May 13th, 2013 at 6:19 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Rhode Island’s congressional delegation slammed the Internal Revenue Service on Monday for giving special scrutiny to conservative groups, but U.S. Sen. Sheldon Whitehouse suggested the scandal reflects a broken national campaign-finance system.
August 22nd, 2012 at 9:29 am by Ted Nesi under Nesi's Notes, On the Main Site
Suzanne Sataline reports for The Chronicle of Philanthropy (emphasis mine):
Federal tax data analyzed by The Chronicle of Philanthropy showed that taxpayers in the Providence metropolitan area gave less to charity in 2008 than residents of any of the other 50 largest metropolitan areas. A similar Chronicle study using 1997 data yielded comparable results. …
Each year, that has meant limited money and greater challenges for homeless shelters, Catholic schools, food banks, hospital programs, after-school classes, job-retraining sessions, and small theater groups, some of which have been forced to close their doors. …
While it may be surprising to see so little giving in a city that is home to an Ivy League institution (Brown University) and known as a summer haven for the Vanderbilts and Astors, with Gilded Age mansions and sailboat races, nonprofit leaders say fundraising is tough because few big companies operate in the state.
What’s more, state and local governments have been so strapped for money they are imposing taxes and adopting other fiscal policies that leave the middle- and upper-income residents with less disposable income.
Fundraisers here say it takes extraordinary effort to meet each year’s budget goal.
Sataline also reports that The Rhode Island Foundation has commissioned a study from Boston College’s Center on Wealth and Philanthropy to examine why middle- and low-income people in Providence give less than their peers in other parts of the country. The findings are due out later this year.
May 14th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
During the long months Providence and Brown University spent discussing money, city officials refused to break out exactly how much cash they wanted from each of Providence’s seven tax-exempts to reach their $7.1 million goal. The mayor said on Newsmakers this weekend he doesn’t like to negotiate in public.
That, according to The Tax Foundation’s I. Harry David, is precisely the problem with these sorts of agreements.
Citing a much-discussed 2010 Lincoln Institute of Land Policy study [pdf], David warns that payment-in-lieu-of-taxes (PILOT) agreements “are often secretive, haphazard, arbitrarily calculated, and an unreliable source of funds in the long-term.” He continues:
PILOT payments are less than what a nonprofit would pay if it was not tax exempt, but more than what it is obligated to pay as tax exempt organizations (i.e. zero). Because of this, PILOTs might be viewed either as a subsidy or as a tax. … Viewed either way, the payment is in an arbitrary amount.
The debate over PILOTs resembles the debate over whether to give nonprofits tax-exempt status as charitable organizations. The argument against the exemption is that it violates the benefit principle: nonprofits should pay the government for the services they use. And we have previously made the argument that giving some organizations tax-exempt status gives them a competitive advantage over similar organizations that are not tax-exempt.
May 4th, 2012 at 11:13 am by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Johnson & Wales University has agreed to advance Providence $5 million by June 30, but Mayor Angel Taveras says he won’t count the full amount toward his 2011-12 budget needs despite protests by other tax-exempt institutions.
May 1st, 2012 at 12:56 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Brown University on Tuesday bowed to heavy pressure and agreed to pay the city of Providence $31.5 million over the next 11 years, bringing Mayor Angel Taveras a step closer to his goal of keeping the capital out of bankruptcy.
Update: All the mayor’s moves haven’t convinced Wall Street, however. Standard & Poor’s cut Providence’s bond rating from BBB+ to BBB on Tuesday, only two steps above junk status. S&P said that while Taveras has taken significant steps to fix the problem, “the city’s budget remains structurally imbalanced,” and Providence’s fiscal outlook is still negative (as opposed to stable).
Update #2: Want to read the Brown U.-Providence agreement for yourself? Download the PDF.
April 30th, 2012 at 9:56 pm by Ted Nesi under Nesi's Notes
Read all about it - a productive 24 hours for the mayor, with a balanced budget now suddenly within reach.
