I’m following the developments on this on Twitter, here’s some of the news coming in:
Press release from the City added to end of post.
- Mayor making headway with tax-exempts [WPRI]
Taveras announced a tentative deal with Johnson & Wales University at a news conference on Wednesday. Under the agreement, instead of paying taxes, the university will give the city $6.4 million, with the possibility of an additional $5 million over a 10-year period.
Taveras announces JWU more than tripling contrib. It is at least $958K annually w/ potential for up to $1.45M annually. Council must OK.
— Erika Niedowski (@eniedowski) February 15, 2012
Adding current payments and potential..could be 14.5 mill over 10 yrs.
— bill rappleye (@NBC10_Bill) February 15, 2012
.@Angel_Taveras says he’s more positive than a week ago on getting planned 7m from tax-exempts
— Ian Donnis (@IanDon) February 15, 2012
Will add more information as it comes in.
Press release from the City:
City of Providence, Johnson & Wales University Reach New Tentative Agreement for Voluntary Payments In Lieu of Taxes
JWU to triple its current contribution with additional $6.4 million and possibility of another $5 million
PROVIDENCE, RI – Mayor Angel Taveras and Johnson & Wales University Chancellor John Bowen today announced a partnership agreement between Rhode Island’s capital city and the university, in which Johnson & Wales will make a payment in lieu of taxes of $6.4 million, with potential for an additional $5 million, for a total of $11.4 million in additional payments over 10 years.
The agreement is the first in Providence since Mayor Taveras called on the city’s seven largest tax-exempt educational and health care institutions to be part of the sacrifice needed to pull the capital city back from the brink of fiscal collapse by increasing their financial support to Providence for the city services they receive.
“I am pleased to announce this new agreement with Johnson & Wales, and am grateful to the university for being a strong partner to the City of Providence,” said Mayor Taveras. “Johnson & Wales and all of our city’s major tax-exempt institutions provide great economic and cultural value to Providence. At the same time, our tax-exempts cannot thrive if our city is in continual fiscal crisis. This agreement helps to address an unsustainable structural imbalance in our city’s finances caused by the great and growing percentage of tax-exempt land in Providence.”
The agreement, which is subject to ratification by the City Council, represents a significant commitment to Providence from JWU at a time when Providence faces an uncertain future. The university has campuses in Miami, FL., Denver, CO. and Charlotte, N.C., and could have made the decision to make further investments elsewhere.
“I am pleased to announce this new agreement under which Johnson & Wales University will increase the support we provide to the City of Providence,” said Johnson & Wales University Chancellor John Bowen. “Johnson & Wales is committed to a strong and vibrant future in Providence, and we recognize that we cannot be successful in a failing city.”
The agreement at least triples JWU’s annual contributions to Providence, increasing the university’s annual payment from $308,890 this year under an existing 2003 memorandum of understanding to at least $958,000 each year with the potential for as much as $1.45 million annually.
In all, JWU will directly contribute an additional contribution of as much as $11.4 million to the City of Providence over the next 10 years, bringing the university’s total contribution to as much as $14.5 million over 10 years.
The agreement is structured with an upfront contribution from the university of as much as $5 million in accelerated payments to the city.
Under the 2003 memorandum of understanding between the city and four colleges and universities, the institutions agreed to make payments in lieu of taxes of $50 million over 20 years.
Faced with a $110 million structural budget deficit for the current fiscal year, Mayor Taveras called on seven of Providence’s large tax-exempt institutions to increase their combined payments in lieu of taxes to the city by $7.1 million.
Collectively, Providence’s large hospitals, colleges and universities own nearly $3 billion of property across Providence | land that would be worth $105 million in tax revenue per year.
While future growth of such institutions will also help to spur economic development in Providence and Rhode Island, their expansion will result in an increasingly heavy burden on the city’s taxpayers without increased payments in lieu of taxes to the city.