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Providence Commission Report.Indd ! #ALL TO "UILD THE #APITAL #ITY 0ARTNERSHIP FOR %CONOMIC 'ROWTH 2EPORT TO THE 0ROVIDENCE #ITY #OUNCIL FROM THE #OMMISSION TO 3TUDY 4AX %XEMPT )NSTITUTIONS .OVEMBER #OMMISSION TO 3TUDY 4AX %XEMPT )NSTITUTIONS -ICHAEL 6AN ,EESTEN #HAIR "USINESS #OMMUNITY 2EPRESENTATIVE #AMILLE 6ELLA 7ILKINSON 6ICE #HAIR "USINESS #OMMUNITY 2EPRESENTATIVE #OUNCILMAN ,UIS !PONTE #ITY #OUNCIL 2EPRESENTATIVE &RANCIS 3MITH #OMMUNITY /RGANIZATION 2EPRESENTATIVE 3TEVEN 3MITH ,ABOR /RGANIZATION 2EPRESENTATIVE $ANIEL %GAN #OLLEGE5NIVERSITY 2EPRESENTATIVE *OHN - 3UTHERLAND ))) (OSPITAL 2EPRESENTATIVE 2EPRESENTATIVE *OHN #ARNEVALE #ITY #OUNCIL $ESIGNEE -ATTHEW 3TARK -AYORAL $ESIGNEE #ITY #OUNCIL 3TAFF 4OMAS - 'LAVIN #HIEF OF 3TAFF 9VONNE * 'RAF -ANAGER OF 0OLICY 2ESEARCH .ICK &REEMAN 2ESEARCH !NALYST #ITY #LERK !NNA 3TETSON 0ROJECT #ONSULTANT "ETH !SHMAN #OMMUNTY %CONOMIC &UTURES 0ARCEL -APPING 0ROVIDENCE 0LAN 7RWKH+RQRUDEOH0HPEHUVRIWKH&LW\&RXQFLO 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&LW\+DOO3URYLGHQFH&LW\JRYHUQPHQWDQGEHVWSUDFWLFHVUHVHDUFKRQWKHVXEMHFWLQFLWLHVLQWKH 1RUWKHDVWUHJLRQZLWKVLPLODUFKDOOHQJHV $VLJQL¿FDQW¿QGLQJLQWKHFRXUVHRIRXUZRUNLVWKDWGHVSLWHFROODERUDWLYHSURMHFWVWKDWH[LVWWKHUH LVDQRSSRUWXQLW\IRUJUHDWHUDOLJQPHQWEHWZHHQWKHOHDGHUVKLSRIWKH3URYLGHQFHFLW\JRYHUQPHQW WKHODUJHWD[H[HPSWLQVWLWXWLRQVDQG6WDWHJRYHUQPHQWRQHFRQRPLFGHYHORSPHQWVWUDWHJ\DQG LPSOHPHQWDWLRQ7KHUHSUHVHQWO\H[LVWGLIIHUHQFHVRIRSLQLRQEHWZHHQWKHWD[H[HPSWVDQGFLW\ JRYHUQPHQWWKDWGRQRWDXJHUZHOOIRUWKHIXWXUH7KLVPXVWFKDQJHDQGWKH&RPPLVVLRQ¶V SDUWQHUVKLSUHFRPPHQGDWLRQVJRWRWKHKHDUWRIWKDWLVVXH ,QWKDWUHJDUGFULWLFDOWRWKHSODQQLQJJRLQJIRUZDUGLVDFRPPLWPHQWWRSDUWQHUVKLS7KH¿QDQFLDO KHDOWKRIWKH&LW\RI3URYLGHQFHLVWKHOLQFKSLQRIHFRQRPLFGHYHORSPHQWSODQQLQJIRUWKH6WDWH RI5KRGH,VODQGLQWKHIXWXUH7KH&RPPLVVLRQUHFRPPHQGVVWURQJO\WKDWDWUXHSDUWQHUVKLSEH GHYHORSHGDPRQJVWWKHSUHVHQWGLVSDUDWHHQWLWLHVLQRUGHUWRPD[LPL]HWKHHFRQRPLFDFWLYLW\WKDW ZLOOFUHDWHQHZGHYHORSPHQWEURDGHQWKHWD[EDVHDQGFUHDWHPXFKQHHGHGMREV7KHFLW\DQG VWDWHZRXOGERWKEHQH¿WIURPVKDULQJLQFUHPHQWDOUHYHQXHIURPNQRZOHGJHHFRQRP\JURZWKDQG LQYHVWPXFKRIWKDWEDFNLQWRDQHFRQRPLFGHYHORSPHQWSDUWQHUVKLSWRJURZMREVDQGUHYHQXHWR