March 29th, 2012 at 2:20 pm by Ted Nesi under Nesi's Notes, On the Main Site
Here’s an interesting chart city officials gave out on Thursday afternoon at a hearing on a bill to force tax-exempt institutions to pay 25% of the tax bill they’d owe if their property was taxable. It shows the latest assessments of property owned by the seven largest, led by Brown University and Lifespan hospital group:
• Related: Moody’s: Cities must balance tax-exempts’ cash, contributions (Feb. 15)
February 28th, 2012 at 10:32 am by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Providence Mayor Angel Taveras says he’s “making good progress” in negotiations with Brown University over how much the Ivy League school should increase its contribution to the city budget.
Taveras and Brown President Ruth Simmons have met face-to-face twice in the last two weeks and spoke by telephone on Monday, the mayor told WPRI.com. “We’re planning to meet again soon,” he said. “She’s personally involved.”
Taveras met earlier this month with the CEOs of Providence’s large hospitals to plead the city’s case with them. “We’re pursuing that, as well,” he said. “Those conversations are ongoing.”
The mayor has asked Providence’s largest tax-exempt schools and hospitals to contribute an additional $7.1 million to the city budget as he tries to keep the state capital out of bankruptcy. An exclusive new WPRI 12 poll set for release Tuesday at 6 p.m. will show whether Rhode Islanders think the state should keep the city out of Chapter 9.
Taveras will meet Saturday morning with city retirees to ask them to accept voluntary reductions in their pension benefits. “You have to have structural change,” the mayor said Tuesday. “You cannot simply rely on more revenue to solve this problem.”
• Related: Moodys: Cities must balance tax-exempts’ cash, contributions (Feb. 15)
(photo: Ted Nesi/WPRI)
February 21st, 2012 at 9:51 am by Ted Nesi under Nesi's Notes, On the Main Site
If you thought Providence’s fight with Brown University was tough, look across the pond. Italy is trying to squeeze more revenue out the most powerful tax-exempt of all – the Vatican:
The government of Prime Minister Mario Monti … [said] it would change Italian law to ensure that the church pays property tax on the parts of its buildings used for commercial ends.
The church owns vast amounts of property in Italy, and the move is aimed at making sure that convents that offer bed-and-breakfast services or church buildings that rent space to shops pay their share of taxes.
The change — once it is formally drafted and approved by Parliament — could result in revenues of $650 million to $2.6 billion annually, according to municipal government associations. It could also set an example for other European countries that are struggling with debt — notably Greece and Spain — and where there is growing popular resentment over tax breaks for the church. …
Many church buildings fall into a gray area, taking advantage of a tax exemption for religious organizations’ buildings even if they are largely used for commercial purposes.
Sound familiar?
In Providence, $602.5 million worth of property owned by religious institutions is exempt from taxation, according to city documents. That’s equal to a little less than 9% of the city’s $6.7 billion in total exemptions.
(photo: Enrique Cornejo/Wikipedia)
February 15th, 2012 at 1:14 pm by Ted Nesi under Nesi's Notes, On the Main Site
Moody’s Investors Service thinks Providence and other cities could reap significant rewards from pushing local tax-exempt institutions to fork over more money. But they should guard against killing the goose that laid the golden egg.
Payments in lieu of taxes, or PILOTS, “represent a potential revenue boon for local governments with high concentrations of tax-exempt properties in their tax bases, many of which are in the Northeast,” Moody’s analysts wrote in a research note Tuesday that singled out Boston as a successful example.
“Though far from immanent, greater PILOT revenue comes with long-term risks for some local governments should PILOTs grow so large that they impair not-for-profits’ ability to create jobs and stimulate the economy, or encourage them to move elsewhere,” Moody’s said, adding: “In general, local governments are still far from that tipping point.”
“Efforts by local governments to bolster PILOTs appear to be shaping into a trend,” according to Moody’s. In addition to Providence and Boston, Scranton, Pa.; Worcester, Mass.; Framingham, Mass.; and Newton, Mass., have all sought larger voluntary payments recently.
February 9th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Is Providence biting the hands that feed its residents?
