PROVIDENCE, R.I. (WPRI) — Mayor Brett Smiley signed a payment-in-lieu-of-taxes (PILOT) agreement with four private higher-education institutions Thursday morning that could generate at least $177 million for the city over the next 20 years.
Brown University, Johnson & Wales University, Providence College, and the Rhode Island School of Design, are exempt from paying commercial taxes but have historically entered into the PILOT agreements as a way of contributing in exchange for taking up so much physical space throughout the city and using services.
“We’re excited now to start the next chapter with the colleges,” Smiley said.
The mayor, along with Brown University President Christina Paxson, also signed a supplemental memorandum of agreement, or MOA, that totals about $46 million over ten years.
As part of the MOA, the city would support various zoning changes for Brown, in addition to changes to improve access, delivery, and service to a new Integrated Life Sciences Building project.
“This is not a completely transactional agreement. This is an agreement that gives us incentives to do even more on behalf of the city,” Paxson said.
She said Brown is looking forward to real estate development in Jewelry District, in addition to being an anchor partner in other development projects in the city.
“I don’t even know what comes after that. But it’s very exciting,” she said. “Knowing that we don’t have to negotiate this every year and we can get on with business and doing great things, is a real asset.”
The memorandum of understanding, or MOU, asks all four institutions to make voluntary payments and community contributions. Those payments, according to the city, would be paid in cash and would increase every five years.
“The combined voluntary payments and community contributions are $442 million over the next 20 years and make a meaningful impact in both financial stability, community impact, and the long-term success of our beautiful Providence,” Smiley said after signing the agreements on Thursday.
The agreements signed Thursday represent a 138% increase over the combined 2003 and 2012 agreements between Providence and the four institutions, according to the Smiley administration.
Smiley said he expects the first payments to start being made “soon,” noting that they have to be made in this fiscal year.
“We don’t expect there’ll be any delay,” he added.
Even before the payments start rolling in, the signing of the agreements now opens up more city jobs. A hiring freeze for new non-essential jobs was put in place in July when the mayor signed the city budget.
“The condition on the budget last year was to ensure that we have signed agreements sufficient to cover the budget figure that we have put in,” Smiley explained. “So now that the agreements are signed, the hiring freeze has been lifted, and we will start making those investments that the council and the administration together prioritized this year’s budget.”
The mayor said that includes jobs that will improve the quality of life in the city, like an additional sidewalk crew to work on a backlog of sidewalk repairs, and jobs in the public property department to deal with graffiti.
“We’re going to see what work we can get done before winter comes. Some of these are construction season-dependent, but we’re going to start recruiting for those positions right away,” Smiley said.
The Providence City Council voted in favor of advancing the agreements to the mayor’s desk at its regular meeting last Thursday.
“It is an agreement that raises the bar for our relationship between, not just these four non-profit education institutions, but how the city works with all of our non-profit institutional partners,” City Council President Rachel Miller said.
From the vetting process through the most recent meeting last week, several councilors expressed the deal wasn’t perfect, but said they were grateful any agreement was reached. The council ultimately voted 9-1 to send the agreements to the mayor for his signature.
Before that meeting, the public got to weigh in on the proposed agreements. Many Brown students in attendance voiced their opposition to the proposals, asking the city to go after more money from their university.
With the new agreements with the colleges now finalized, the focus now shifts to the state’s largest 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.
Lifespan’s new president and CEO, John Fernandez, responded in a subsequent Newsmakers taping, expressing an openness to negotiating, but declined to get into details.
Lifespan and Smiley’s team held their first negotiating meeting last week. Both sides indicated to 12 News the first discussion had been constructive.
“We have weeks and probably months of work ahead. A follow-up meeting has been scheduled, and we’ve got some work to do still between the two parties,” Smiley said. “But I’m grateful that we’re now finally on the table and in the process of starting to trade proposals.”