PROVIDENCE, R.I. (WPRI) — The Providence City Council voted in favor of two payment-in-lieu-of-taxes (PILOT) agreements with four private higher-education institutions that could generate $223 million for the city over the next 20 years.
The agreements were negotiated between Mayor Brett Smiley’s administration and four institutions: Brown University, Johnson & Wales University, Providence College, and the Rhode Island School of Design. Brown has a secondary agreement, too.
The nonprofit organizations, while technically exempt from paying commercial taxes, have historically entered into the PILOT agreements as a way of contributing to city coffers in exchange for taking up so much physical space throughout the city and using services.
“This new agreement sets Providence on a stronger financial path forward and it makes our city a national example of what is possible when communities and their major anchor institutions work together,” Smiley said. “Together, we are laying the foundation to make Providence the world-class city that the brightest students, faculty, doctors, researchers and employees want to live, work and learn in.”
In a 9-1 vote (five councilors were absent), the council approved a memorandum of understanding, or MOU, with all four institutions totaling about $177 million over 20 years. As part of the MOU, the institutions will make voluntary payments and community contributions.
The city says voluntary payments are annual cash payments made by the institutions to the city. Those payments would increase every five years, starting with a 2% increase in the first five years. After that, payments would increase by 2.5%, then 2.75%, and finally 3%.
Separately “community contributions” are non-cash contributions made by the four institutions to improve Providence. Smiley’s agreement asks for these contributions to be tracked and publicly disclosed in an annual report.
The city said an example of that could include performing services traditionally provided by the city, like trash removal, snow removal, maintenance, and repair of public ways.
Institutions could also make voluntary contributions to support “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.”
The supplemental memorandum of agreement, or MOA, with Brown totals about $46 million over 10 years.
As part of the MOA, the city will support various zoning changes for Brown, in addition to changes to improve access, delivery, and service to a new Integrated Life Sciences Building project.
Councilman James Taylor, majority leader of the council, pointed out that the colleges still made voluntary payments under the previous agreements during the pandemic.
“I don’t see them not paying,” Taylor said.
Several councilors expressed the deal wasn’t perfect, but said they were grateful any agreement was reached.
“We’re not going to get everything,” Councilwoman Althea Graves said. “But we have to take what we can get.”
“Legally and financially, this is the very best deal that we could possibly get,” Councilor Pedro Espinal said.
Councilor Miguel Sanchez was the only vote in opposition on Thursday night.
“This isn’t good, in my opinion. It’s pretty sad,” Sanchez said. “This isn’t where I would want to be.”
Smiley unveiled the proposed PILOT agreements exactly a month ago after two separate agreements expired in 2022 and earlier in 2023.
The agreements more than double the previous amounts paid by the colleges, according to city officials. Under the combined prior agreements, Providence chief operating officer Courtney Hawkins said the city had received a total of about $94 million over 20 years.
Smiley calls the proposal “one of the most generous PILOT agreements in the country.” He plans to sign the agreements sometime in the next week, according to Smiley spokesperson Josh Estrella.
Once the agreements are signed, it would also end a hiring freeze for new “non-essential” jobs, and give the city a chance to begin working on quality-of-life issues, like sidewalk repairs.
Since the mayor announced the two agreements on Sep. 5, the public got to weigh in on the proposed agreements. Many students from Brown spoke in opposition at the hearing.
After receiving feedback from college students, residents, business owners, and community leaders in a public hearing last Tuesday, the City Council Finance Committee discussed the agreements and advanced them to the full council in a 2-1 vote two days later.
The panel voted to submit the agreements to the City Council without a recommendation.
While Councilwoman Sue AnderBois and Councilman James Taylor both voted in favor, AnderBois made clear she did not have a position on the agreements and only wanted to make sure the rest of the City Council could weigh in.
The agreements on the table did not include Rhode Island’s biggest hospital group, Lifespan, which owns Rhode Island and Miriam hospitals in Providence. During a Sept. 15 taping of Newsmakers, Smiley expressed frustration over Lifespan’s lack of PILOT payments.
“They have had a policy, I guess it’s fair to say, that when they have a good year, they throw us something, and when they don’t they don’t,” Smiley said. “That’s deeply offensive to me.”
Lifespan’s new president and CEO, John Fernandez, responded on last week’s Newsmakers taping, expressing an openness to negotiating, but declined to get into details.
“We’re going to help support the city, but we just have to have that negotiation with his team and move on,” Fernandez said.
Lifespan and Smiley’s team held their first negotiating meeting on Wednesday, and both sides indicated to 12 News the discussion had been constructive. Neither side gave details about what was discussed or when they plan to meet again.
Council President Rachel Miller said Thursday night’s vote may “set the tone” for Lifespan.
“I think that there’s an opportunity to sort of say like, ‘There’s only one institution not participating in voluntary payments,’ and I’m looking forward to Lifespan coming to the table,” Miller said.