Providence Mayor Angel Taveras and his aides certainly don’t see it that way. But the seven tax-exempt institutions they’re targeting for a bigger contribution to Providence’s budget employ one in five workers there, making each of them one of its main employers, city documents show.
The gang of seven are Brown University, Lifespan (Rhode Island and The Miriam hospitals), Care New England (Women & Infants and Butler hospitals), CharterCARE (Roger Williams Medical Center and St. Joseph Health Services), Providence College, Johnson & Wales University and the Rhode Island School of Design.
Those seven tax-exempts employed 20,837 workers in Providence in 2011, which was 19.5% of total city employment, according to R.I. Economic Development Corporation data city auditors prepared for bondholders. Brown is the city’s No. 1 employer with 5,162 workers, or 4.83% of total city employment.
February 3rd, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Rhode Island Hospital’s parent company paid its CEO $9.5 million in 2009, but the industry’s top lobbyist says that doesn’t mean Providence’s hospitals can afford to start contributing money to the city budget.
“You have to look at the role hospitals play in their community,” Ed Quinlan, president of the Hospital Association of Rhode Island, told WPRI.com on Thursday. “Executive compensation is determined by hospital boards based on the financial performance of the hospital, based on the financial stability of the hospital – there’s multiple factors.”
Local hospital chain Lifespan’s CEO George Vecchione earned $9.5 million in fiscal 2009, after getting paid $3.2 million in 2008 and just under $3 million in 2007, federal income tax filings show. House Speaker Gordon Fox cited Vecchione’s compensation on “Newsmakers” last month as evidence that all nonprofits should contribute.
Quinlan declined to say whether a portion of the money Lifepsan uses to pay Vecchione should be redirected to the city that’s home to three of its hospitals: Rhode Island, Hasbro Children’s and The Miriam. ”I couldn’t respond to a specific case, because I’m not party to those discussions,” he said.
December 28th, 2011 at 11:27 am by Ted Nesi under Nesi's Notes, On the Main Site
Former Congressman Patrick Kennedy sent an email appeal Wednesday to seek donations to the Edward M. Kennedy Institute for the United States Senate, a nonprofit educational center being built on the campus of the UMass Boston.
A groundbreaking ceremony for the institute was held in April, and Kennedy said he expects “significant milestones” in its development next year. He pointed out donations to the nonprofit made before Saturday can be deducted from this year’s tax bills.
“As a young child, I had the great privilege of walking the halls of the Capitol with my dad, Ted Kennedy, as he worked tirelessly to make America live up to its highest ideals,” Kennedy wrote.
October 24th, 2011 at 12:23 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Two separate reviews have been launched into the Providence Community Action Program, a taxpayer-funded nonprofit with close ties to city government, WPRI.com has learned.
Providence City Council President Michael Solomon, who chairs the ProCAP board, acknowledged Monday he has ordered “an independent operations assessment” by accountant Ken Richardson in addition to the annual audit required by law being conducted by Braver Associates.
“The board and I look forward to reviewing Mr. Richardson’s findings when they are complete,” Solomon said in a two-sentence statement.
Providence Mayor Angel Taveras “is aware of this review of ProCAP’s management and is obviously concerned if any improprieties are found to have occurred,” spokesman David Ortiz told WPRI.com. “We await Mr. Richardson’s report and will continue to monitor developments at ProCAP.”
Richardson served on the emergency fiscal review team appointed by Taveras in January that uncovered a $180 million two-year structural deficit in Providence’s municipal budget.
It’s unclear what prompted the additional scrutiny of ProCAP, but board vice-president Paul McDonald acknowledged there are concerns about how its finances have been handled.
June 10th, 2011 at 12:39 pm by Ted Nesi under Nesi's Notes
Better double-check your next write-off.
More than 1,000 nonprofit organizations in Rhode Island lost their tax-exempt status on Thursday after failing to file required documents for three years in a row, the Internal Revenue Service has announced.
They were among roughly 275,000 nonprofits – about 14% of the national total – that lost their exemptions following an IRS review of their status. The agency said it “believes the vast majority of the newly revoked groups are no longer in existence.” Organizations can apply to get back their tax exemption.
