The colleges and hospitals in Providence get lumped together a lot. (I know I do it.) Often that makes sense – they’re two sets of powerful, wealthy, not-for-profit institutions whose presences are felt throughout the city.
But in other ways, they’re different – and Mike Stanton’s terrific Projo profile of Mayor Angel Taveras offers me an opportunity to point out a key distinction of which I’m not sure many people are aware (emphasis mine):
Taveras says talks have intensified with the city’s nonprofit hospitals and universities about contributing more ….
Another test will be his efforts to collect more from the city’s nonprofit hospitals and universities. Taveras says he must balance the city’s financial plight with the role that those institutions play in helping the city and state develop a “knowledge economy” in the old Jewelry District and on the downtown land freed up by the Route 195 relocation. …
Brown president Ruth Simmons says that charging nonprofits, such as Brown … could force the university to lay off employees, while overlooking Brown’s value to the city as an economic engine.
Still, she praises the new mayor’s intelligence and toughness, says that his decisions seem based on facts, not politics, and welcomes “a fact-driven discussion.”
Here’s the thing: The Cicilline administration’s 2003 deal to get $50 million in voluntary payments in lieu of taxes (PILOTs) over the next 20 years only included the four private colleges. The schools also pay taxes on some non-exempt properties and reimburse the city for police and fire services. The three types of direct payments totaled $7.9 million in 2009-10, according to their association.
By contrast, the big hospitals – Rhode Island Hospital and The Miriam, both owned by Lifespan; Women & Infants and Butler, owned by Care New England; and Roger Williams Medical Center, now owned by CharterCARE – don’t have any PILOT agreement with the city, and thus don’t make any direct contribution to its budget.
“There are no formal payments,” Amanda Barney, a spokeswoman for the Hospital Association of Rhode Island, told me. ”It’s all in the form of the benefit that [the hospitals] provide to the community through employment, uncompensated care and those sorts of things.” Of course, the colleges point out that they provide indirect benefits of their own.
I raise this because lumping the universities and the hospitals together doesn’t seem particularly fair to the schools or particularly helpful as the city grapples with its financial crisis.
In this case, Brown President Ruth Simmons is standing in for all the nonprofits – but she did agree to the 2003 deal, which the hospital executives haven’t done.
What, for instance, does Lifespan CEO George Vecchione think should happen? He made an astonishing $9.3 million in 2009 - an amount equal to one-third of Providence’s $29 million budget deficit this year. (Simmons earned a comparatively paltry $884,771, IRS filings show.)
On a less populist note, the final report [pdf] released last fall by the Providence City Council’s Commission to Study Tax-Exempt Institutions estimated a gap of up to $6.2 million between the city’s revenue from tax-exempts and the cost of providing services to those organizations. Vecchione could cover that and still keep $3.1 million.
The commission offered Providence a range of suggestions, including pushing the General Assembly to appropriate more PILOT reimbursement money or using Boston’s model, which allows nonprofits to itemize the services it provides the community to show how it makes up for part of the foregone property-tax revenue. It also suggested negotiating a PILOT payment with the hospitals mirroring the one with the universities.
For the record, the report found the nine “major tax-exempt institutions now own 15% of the land within the city (23% of all non-public land),” with an assessed value of $3.1 billion. It also included this neat map comparing the footprint of tax-exempt properties in 1985 and 2005:
(map: Providence City Council)