: Providence Journal | Boston Mayor Thomas Menino’s policy of taxing large tax-exempt property owners is being copied as fast as brother and sister mayors can work the numbers into their municipal budgets. Providence, R.I., Mayor Angel Taveras is looking at potential payments from nine nonprofit hospitals and universities to help fill the city’s looming $110 million budget deficit. Taveras’s plan is to get the nine institutions pay in $24 million to the city budget which the mayor says is 25 percent of what these institutions would pay had their properties been taxable.
Among the nine nonprofit institutions are well-known higher education institutions such as Brown University, the Rhode Island School of Design, and Providence College. Beyond these nine, the city says that tax exempts own more than 40 percent of real estate in Providence.
Taveras’s plan would supplant a 2003 payment in lieu of taxes (PILOT) agreement with the four universities negotiated by former mayor David Cicilline, which has generated a total of almost $30 million. But Taveras is aiming for bigger numbers and more payers.
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Therein lies one of the problems with the Menino/Taveras concept of sending all-but-tax-bills to tax-exempt property owners. As the Providence Journal notes, “Taxing all of the city’s tax-exempt property could fill the budget gap, but the mayor is pressuring only the nine.” The Mayor cites Johnson & Wales University and Roger Williams Medical Center as endorsing his plan, but the hospital refused to comment to the newspaper and Johnson & Wales only said it “stands with the other three schools to explore other ways we can assist the city.”
Others are clearly not in the mayor’s camp, such as Rhode Island Hospital, whose spokesperson says that the institution “has a respectful difference of opinion with the mayor.” Brown University is talking to the mayor’s office, but its spokesperson said, “Writing a blank check, however, is out of the question.”
Maybe Taveras knows where this is going to lead. While negotiating with his city’s tax-exempts, he has also asked the state’s General Assembly to pass legislation that would give cities the right to charge tax-exempt property owners 25 percent tax bills. Taveras admits being inspired by Menino in Boston, but where the Menino concept is going to lead is hard to predict and potentially disruptive for nonprofit property owners.—Rick Cohen