I’ve been critical of Mayor Smiley in the past – particularly about his lackluster approach to PVDFest – but now, I’ve got to hand it to him. The mayor’s PILOT agreement negotiation seems to have been quite successful.
PILOT agreements – or Payment In Lieu Of Tax agreements – have been a subject of discussion in PVD for over 20 years. Basically, these are amorphous, undefined payments that the city guilts nonprofit universities into making because they don’t pay property taxes but have lots of money. Considering 40% of the city is held by nonprofit entities and the main way the city makes money is property taxes, it makes sense that some of these multi-million dollar entities chip in.
Up until now, it doesn’t seem like there was a structure for how these negotiations should go, who should pay for what, and how much, etc. Every university paid the city according to an independent agreement.
Enter Mr. Smiley. Not only does the agreement increase the contributions from Providence higher ed institutions by 168%, totaling over $177M over the 20-year life of the agreements, but it has some well-thought-out points that put Smiley’s detail-orientation on display:
- Commercial property taxes from for-profit businesses leasing space from nonprofit entities (a Smiley campaign talking point)
- Regular increases in contributions over the duration of the agreements
- Recognize the community impact of the universities and acknowledge their non-monetary contributions, which will be accounted for and published in an annual report
- Establish a working group that meets every other month to keep communication open between universities and City Hall
- Incorporate flexibility for the universities, which can increase or decrease their in-kind community contributions and see a relative increase or decrease in required financial contribution
While Brown University also got some things out of the deal – some zoning changes, street parking for staff and faculty, and transferring ownership of a few streets – these seem minor to the benefits reaped by the city in this new agreement.
I’m sure that some will say the city could have done better considering Brown’s $6.5B endowment, but it’s clear that a lot of time and thought went into this multi-month negotiation, and I am happy with the concessions of the capital city’s educational institutions. I still see an opportunity for a joint student center downtown (a proposal that fell by the wayside), but perhaps that can be part of 2033’s negotiation.
Next stop: Lifespan! With billions of dollars in revenue and millions in executive compensation, our state’s largest employer can definitely afford to contribute better to its host city.