VXSSRUWTXDOLW\FLW\VHUYLFHV ,QFRQFOXVLRQWKH&RPPLVVLRQVXEPLWVWKLVUHSRUWZLWKWKHKRSHWKDWLWZLOOVHUYHDVDXVHIXO SODQQLQJWRROIRUWKH3URYLGHQFH&LW\&RXQFLO:HDUHSUHSDUHGWRPHHWZLWKWKH&RXQFLOWR SURYLGHDSUHVHQWDWLRQRIRXU¿QGLQJVDQGUHFRPPHQGDWLRQVDW\RXUFDOO )RUWKH&RPPLVVLRQ 0LFKDHO69DQ/HHVWHQ &DPLOOH9HOOD:LONLQVRQ &KDLU 9LFH&KDLU 0REFACE 0ROVIDENCE IS A DENSELY POPULATED POST INDUSTRIAL CITY THAT FACES A RANGE OF SOCIAL CHALLENGES AS IT TRANSITIONS FROM A MANUFACTURING BASED ECONOMY TO A SERVICE AND KNOWLEDGE BASED ECONOMY !S IT HAS FOR ALMOST YEARS IT CONTINUES TO ATTRACT IMMIGRANTS FROM AROUND THE WORLD WHO ENRICH THE CITY WITH THEIR DIVERSE CULTURE ENTERPRISE AND INDUSTRIOUSNESS 4HE #ITY IS ALSO ENRICHED BY WORLD CLASS INSTITUTIONS OF HIGHER EDUCATION AND HEALTHCARE WHICH SERVE NOT ONLY THE CITY POPULATION BUT ALL OF SOUTHEASTERN .EW %NGLAND AND ATTRACT STUDENTS FROM ACROSS THE GLOBE 4HESE TAX EXEMPT INSTITUTIONS HAVE GROWN OVER TIME ESPECIALLY IN THE LAST TWO DECADES AND NOW EMPLOY OVER MAKING HIGHER EDUCATION AND HEALTH CARE TWO LEADING INDUSTRIES IN THE STATE 4HIS GROWTH HAS NOT COME WITHOUT TENSIONS HOWEVER -ANY TAXPAYERS OF THE #ITY SEE THE GROWTH OF TAX EXEMPT INSTITUTIONS AS PLACING A GREATER PROPERTY TAX BURDEN ON THEM 4HESE INSTITUTIONS COUNTER THAT THEIR GROWTH IS NECESSARY TO STAY COMPETITIVE TO BETTER SERVE THEIR CUSTOMERS AND INDEED TO SURVIVE 4HE GROWTH OF THESE INSTITUTIONS HAS COINCIDED WITH THE LOSS OF THOUSANDS OF ENTRY LEVEL MANUFACTURING JOBS AS THE ECONOMY HAS TRANSFORMED OVER THE PAST FEW DECADES 4HIS CHANGE HAS BEEN EXACERBATED BY STAGNANT WAGES HIGH RATES OF POVERTY AND DECREASING STATE AID TO THE #ITY 4HE #ITY IS ALSO BURDENED BY HIGH LEGACY COSTS FOR SOCIAL AND PUBLIC SAFETY SERVICES )TS UNFUNDED PENSION LIABILITY IS APPROACHING BILLION AND RETIREE HEALTH CARE COSTS ARE ANOTHER MAJOR UNFUNDED BURDEN #HARGE OF THE #OMMISSION $ETAIL COSTS ASSOCIATED WITH PROVIDING #ITY SERVICES TO TAX EXEMPT INSTITUTIONS 0ROVIDE SUMMARY OF lNANCIAL AND PROGRAMMATIC CONTRIBUTIONS MADE BY TAX EXEMPT INSTITUTIONS TO MUNICIPALITIES IN SELECTED CITIES NATIONWIDE INCLUDING BEST PRACTICES IN PUBLIC PRIVATE PARTNERSHIPS $EVELOP STANDARD METHODOLOGY FOR VALUING COMMUNITY PARTNERSHIPS MADE BY TAX