The IRS said it revoked the tax-exempt status of 1,031 nonprofits in Rhode Island. The list includes a number of union locals, two dozen American Legions, 10 Knights of Columbus, fraternities and sororities, and groups such as the Ocean State Knitting Guild and the Newport IBM Club.
“During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file,” IRS Commissioner Doug Shulman said in a statement. “Still, we realize there may be some legitimate organizations, especially very small ones, that were unaware of their new filing requirement.”
The IRS has posted the full list here. The Chronicle of Philanthropy has more details on the revocations.
April 28th, 2011 at 1:23 pm by Ted Nesi under Nesi's Notes
Speaking of Brown, my ace intern Claire Peracchio has a terrific story in today’s Daily Herald that looks at the potential for Providence’s newly cleared Iway land – and the possible sticking points that could derail the university’s, and the city’s, current plans:
The state’s political leaders call it a once-in-a-generation economic opportunity. Set to be completed at the end of 2012, the 10-year relocation of Route 195 has cleared 20 acres of prime real estate in Providence’s Fox Point and Jewelry District, some of which Brown is eyeing for further expansion.
The area, known as the Knowledge District, has been billed as a hub for research in medicine and the life sciences — an engine for growth in Rhode Island’s still-struggling economy.
But there is currently no process in place to sell the land, and recent discussions have stalled on the issue of taxation, particularly for tax-exempt nonprofits like Brown. The prospect of subtracting land from the tax base of a city facing a two-year $122.6 million deficit by selling to a nonprofit has until now been a political non-starter.
The city’s fiscal woes complicate Brown’s expansion plans, said Richard Spies, executive vice president for planning and senior adviser to the president. “It means that what might seem like a really terrific idea, investment by a not-for-profit, all of a sudden seems a lot more scary for the city because they’d like to have some tax revenues from that,” he said.
Now, the General Assembly is considering a bill that would finally establish a process for selling the land. For the city’s expansion-minded nonprofits, the stakes are high.
Read the whole thing. I like the first section header: “My way or the Iway.” Clever! And while you’re poking around the Daily Herald site, check out the paper’s “Town/Brown” series about the university’s sometimes tense relationship with the City of Providence.
(photo: R.I. Department of Transportation)
April 1st, 2011 at 7:00 am by Ted Nesi under General Talk, Nesi's Notes
After Tim White and I reported last month that figures tied to the Navy kickbacks case had donated nearly $100,000 to top Rhode Island politicians, most of the recipients pledged to get rid of the cash by giving it to charity. Now we know which nonprofits will reap the benefits.
The biggest beneficiary by far is the Rhode Island Community Food Bank. U.S. Sen. Jack Reed’s office said he will give the food bank the entire $22,460 in donations he received from figures tied to the kickbacks case.
Another major recipient is Crossroads Rhode Island, which provides services to the homeless. Crossroads will get $5,950 from U.S. Rep. David Cicilline and $2,000 from Gov. Lincoln Chafee, their offices said.
U.S. Sen. Sheldon Whitehouse’s office said he will split the $2,500 he received between the food bank, Crossroads and four other organizations: the Pawtucket Soup Kitchen; Amos House in Providence; the Johnnycake Center of Peace Dale in South Kingstown; and The WARM Center in Westerly.
U.S. Rep. Jim Langevin got nearly as much money as Reed from people tied to the kickbacks investigation – $22,190 – but unlike the rest of the state’s congressional delegation, Langevin told us last month he doesn’t plan to return the contributions because they “were accepted in good faith prior to my knowledge of possible wrongdoing.”
Langevin’s new spokesman, Jonathon Dworkin, said the congressman hasn’t changed his mind and is still planning to keep the cash. He would miss it a lot more than Reed – the amount is equal to over 12% of the money Langevin had in his campaign account at the end of last year, versus less than 1% for Reed.
Attorney General Peter Kilmartin said previously he would forward a $200 donation of his own tied to the case to the Navy-Marine Corps Relief Society in Newport.
March 14th, 2011 at 4:04 pm by Ted Nesi under General Talk
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)