Government

Bills to allow the taxing of private universities supported by a broad coalition at State house event

“Given that our thriving higher education institutions are generating enormous amounts of income and have vast wealth and property holdings, they should be fully supporting our community through tax contributions, the same as working people and small businesses.,” said Representative David Morales.

Rhode Island News: Bills to allow the taxing of private universities supported by a broad coalition at State house event

April 8, 2022, 12:07 pm

By Steve Ahlquist

Yesterday , at an event held in the Rhode Island State House Library, Representative David Morales (Democrat, District 7, Providence) called for passage of his legislation to hold private universities and colleges more financially accountable to the communities that host them.

The bills would enable municipalities to tax properties owned by private colleges and universities and would allow host communities to impose up to a 2 percent tax on their endowments, to be used only for the host community’s public school district.

“Across Providence, we are struggling with a gap in quality education. While our private higher-education institutions hold huge fortunes in both income-generating property and endowments, our city lacks the resources to properly support our K-12 students in public schools. Ironically, one reason our city lacks funding is the fact that 40 percent of our land is tax-exempt, largely due to the property ownership of private higher education institutions who have the privilege of being exempt from taxation,” said Representative Morales. “Given that our thriving higher education institutions are generating enormous amounts of income and have vast wealth and property holdings, they should be fully supporting our community through tax contributions, the same as working people and small businesses. Now is the time we establish standards of accountability and finally require fair investments into our communities

Brown University’s endowment was valued at $6.9 billion as of July. Its properties, if they were not tax-exempt, would generate an estimated $49 million annually for Providence. Providence College would owe $16.2 million; Johnson & Wales University, almost $12.8 million; and Rhode Island School of Design, $11.6 million.

Brown does contribute about $4.4 million annually to the city through a memorandum of understanding signed in 2003, but that agreement expires next year.

The first bill (H7956) would enable cities and towns to tax properties that are owned by private colleges and universities, whether or not the property is used in support of the school’s mission. Current law allows taxation of those properties that the schools own but either lease to others or use for purposes other than education, such as parking lots or retail.

Senator Tiara Mack (Democrat, District 6, Providence) has introduced that bill in the Senate (S2600) as well.

“These are not just feel good pieces of legislation,” said Senator Mack. “They are common sense, data backed pieces of legislation that will improve the lives of every single member of our community in Rhode Island.”

The second bill (H7813) would enable municipalities to impose a tax of up to 2% on the endowment of any private institution of higher education located in that city or town. Under the bill, all revenues generated by that tax would be used exclusively to support the public school district of that municipality.

“While universities contribute to our municipalities in innumerable ways and we appreciate their local impact, their simultaneous harm is seemingly never quantified: their challenging impacts on quality of life, their strains and demands on limited city services, demolition of historic housing stock, their impact on rising rents and property taxes, and their historical displacement of people who once lived in vibrant long-standing communities, such as Fox Point,” said Providence Councilmember John Goncalves (Ward 1) who is in support of both bills. “These bills can enable us to compel our universities to deepen their commitments and ensure that we’re alleviating the overwhelming burden that our taxpayers have been bearing the brunt of for far too long.”

“[Brown’s] small, voluntary payments have never been enough,” said Carina Sandoval, a junior at Brown University, speaking on behalf of Students for Educational Equity at Brown University. “And these small, voluntary payments furthermore are viewed as a gift. And really, these aren’t gifts. These are obligations…”

“Universities in Rhode Island and specifically Brown University, whose name has been ringing bells from stolen land to displacement, in the Black, Indigenous and marginalized community,” said Terri Wright, speaking on behalf of Direct Action for Rights and Equality (DARE). “Why are Universities allowed to thrive without addressing past, present and future harms?

“Student housing in communities is causing astronomical numbers of homelessness because landlords prefer to partner with universities.”

“We see this issue as a big issue for housing justice because of the gentrification and displacement,” said Gabe Mernoff, one of the organizers of the event. “Brown, RISD, Johnson and Wales and all private universities should thrive, but so should Providence and so should Rhode Island. Currently, the situation could not be more backwards. Our wealthiest Institutions should pay property taxes just like everyone else…”

Providence School Board Member Ty’Relle Stephens, Providence mayoral candidate Gonzalo Cuervo, and Housing Opportunities for People Everywhere (HOPE) at Brown University also attended the event in support of the bills.