Brown will pay Providence $31.5M more

PROVIDENCE, R.I. (WPRI) - Brown University on Tuesday bowed to heavy pressure and agreed to pay the city of Providence $31.5 million over the next 11 years, helping Mayor Angel Taveras in his efforts to keep the capital out of bankruptcy the same day another Wall Street firm downgraded its bond rating.

Brown will pay the city an extra $3.9 million before the current fiscal year ends on June 30 in addition to the $4 million it will pay under a 2003 deal with former Mayor David Cicilline. Under the terms of the agreement, the school will pay an extra $3.9 million per year through 2016, then pay an extra $2 million per year through 2022.

Taveras has also reached deals to get $600,000 from Johnson & Wales University and $800,000 from Rhode Island Hospital parent Lifespan. He wants $7.1 million in new money from the city's seven biggest nonprofits before June 30 and has secured roughly $5.3 million of that amount thus far.

• PDF: Read the Brown-Providence agreement
• At-a-Glance: Providence's Tax-Exempt Institutions
• Timeline: How Providence's Crisis Has Unfolded
• In-Depth: Providence Financial Crisis

"This would not have happened without President [Ruth] Simmons," Taveras said Tuesday during a packed press conference at the State House where the pair were flanked by Gov. Lincoln Chafee, who was praised by all sides for helping broker the agreement, and legislative leaders including House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed.

In exchange for the money, and pending City Council approval, Providence will abandon streets around Brown's campus and give the university 250 non-exclusive parking permits. Brown also says the state will not seek to alter its tax-exempt status. The deal does not include payments or fees for any property Brown will purchase or develop in the I-195 area.

Time for Brown to 'turn the page'

Simmons, who will be succeeded in June by Princeton University's Christina Paxson, has been president of Brown since 2000 and recently criticized the city's mismanagement. She said that while the additional payments will strain the university's resources, it was a necessary step to protect Brown and assist its hometown.

"At some point it's necessary to turn the page," Simmons said. She expressed hope that in the coming years the university can boost economic development in Providence the way the University of Rochester and other institutions there have helped that New York city weather the decline of Kodak, its largest employer.

Taveras stepped up to defend Simmons' comments about previous Providence administrations' profligacy. "She's correct," he said. "We have made mistakes."

Talks between the school and the city began last year and reached a low point late last fall. "It's easy to be myopic - most of us are," Simmons said. A "breakthrough" occurred last week during a "marathon session" of negotiations between her and the mayor that led to Tuesday's announcement, she said.

Mayor: Brown boosts capital

"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," Simmons wrote Tuesday in a letter to students and staff. "Such questions are valid and must be explored more thoughtfully and deliberately in the coming years."

Without voluntary deals, lawmakers had threatened to pass a bill requiring tax-exempts to pay 25% of what they'd owe if their properties were taxable. Fox said he thinks those proposals are no longer necessary.

On Tuesday, all was forgiven. Simmons received a standing ovation from the crowd and fulsome praise from Taveras, who said he and the university president exchanged text messages during the negotiations. Chafee, Fox and Paiva Weed lauded Brown's contributions to the vitality of Rhode Island.

"Brown is our major league franchise," Taveras said. "Brown puts us on the map, not only in the United States but around the world. ... It's vital that we work together to see them continue to grow and be successful, because if we want to see Rhode Island succeed we will never get there without Brown."

Progress on pensions, payments

Tuesday's news conference comes on the heels of an announcement Monday night that Providence had reached a deal with Lifespan, the nonprofit parent of Rhode Island Hospital, that will net the city an annual payment of $800,000 for three years. The mayor called that agreement "groundbreaking."

Providence's private colleges first agreed to contribute to the city budget back in 2003, but the hospitals have never done so up to now. "I hope it inspires the other hospitals who rely on a strong Providence to be a part of the solution that positions our capital city for the future,” Taveras said in a statement.

In addition, the mayor signed a far-reaching pension overhaul on Monday that will save the city at least $16 million this fiscal year and shave $236 million off its $900 million unfunded liability. "I believe that we are on the road in Providence to being the next great American comeback story," Taveras said Tuesday.

Taveras is still working to reach deals for the other $1.8 million with the city's four other large tax-exempts: Care New England (Women & Infants and Butler hospitals), CharterCARE (Roger Williams Medical Center and St. Joseph Health Services), Providence College and the Rhode Island School of Design.

'Grandstanding' concerns Simmons

During Tuesday's news conference, Taveras declined to comment on the status of those negotiations, but said he hopes to make progress with them. Providence officials said they are increasingly confident they can avoid a bankruptcy filing, though the pension changes are likely to be challenged in court by retirees.

The roadways near Brown that Providence will abandon under its agreement with the school are one block on Olive Street between Thayer and Brown streets; two blocks on Brown Street between George and Charlesfield streets; and one block on Benevloent Street between Brown and Magee streets.

Simmons suggested she hoped Rhode Islanders would work harder to welcome Paxson, her incoming successor, into the community. Shortly after Simmons arrived, she said the first outreach she received was when a previous mayor threatened to march up College Hill and call a press conference about taxing the university.

"That was my introduction to the city of Providence," Simmons said. "I think that if that kind of thing had not happened, I think we might be much further ahead than we are in our agreements with the city. ... It's very important for good relations to exist, and for grandstanding to be at a minimum."

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

Nancy Krause and Tim White contributed to this report.