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On Providence’s East Side, a battle brews between Brown University and longtime residents

A project to build student housing would help keep rental prices reasonable, but the university’s tax-exempt status raises worries about homeowners’ property tax rates.

Homeowner Peter Taylor sat on his stoop. Brown University is looking to tear down homes and a small shopping plaza in Providence to build new dorms, but neighbors are worried about what Brown's expanding footprint will do to their property taxes.
Homeowner Peter Taylor sat on his stoop. Brown University is looking to tear down homes and a small shopping plaza in Providence to build new dorms, but neighbors are worried about what Brown's expanding footprint will do to their property taxes.Lane Turner/Globe Staff

PROVIDENCE — When East Side residents learned in early 2020 that Brown University was looking to further develop properties within the institutional zone, they took to the city and demanded revisions.

The school was proposing to knock down historic homes in Fox Point, which are not protected under preservation law, as well as a small shopping plaza owned by the university, displacing several shops and a Providence Police substation. They would replace them with two buildings, with retail space on the ground floor, one on each side of Brook Street, between Charlesfield and Powers streets.

The student housing had been on the university’s wish list since the early 1990s. Residents had long sought to preserve the quaint, colonial look of the area, and didn’t want two massive buildings to change the look and feel of the place.

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After rounds of community engagement sessions, the university offered a revised plan in April 2021: smaller buildings, with 350 beds instead of 400, outside of the Providence Historic District boundary, without the ground-floor rental retail space. They would add community green space, too, they said.

But with construction slated to begin just a few months from now, residents still aren’t satisfied with the plans.

In an effort led by their councilman, Brown alumnus John Goncalves of Ward 1, they are petitioning the university to make sure the new buildings blend in to the neighborhood in terms of size and style, and are asking that the university preserve the three existing, historically significant buildings instead of tearing them down. And, in a move that some may find surprising, they want that rental retail space restored, “to be inclusive of the local community and contribute city taxes.”

The mini-plaza at 250 Brook St. that will be torn down.
The mini-plaza at 250 Brook St. that will be torn down. Lane Turner/Globe Staff

Brown University does not pay property taxes to the city of Providence. But regular homeowners do. And some residents are wondering what will happen to their own taxes as Brown expands its footprint in the East Side.

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Peter Taylor, who lives on John Street close to the proposed project, has lived on the East Side for 30 years and says he likes having Brown nearby. He and his wife live on the bottom floor of the three-family home they own, and he rents the other two, two-bedroom apartments for $1,000 and $1,100 per month — “a steal” for the area, he says. But he’s seen his own property taxes skyrocket from $3,000 annually to more than $9,000 each year, even with a homestead tax exemption. Without that exemption, he said his property taxes would be nearing $12,000 each year.

The house, which was passed down to his wife, has been paid off, so they won’t be pushed out. But he’s afraid that his tenants would bear the brunt of a tax hike.

“It would come down to raising those rents. And I really don’t want to do that,” said Taylor, who is retired but works part-time at a nearby golf course. “New buildings are nice, I understand the need. I love being by Brown. But it becomes a double-edge sword. And residents, or their tenants, are paying for it.”

The Providence’s City Plan Commission approved the original plans in June 2020, with “minimal negative feedback,” according to a Brown official. With ground breaking in October, it’s unlikely that any major plans will be changed, including bringing any potential retail space back.

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“If we kept the retail end, it would reduce the number of beds even further,” said Russel Carey, Brown’s vice president of planning and policy, in an interview. “There’s plenty of retail in the area… So I don’t think that is really a significant loss.”

Residents should know that the city could receive more money by allowing this development to happen, Carey said.

“The buildings that are going to be built here will have significantly more appraised value than what’s there now,” said Carey, though the project has not yet begun and has not yet been appraised. Projects like these, he said, “costs tens of millions of dollars” and “will increase the city’s revenue through the state pilot program.”

Rhode Island’s Payment In Lieu of Taxes, or PILOT, program, reimburses municipalities 27 percent of the appraised value on properties owned by nonprofit, tax-exempt institutions — including Brown.

Also: the taxes from the mini-plaza won’t disappear immediately. Because of an agreement between Brown and the city, real estate taxes at the time of acquisition would be classified as “transitional parcels,” which would phase out over a 15-year period.

Brian Clark, a spokesman for the university, said in an e-mail that “university development on university property increases state payments to the city without any loss of property taxes — this is why development of the Brook Street project will result in a net increase in revenue to the city, even though the small retail space has been eliminated from current plans.”

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This year, the PILOT program will bring more than $32 million into Providence. But state taxpayers pay for the PILOT program, not tax-exempt organizations. So while the city may still get some revenue, they’re not getting it from Brown.