EXEMPT INSTITUTIONS %STABLISH A STANDARD LEVEL OF lNANCIAL AND PROGRAMMATIC CONTRIBUTIONS TO BE MET BY ALL LARGE SCALE TAX EXEMPTS IN 0ROVIDENCE )DENTIFY NECESSARY #ITY AND 3TATE LEGISLATION AND 2EVIEW ANY ADDITIONAL MEANS TO MITIGATE THE IMPACT OF TAX EXEMPT INSTITUTIONS ON THE #ITYS TAX BASE AND TO ESTABLISH A FAIR AND EQUITABLE APPROACH TO GENERATING REVENUE TO SUPPORT #ITY SERVICES )NTRODUCTION 4HE #ITY #OUNCIL OF 0ROVIDENCE CREATED THIS COMMISSION IN OF 2HODE )SLANDS CAPITAL CITY LEADS TO A BROADER CONVERSATION TO STUDY THE IMPACT OF TAX EXEMPT INSTITUTIONS ON THE #ITYS ABOUT STRENGTHENING PARTNERSHIPS TO INCREASE THE #ITYS TAX TAX BASE AND IDENTIFY MEANS TO INCREASE THE CONTRIBUTIONS OF BASE AND INCREASE ECONOMIC OPPORTUNITY ,OOKING AT OTHER TAX EXEMPT INSTITUTIONS TO THE #ITY 4HE #ITY OF 0ROVIDENCE CITIES WE FOUND THAT HOSPITALS COLLEGES AND UNIVERSITIES HAS EXPLORED THE ISSUE OF CONTRIBUTIONS FROM TAX EXEMPT CONTRIBUTE MORE TO THEIR HOST CITIES WHEN ENGAGED AS PARTNERS INSTITUTIONS PREVIOUSLY IN AND AND THE #ITY HAS A SIGNED MEMORANDUM OF UNDERSTANDING WITH FOUR INDEPENDENT 4ENSION ABOUT THE LEVEL OF CONTRIBUTIONS FROM UNIVERSITIES COLLEGES AND UNIVERSITIES STIPULATING VOLUNTARY PAYMENTS FROM AND HOSPITALS IS A BARRIER TO TAKING THE NEXT STEP TO DEEPEN THOSE INSTITUTIONS THROUGH 7HAT MAKES THIS ISSUE RELEVANT #ITY INSTITUTIONAL PARTNERSHIPS FOR ECONOMIC DEVELOPMENT AGAIN IN IS THE ECONOMIC CRISIS AND THE LARGE ONE TIME 4HE HOSPITALS COLLEGES AND UNIVERSITIES OF 0ROVIDENCE OPPORTUNITY FOR NEW DEVELOPMENT CREATED BY THE RELOCATION TESTIlED TO THE COMMISSION ABOUT THEIR EXTENSIVE COMMUNITY OF )NTERSTATE 3IMULTANEOUSLY PROFOUND ECONOMIC SHIFTS CONTRIBUTIONS AND POSITIVE ECONOMIC IMPACTS4HESE MAJOR RAISE A NEW QUESTION 7ITH TAX EXEMPT INSTITUTIONS AS GROWING TAX EXEMPT INSTITUTIONS HAVE DEMONSTRATED THEIR WILLINGNESS ANCHORS OF THE KNOWLEDGE ECONOMY HOW CAN CITIES TAP INTO TO STEP UP AND CONTRIBUTE TO THE COMMUNITY IN WAYS THAT ARE THIS ECONOMIC ENGINE THROUGH DIVERSE REVENUE SOURCES TO CONSISTENT WITH EACH INSTITUTIONS MISSION4HE UNIVERSITIES SUPPORT QUALITY CITY SERVICES AND COLLEGES SIGNED A YEAR DEAL WITH THE #ITY TO MAKE CASH CONTRIBUTIONS AND RESIST THROWING THAT DEAL