Brown University, like many other 501(c)(3) federally recognized nonprofits, does not pay any property taxes. While state and federal governments argue nonprofit organizations like Brown add to their communities in monetary and nonmonetary ways, Housing Opportunities for People Everywhere (HOPE) strongly disagrees. Not only does Brown not benefit the Providence community, but it actively harms it in ways that run completely counter to the logic of nonprofit tax breaks. The largest of these is a statewide real estate tax exemption commonly referred to as PILOT, an acronym for “Payment In Lieu of Taxes.” Under Rhode Island General Law § 45-13-5.1, PILOT enables Brown to offer a symbolic payment at its own chosen rate instead of paying the standard Providence property tax of 1.79 percent (the highest in the state). If Brown were to pay the standard tax rate for each of its 158 tax-exempt properties, it would pay nearly $20 million each year for its evaluated $1.1 billion property. This law results in a substantive loss in revenue for the general fund of a county, especially one such as Providence, which houses a large number of tax exempt organizations. In an effort to compensate for the state-mandated tax break, Rhode Island offers to pay municipalities 27 percent of owed property taxes from PILOT. Effectively, the state recognizes that such a tax break is too much for many counties to bear but refuses to let the municipalities properly tax these organizations.
As the single largest beneficiary of PILOT, Brown regularly deprives the Providence community of millions in tax dollars. The central question local politicians and students at Brown should be asking themselves is whether we add enough value back to the community to justify our tax-exempt status. The answer Housing Opportunities for People Everywhere (HOPE) has come to is that not only does the university not add to its surrounding community, but it also actively displaces and burdens surrounding neighborhoods, primarily Fox Point.
What has HOPE done about this in the past?
As a member of HOPE, I believe it is crucial for current students to engage with the university by questioning these long-standing policies. University accountability is one of the newest sections of our advocacy team. Although our work has traditionally focused on housing legislation and direct service advocacy, one of HOPE’s previous directors, Nathaniel Pettit, encouraged the rest of the team into investigating Brown’s role in exacerbating gentrification in Providence. Pettit’s senior thesis argued that “studentrification,” or student-gentrification of the surrounding area, has radically changed the demographics of the Lower East Side, especially in Fox Point. Numerous local families, including members of a large Cape Verdean population, have been forced out of their homes by increasing rent costs. Simply put, as a large wealthy organization in Providence, Brown affects the city in complex and often harmful ways, such as creating a housing squeeze that directly impacts city locals.
For HOPE, university relations mean two things: educating the campus and larger community about Brown’s problematic role in the local housing market and advocating for Brown to pay property taxes and give back to the community. In 2018, HOPE met with Brown University Assistant Vice President of Community and Government Relations Director at Brown Albert Dahlberg to advocate for increasing Brown’s PILOT payment to match the approximate cost of property taxes. Unfortunately, Assistant Vice President Dahlberg has not made any significant changes to Brown’s PILOT payments since 2018. In response, HOPE has been forced to take measures outside of meeting with members of the university, including a teach-in on “studentification” in 2021 and a new combination of legislative advocacy this year.
So What Is Brown Doing for the Community?
There is no part of Brown’s monstrous growth that benefits the community it is swallowing. When Wriston Quadrangle was built in 1950, Brown destroyed over 50 buildings and the construction of the student dormitories at Keeney Quadrangle destroyed 11 Providence homes. Not only does the university displace and gentrify the communities it surrounds, but it continues to tear down local infrastructure in order to expand the school. Most recently, the university has demolished multiple local businesses on Brook Street to construct another dormitory. As a 2017 interview in The College Hill Independent with scholars Fred Moten and Stefano Harney explains, “Universities don’t owe, they obligate; they don’t give, they impose.” Nowhere is this more clear than with the PILOT program. Due to the voluntary nature of payments, the city of Providence asks Brown and other universities to sign onto Memorandums of Understanding (MOUs) which are contractual agreements to set consistent payments. These help balance budgets and enable city fiscal planning. In 2003, the university agreed to pay approximately $1.3 million each year through 2023, an amount that pales in comparison to the expected $18 million based on the standard tax rate. There is nothing reasonable about negotiating tax rates. In March 2012, the university renegotiated its MOU to help a struggling Providence government; however, in exchange for paying marginally more—$3.9 million over 5 years—Brown requested 250 parking spaces in the nearby area. These parking spaces are subject to university policing and all money made from parking passes and street parking rates is received by Brown. Not only is the university not paying taxes, but it is also negotiating with the city in order to make money from former city property. Taxation should not work like Shark Tank, where Brown can levy its massive property and endowment to ask the city for more services. The largely informal and unorganized nature of bargaining at the core of PILOT creates a haphazard, competitive environment where Brown can force the city to recoup a small portion of the university’s unfulfilled tax obligation.
What Can Be Changed?
HOPE has been participating in conversations with local politicians and community organizers, including Fox Point’s City Counselor John Goncalves. Counselor Goncalves grew up in the historically Cape Verdean Fox Point and has watched “studentification” push out his community. Now, as a city council member, he is pushing back. His position in local government, however, limits him from taking action since PILOT was enacted at the state level.
HOPE is also engaging in political strategizing with State House Representative David Morales, who serves the Mount Pleasant community and nearby parts of Elmhurst. This legislative session, Representative Morales is introducing two bills: House Bills 7813 and 7492 to directly rewrite sections of the law that give Brown enormous tax breaks. The bills will begin to remove specific tax loopholes for Brown while maintaining the spirit of the PILOT program. These bills, however, will not change Brown’s tax status as a federally recognized 501(c)(3), meaning that the university will continue to receive significant tax breaks. HOPE expects pushback from both the general assembly and Brown University itself. As Brown students, we have considerable leverage on what the university does. Fill out this link to be added to future communications. Brown University is, at least in theory, here to serve its students and its community and should listen to the voices of the people. It is not enough for Brown to merely enter into MOUs in exchange for more control of East Providence: This is not fair and we all know this. Brown needs to change its taxation practices, and bills 7813 and 7492 offer a substantial first step.