Brown University will voluntarily pay Providence $31.5 million more over the next 11 years to help address financial problems that Mayor Angel Taveras has warned could put the city on the brink of bankruptcy.
Taveras and Brown President Ruth Simmons announced the landmark agreement Tuesday at the State House, backed by Gov. Lincoln Chafee and top lawmakers who helped shepherd both sides through the often difficult negotiations.
The deal caps months of contentious dialogue between the tax-exempt Ivy League school and its struggling host city and hands Taveras a key victory in his efforts to resolve a $22.5 million budget deficit.
“We face tremendous challenges,” Taveras said. “We’ve come together to make some very difficult decisions. We need each other to be successful.”
Simmons, who plans to step down later this year, said Brown is “deeply concerned” about Providence’s finances and understands that its future is tied to that of the city.
“It’s easy to be myopic,” she said. “(But) it would be foolish of us not to understand the context in which we exist today.”
Under the deal, Brown will agree to contribute an additional $3.9 million this year, on top of the $4 million the university has contributed each year in voluntary payments and taxes on newer buildings and those not used for educational purposes.
In exchange, the city agreed to give up some streets adjacent to campus – meaning they will become Brown’s – and provide 250 parking permits to allow Brown employees to park for extended hours on certain streets near campus.
The deal, which must be approved by the Providence City Council, delighted Chafee and lawmakers who worked on the negotiations.
“In tough times everyone has to chip in a little bit. … Brown stepped up to the plate,” said House Speaker Gordon Fox, D-Providence.
Taveras has been seeking $7.1 million more from tax-exempt institutions including Brown to shore up the city’s budget. The capital has been struggling to close a $22.5 million deficit in the final months of this fiscal year.
Health care provider Lifespan has voluntarily agreed to contribute $800,000 to the city annually for the next three years. Johnson Wales University agreed in February to at least triple its annual voluntary payments to $958,000.
The first-term mayor is also seeking to reduce the city’s pension costs. On Monday, the City Council approved and Taveras signed a plan to save $16 million by freezing automatic cost-of-living adjustments for retired municipal workers.
Taveras had sought $40 million more from Brown over 10 years, but the city reduced the amount during negotiations. Taveras said the $31.5 million figure agreed to by Brown was higher than the city’s final request.
Simmons said university faculty and students may question why she agreed to commit an additional $31.5 million to the city in exchange for “modest” concessions. But she said it will be worth it if in 10 years the city is fiscally sound.
Brown’s future success as a research institution will depend on support from local and state officials, Simmons said. She said Brown’s willingness to help Providence shows the university is serious about the town-gown relationship.
“We have to have everyone’s support, not their resentment,” she said.
Chafee, himself a Brown University graduate, stepped in when negotiations with the university broke down, Taveras said.
The governor, an independent, said his message to both sides was simple: “Make peace.”
“Rhode Island and Providence share a history and future with Brown,” he said.
The deal will reduce pressure on Brown in the State House, where lawmakers have suggested legislation to allow cities to charge tax-exempt institutions for police, fire protection and other city services.
Those bill probably aren’t going anywhere now, Fox said.
Rep. John Carnevale, a Providence Democrat who sponsored some of those bills, said the deal with Brown is “a good step,” but he thinks cities should have the authority to require contributions.
If Brown paid property taxes on all its property, it would pay the city $38 million annually, according to city calculations.