OUT AFTER 7HILE THE TAX ON REAL ESTATE AND TANGIBLE PROPERTY IS THE #ITY YEARS )T IS IN THE 3TATE OF 2HODE )SLANDS STRATEGIC INTEREST OF 0ROVIDENCES PRIMARY REVENUE SOURCE MAJOR TAX EXEMPT TO SHARE REVENUE FROM THE GROWTH OF HIGHER EDUCATION AND INSTITUTIONS NOW OWN OF THE LAND WITHIN THE CITY OF HOSPITALS WITH THE #ITY OF 0ROVIDENCE TO BETTER ALIGN ECONOMIC ALL NON PUBLIC LAND 4HE lSCAL CHALLENGES 0ROVIDENCE FACES ARE DEVELOPMENT INTERESTS AND STRENGTHEN THE GOVERNMENT NOT UNIQUE AS CITIES FACE RISING COSTS AND STAGNANT TAX REVENUES INSTITUTIONAL BUSINESS PARTNERSHIP FOR ECONOMIC DEVELOPMENT MANY ARE SEEKING TO REDElNE THE RELATIONSHIP BETWEEN THE CITY AND MAJOR TAX EXEMPT INSTITUTIONS 4HIS ISSUE IS EMBEDDED IN 4HE COMMISSION CONSIDERED THE AVAILABLE DATA ON CITY COSTS LARGER ECONOMIC EQUITY AND MUNICIPAL lNANCE ISSUES YET THE AND INSTITUTIONAL CONTRIBUTIONS AND FOUND THAT THE MAJOR FACT REMAINS THAT THE PROPERTY TAX DEPENDANT FUNDING MODEL TAX EXEMPT INSTITUTIONS ARE MAKING CONTRIBUTIONS ON PAR WITH FOR CITY SERVICES IS IN CRISIS 4HE #ITY IS LOOKING FOR WAYS TO FUND COSTS INCURRED &URTHERMORE THE COMMISSION lNDS THAT GIVEN LOCAL SERVICES SUCH AS ROADS SNOW REMOVAL POLICE AND lRE LEGAL AND INSTITUTIONAL CONSTRAINTS THESE INSTITUTIONS ARE ABLE TO PROTECTION THAT BENElT CITY RESIDENTS STUDENTS COMMUTERS AND MAKE CONTRIBUTIONS OF HIGHER VALUE TO THE CITY AND ITS RESIDENTS INSTITUTIONS ALIKE THROUGH IN KIND PARTNERSHIPS THAT DRAW ON THE CAPABILITIES OF EACH INSTITUTION .EVERTHELESS 0ROVIDENCES lSCAL CONDITIONS DEMAND COLLABORATIVE ACTION TO INCREASE THE #ITYS TAX BASE AND .OWHERE IN THE 5NITED 3TATES CAN CITIES TAX TAX EXEMPT CREATE GREATER ECONOMIC OPPORTUNITY FOR RESIDENTS 7E lND THAT INSTITUTIONS FOR PROPERTY USED WHOLLY FOR THEIR TAX EXEMPT SEVERAL OTHER CITIES OFFER MODELS FOR PARTNERING WITH HOSPITALS MISSION 4HE REVENUE OPTIONS AVAILABLE TO CITIES INCLUDE LEVYING AND UNIVERSITIES TO ENABLE BUSINESS EXPANSION WITHIN THE CITY FEES FOR SERVICES BEING VIGILANT ABOUT TAXING NON EXEMPT USES AND CREATE JOBS FOR RESIDENTS )T IS IMPERATIVE THAT 0ROVIDENCE AND DESIGNING TAXES THAT BRING IN REVENUES FROM COMMUTERS PURSUE GROWTH
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