Bill would allow taxation on some exempt property

PROVIDENCE, R.I. — With the legislative session under way, the city is pushing for a new law that would allow it to tax real estate owned by tax-exempt institutions if the property wasn’t an essential part of the institution’s mission.

Under the proposed law, classrooms and hospital rooms would still be exempt, but vacant lots, parking lots and garages and properties owned but not developed by the city’s colleges, universities and hospitals would go on the tax rolls.

“Our non-profit partners make up a critical sector and workforce for our residents and students,” Mayor Jorge O. Elorza’s Communications Director Emily Crowell said. “They serve an irreplaceable place in our city's landscape, however, the city supports legislation that would allow cities and towns to tax the portion of the land held by nonprofits and not used in their mission essential duties.”

Spokesmen for the city’s institutions of higher learning and one of its hospitals said they were surprised by the move, pointing they had joined a city-sponsored working group with the non-profits that was tasked with exploring issues like that.

“We believe the workgroup is on the right path, so news of the proposed tax on nonprofits came as a surprise and as a disappointment,” said David Levesque, spokesman for LifeSpan, which operates Rhode Island Hospital, Miriam Hospital and Hasbro Children’s Hospital.

Daniel P. Egan, president of the Association of Independent Colleges and Universities/Rhode Island, which includes Brown University, Johnson & Wales University, Providence College, the Rhode Island School of Design and Roger Williams University, agreed. He said the city’s colleges and universities have been willing to assist the city financially in the past, negotiating payment agreements in 2002 and 2012.

“For 20 years we have been part of the solution,” Egan said. “To legislate against the partnership leads you down a road of no good deed goes unpunished.”

The bill is sponsored by Providence state representatives Daniel P. McKieran, Joseph S. Almeida, Moira J. Walsh, J. Aaron Regunberg and Anastasia Williams.

Besides the specifically mentioned vacant lots, undeveloped properties and parking facilities, the law would also open up to taxation any real property “that is not wholly and exclusively utilized for the purposes set forth in their respective charter or applicable provisions of general public laws …”

With the city facing a long-term retirement fund liability of around $1 billion, tax-exempt properties are an issue for Providence, where 43.9 percent of the real estate is owned by institutions that are exempt from paying taxes. The city didn’t have estimates of how much in additional revenue the change would generate.

A 2016 analysis of the city’s finances by the National Resource Network estimated that Brown University, John & Wales University, Providence College and the Rhode Island School of Design between them owned 264 properties worth $1.8 billion.

Levesque said the city wasn’t the only one with strained finances.

“Like Providence, we are faced with difficult decisions,” he said.

“It is important to understand that our tax-exempt status requires us to provide medical care to anyone who comes through our doors, regardless of their ability to pay for that care,” he said. “Last year, the Lifespan hospitals based in Providence provided approximately $24 million in charity care at cost.”