The houses at 66-72 Charlesfield St., which Brown University is looking to tear down to build two dorm halls.
The houses at 66-72 Charlesfield St., which Brown University is looking to tear down to build two dorm halls. Lane Turner/Globe Staff

Like other nonprofit colleges and universities across the state, Brown University is tax-exempt and is not required to pay property taxes. But if they did have to pay taxes on the properties they own, they would owe the city of Providence about $48 million annually, based on 2018 assessed values. Instead, they only pay taxes on the parts of properties that are not “mission-driven” — that is, those that are for commercial use, not for education. That amounts to approximately $1.7 million annually, the Globe has found.

According to a study by the Lincoln Institute, property tax rates are significantly higher because of nonprofit institutions’ tax-exempt status. And Brown is not the only tax-exempt institution in Providence: churches, hospitals, and other nonprofit universities are also tax exempt.

About 36 percent of properties in the city are tax exempt, accounting for $7.9 billion in assessed value, according to Elyse Pare, the city’s tax assessor.

Brown University.
Brown University.Jonathan Wiggs/Globe Staff

Brown does pay into two Memorandums of Agreement with the city, as do other nonprofits. Brown pays about $4.4 million each year through a 20-year memorandum of understanding that was signed in 2003 and a second agreement signed in 2012. They also pay about $2.3 million in fees each year for their space at 121 South Main St., which is occupied by Hemenway’s restaurant.

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However, the 2003 agreement is set to expire in 2023, and has not yet been amended to renew. Carey said the university expects that the city will want to sit down and start negotiations again soon.

“I think the city would affirm: both of those agreements have served their relationship extremely well. They’ve provided significant amounts of revenue for the city, both from Brown and other institutions,” said Carey.

Lawrence Mancini, chief financial officer for the city, said he expects to be part of any upcoming discussions or negotiations for a new MOU. He declined to say what amount the city would ask Brown to pay annually in a new agreement, but suggested that land use and value would be a more appropriate way to calculate that amount, not by endowment.

Theresa Agonia, a spokeswoman for the Mayor’s office, said the city anticipates beginning conversations with Brown University in the “coming months” and that members of the Administration, Finance Department, and Law Department will be involved.

The university’s relationship with the broader community extends beyond property taxes and fiscal agreements. Brown is an economic engine for Providence, and has invested more than $250 million in the Jewelry District in the last decade, buying property and improving public space. It is one of the state’s largest employers, with roughly 4,700 employees in total — 1,700 of whom live in Providence, according to Clark — and they have avoided layoffs to regular staff during the pandemic. The university has spent about $205 million on research in the last fiscal year, much of which comes from out of state but is expended within Providence or the state. And the university has renovated 20 houses on College Hill over the last nine years and sold them to faculty, which has resulted in more than $12 million returning to the tax rolls.

Councilman Goncalves said he wanted to make it clear that this student housing project “isn’t necessarily a bad thing for the neighborhood” as it would reduce the number of students seeking to rent in the residential area.

Brown University requires that undergraduate students live on campus for at least six semesters. But in the last decade, as enrollment has grown, the university hasn’t been able to provide enough housing to meet their own mandate. Undergrads, along with medical and graduate students, have sprawled out into rental units across the East Side, as well as into other parts of Providence.

In many cases, the students are willing to pay more than the families that have been there for years, leading to a shift in the makeup of communities. The Cape Verdean and Portuguese residents, who were once the predominant population of Fox Point, have been pushed out, residents say, and rent prices have skyrocketed. Both issues are things the university says it’s trying to prevent by building the student housing on Brook Street.

Goncalves said while Brown has attended community meetings to explain the housing project, they “have not done a great job at incorporating some of the feedback that neighborhood residents collectively have given them” including requests to keep the aesthetic and identity of the historic neighborhood.

”Ultimately, we’ve been trying our best to work with Brown and have more meaningful community engagement. But that hasn’t necessarily been the case,” said Goncalves in an interview.

His petition pushing the university to address the residents’ concerns has garnered more than 600 signatures of East Side residents.

“When I talked to people in the neighborhood, the sentiment is that Brown continues to grow their endowment. But it’s a tax-exempt institution and property taxes for residents continue to rise. Neighbors are feeling the pressure as Brown continues to grow and expand,” said Goncalves, who graduated from Brown in 2013 and earned his masters there in 2015. “And this is coming from someone who loves Brown. I sit on the Alumni Association Board of Governors. I’m a cheerleader for Brown.”

He added: “But something’s got to give when you have a $4.7 billion endowment that grew 12 percent this year.”


Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her on Twitter @alexagagosz.