Mayor Elorza, Council President Aponte plead case for taxing nonprofits

PROVIDENCE, R.I. (WPRI) – Providence officials are again asking the General Assembly to approve a bill that would allow municipalities to charge nonprofit institutions up to 50% of what their tax bill would be if they weren’t tax exempt in order to cover the cost of police, fire and rescue services.

During a lengthy House Finance Committee hearing Wednesday evening, Mayor Jorge Elorza and Council President Luis Aponte made the case that the legislation would provide the city with a more predictable stream of revenue from the city’s large nonprofits, which include Brown University, Rhode Island School of Design, Providence College, Johnson and Wales University, Lifespan and Care New England.

“While their presence brings many positive contributions to the city, they put us in a difficult situation because we have to run 100% of the city on only 60% of our tax base,” Elorza said, referring to an oft-cited statistic that shows about 40% the city’s land parcels are owned by tax-exempt institutions.

“In addition, they use significant city resources while only contributing a small portion of their share in taxes,” Elorza continued.

The legislation, sponsored in the House by Rep. John Carnevale, is similar to a bill Providence lawmakers introduced in 2012 at the request of former Mayor Angel Taveras. The bill was never approved, but it gave the city leverage as it negotiated new payment-in-lieu-of-taxes (PILOT) agreements with its nonprofits.

Now the city wants more. In April, a study conducted by the National Resources Network suggested the nonprofits should be one of Providence’s top revenue targets as it seeks to reduce projected structural deficit that could balloon to $37 million over the next decade.

The study did not say how Providence should go about seeking more money from the nonprofits, but it did suggest working “more closely with anchor institutions to identify targeted investments” for more PILOT revenue rather than simply asking for money to plug budget holes.

“This bill gives us some predictability if enacted,” Aponte said. “But it also gives our tax-exempt partners some predictability.”

As it stands now, Providence’s budget relies on about $9 million in PILOT payments from its six major nonprofits. Lifespan, whose three-year deal to pay the city $800,000 annually expired in 2014, is the only nonprofit that does not currently have a PILOT agreement in place.

Predictably, the nonprofits oppose the bill.

Tony DeSisto, a lobbyist for the Association of Independent Colleges and Universities of Rhode Island, told the committee the legislation would create a third revenue stream from the nonprofits for municipalities. He noted that Providence already benefits from PILOT funding on the state level and agreements with each of its individual tax-exempt institutions.

“It would create different classes of nonprofits in this state [that would not] be treated equally with other nonprofit institutions in the state,” DeSisto said.

David Balasco, one of several lobbyists who represent Lifespan, was more direct. He criticized the Elorza administration for its “significant and profound and quite frankly, unfortunate lack of understanding about what we do and what we have done.”

He said Lifespan was the first hospital to reach an agreement with the Taveras administration and argued that the organization is currently paying about $1.72 million in taxes on property it owns or leases in the city.

Balasco said Lifespan has struggled financially in recent years and cannot afford to negotiate another deal with the city.

“The fact is, I’d be happy to say to the mayor ‘I could give you money,'” he said. “We just don’t have it to give.”

CORRECTION: The original version of this report incorrectly stated the House Finance hearing was on Thursday. It was on Wednesday.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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