October 5, 2023
New Agreement More than Doubles Voluntary Payments for City of Providence
Tonight, the Providence City Council voted to pass Mayor Brett P. Smiley’s new Payment In Lieu of Taxes (PILOT) agreement between the City of Providence and the four private higher learning institutions (Brown University, Rhode Island School of Design, Providence College and Johnson & Wales). The proposed new agreement more than doubles the financial contributions the City of Providence will receive over the next twenty years, builds a mutually beneficial agreement with each of the higher education institutions, and serves as a national model for PILOT agreements in other communities.
“This new agreement sets Providence on a stronger financial path forward and it makes our city a national example of what is possible when communities and their major anchor institutions work together,” said Mayor Brett Smiley. “Together, we are laying the foundation to make Providence the world-class city that the brightest students, faculty, doctors, researchers and employees want to live, work and learn in. I want to thank the Providence City Council for their careful consideration of this agreement, and I want to thank each of the institutions for choosing to make these investments that will positively impact Providence for generations to come.”
When negotiations began, the Administration focused on creating a new agreement that provided significantly more financial support to the City and the communities that host these institutions and that recognized the need for mutually beneficial agreements and partnerships. The Administration was successful in achieving these goals by including the following in the approved agreements:
- Increased voluntary payments from $93 million to $223 million over the next twenty years from Brown University, Rhode Island School of Design, Providence College, Johnson & Wales.
- Targets for additional community contributions by the Institutions with an estimated value of $177,472,813 over the next twenty years.
- Bimonthly Quality-of-Life working group where City Departments and the Institutions will work together to address quality-of-life concerns reported by neighbors and other issues and concerns of common interest raised by the City and the institutions.
- A stronger economic partnership with the universities that better supports the City as the they continue to grow.
In summary, between voluntary payments, commercial property taxes, transition parcel payments and the estimated value of community contributions, this agreement totals $442 million in contributions from the four colleges and universities over the next twenty years.
“Working with Mayor Smiley and our higher education institutions, the Council was able to negotiate an escalating payment schedule, creating an added $7 million in cash contributions over the life of the agreement,” said Council President Rachel Miller. “These funds will immediately impact the city’s fiscal goals while lessening the tax burden on homeowners and businesses. As we look toward future agreements with meds and eds, I encourage Lifespan, the only non-profit without a PILOT agreement, to come to the table in good faith.”
This newly passed PILOT agreement is now one of the most generous agreements in the country. When looking at similar-sized cities, the agreement between Yale University and the City of New Haven is the closest comparison and is often recognized as a generous agreement. When comparing agreements, Providence’s new agreements exceed those between Yale and New Haven in value of the property, voluntary payment to estimated taxes, and the value of the endowment.