Cities seek more money from tax-exempt colleges

Religious organizations and small charities are also tax-exempt, but there is little talk of targeting them for contributions. Going after churches is a political non-starter, and nonprofit community organizations don’t have much money to offer.

Demanding payouts from higher education and health care providers presented pitfalls, too.

Providence couldn’t afford to make adversaries of universities and health care providers — two growing sectors seen as the state’s best hope for reversing years of rising unemployment and economic stagnation. Rhode Island’s unemployment rate in March was 11.1 percent, or 3 percentage points higher than the nationwide level.

Brown had no legal obligation to contribute more but was facing significant political pressure in the Statehouse, where lawmakers were considering legislation that would authorize cities to require payments in lieu of taxes from tax-exempt institutions.

Simmons noted that Brown is one of the city’s top employers. Students spend money in Providence businesses. Research discoveries spur economic development. The Ivy League school burnishes the city’s national reputation. The mayor himself calls Brown “our major league franchise.”

But “it is simply unfair to ask our residents and businesses to pay more and more in taxes each year, while preserving a 250-year-old special privilege for an organization with a $2.5 billion endowment,” City Councilman John Igliozzi said in January, when he introduced a resolution calling on the state to remove Brown’s blanket property tax exemption.

Taveras went with a softer approach, asking the city’s largest tax-exempt institutions to help close a $22.5 million deficit that he warned put the city on the brink of bankruptcy.

Johnson & Wales University agreed to triple its annual voluntary payments to $958,000. A big health care provider decided to kick in $800,000 annually for three years.

Rhode Island House Speaker Gordon Fox said Brown’s help in staving off bankruptcy for Providence won’t be forgotten.

“Brown does add value,” he said with a smile on the day the deal was announced. “Today, it adds a little more value.”