Providence Considers Asking Some Nonprofits for PILOT Payments

In an effort to close a $110 million budget deficit, Providence mayor Angel Taveras has unveiled a plan to ask tax-exempt hospitals, colleges, and universities to make regular voluntary payments to the city in lieu of taxes, the Providence Journal reports.

Taveras plans to ask the nine largest nonprofit landowners in the city — Brown University, Johnson & Wales University, the Rhode Island School of Design, Providence College, Rhode Island Hospital, Women & Infants Hospital, Butler Hospital, Roger Williams Medical Center, and Miriam Hospital — to eventually contribute an amount equal to 25 percent of what they would owe if their property were not tax-exempt. It's estimated that the properties in question would generate nearly $100 million if fully taxed.

The plan is similar to one recently floated by Boston mayor Thomas Menino, who asked forty tax-exempt institutions in Boston to contribute partial payments to the city. Indeed, more than 115 municipalities in at least eighteen states, including Philadelphia, Baltimore, and Pittsburgh, collect payments in lieu of taxes from nonprofits, said Daphne Kenyon, co-author of a recent report by the Massachusetts-based Lincoln Institute of Land Policy. But because they often are "ad hoc, secretive, [and] unreliable," such agreements frequently don't pan out and can damage relations between nonprofits and the municipalities in question, added Kenyon.

Under an agreement with then-mayor David N. Ciccilline, the four private colleges and universities in Providence have been making voluntary payments to the city since 2003, contributing a total of nearly $30 million. For his part, Taveras and other Providence officials have been negotiating with the nine organizations included in his plan for the past two months. Absent written commitments from the organizations, Taveras will request the state's General Assembly to support a bill presented by state representative John M. Carnevale (D-Providence) that would force them to contribute more to city coffers.

While Taveras claims to have support among nonprofit leaders, support among the institutions in question has been tepid. Indeed, Johnson & Wales University, whose president Taveras considers a supporter, recently issued a statement which said in part that it "stands with the other three schools to explore other ways we can assist the city."

Alisha A. Pina. "Providence Mayor Targets 9 Nonprofits for Tax Collection." Providence Journal 05/08/2011.