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City reaches agreement with university

WPRI 12

Updated: Feb 15, 2012 6:30 PM

PROVIDENCE, R.I. (WPRI) — Just two days after hammering some of Providence's largest tax-exempt institutions in his State of the City address, Mayor Angel Taveras has announced a deal with one of them and to sit down with the president of another.

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.

"I'm 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. 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," Mayor Taveras said.

The agreement at least triples JWU's annual contributions to Providence. It's the first deal the mayor has finalized with the city's large tax-exempts.

In order to avoid falling into what he describes as a financial "black hole," Taveras has demanded that the city's biggest nonprofit colleges and hospitals deposit more money into Providence's coffers each year.

In-Depth: Providence Financial Crisis Nesi's Notes: How much will Taveras get from JWU

Taveras is also set to sit down with Brown University President Ruth Simmons at some point Wednesday to discuss the implications of his request for as much as $3.75 million more in payments from the Ivy League school. Taveras and Simmons have been at loggerheads since December.

Brown says it currently pays roughly $4 million a year to Providence between voluntary payments agreed to in 2003 and taxes on certain buildings used for non-education purposes. However, without exemptions, the school's property tax bill would be nearly $27 million each year.

In-Depth: What Providence's tax-exempt properties are worth Timeline: Providence's Financial Crisis

During his State of the City address Monday, Taveras called Providence a city "in peril," stating that falling revenue and high pension costs could quickly send it towards municipal bankruptcy.

Simmons said over the weekend the discussions between Brown and the city have resumed and are on track.

In addition to more payments from tax-exempt institutions, Taveras is also calling for the suspension of cost-of-living-adjustments, or COLAs, for retirees in order to eliminate the city's $22.5 million budget shortfall. One in four city retirees receives an annual COLA of 5% or 6%.

See the Top 25 retiree pensions

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