Donnis Tells the World About Brown & Providence
An Ian Donnis story has been picked up by the nationally broadcast NPR programmers. The battle of the struggling city, with its socially mobile mayor, and the liberal Ivy League school is, not surprisingly, of broader interest than just to those within Donnis’s usual broadcasting range.
Viewed from the other side of the political street than both the administration and the university tread, it’s a fascinating dispute. Mayor Angel Tavares leveraged Ivy to climb from lower to upper class, and there’s surely not a scary free-marketeer (or at least an admitted free-marketeer) among the decision makers at Brown.
“An Ian Donnis story has been picked up by the nationally broadcast NPR programmers.”
Good job, Ian!
How about thinking the unthinkable? Suppose Brown decided there were greener pastures in, say, Newport. A bit of fluff could be made up and a pilgrimage begun. The “billion dollar asset” would become a pile of bricks looking for a new owner and contributing nothing (can the city lien for non-payment of “payment in lieu f taxes”?). In the end, any new owner would probably be a tax exempt.
Might not broad vistas, large parking lots and convenient housing appeal to RI Hospital? Only financial businesses seem to feel the need to cluster.
Donnis usually does some interesting reporting-more balanced than some other NPR people.
Warrington, the problem with moving would be the cost – three separate costs, actually: acquisition cost of the real estate, construction cost (almost certainly, the university would not find property with the correct building style for their uses) and, least of all but not inconsequential, the cost of moving.
Thanks, Monique
Posted by Monique
“Warrington, the problem with moving would be the cost – three separate costs, actually: acquisition cost of the real estate, construction cost (almost certainly, the university would not find property with the correct building style for their uses) and, least of all but not inconsequential, the cost of moving.”
All true Monique, as I said “thinking about the unthinkable”. But, universities think in the long term. Let us say that Brown was taxed at the full $38 million, in thirty years, they have paid the full $1 billion value of the place. Let us also remember that Brown lends cachet to Providence, it is not the other way around.
I’m not suggesting that they would break camp and march off to Newport tomorrow.They could arrange a “tax treaty” and move slowly. Newport would probably see this as a net benefit.
While it is true that Brown may be an unfortunate beneficiary, I approve of the idea of tax free colleges. The power to tax is the power to destroy.
I don’t think it’s likely that Brown would move, but it is possible for them to put a lot of their jobs elsewhere. They need a new datacenter to replace one built in the early 1970s, there’s no reason they couldn’t build it anywhere else where there’s fiber optic cable. I can see a town deciding to trade tax-free status on an abandoned warehouse for a few dozen full-time professional IT jobs.
I don’t think the problem is Brown or other non-profits not paying taxes, it’s that we have too many tiny municipalities. The benefits that Brown provide (in jobs, mostly) extend far beyond Providence, the hospital services that RIH offer go to people from all over the state. Providence needs to recapture the value they provide to other cities and towns that enjoy the benefits without paying any of the costs. Not doing this will lead to a Providence that’s in permanent decline; a whole bunch of suburbs with nothing in the middle.
I forget who said it first, but I’ll say it again: “What is Providence without its colleges? New Bedford.”
Personally, I think that’s generous. New Bedford is in a state with lower taxes.
Posted by mangeek “Providence needs to recapture the value”
“Value” has developed a nefarious conotation to me. It must have been 1989 when I attended a conference in Boston on commercial real estate financing. It was early in that commercial turmoil which is now early forgotten, the S&L Crisis, the Condo Bust, etc.
Representatives of all the big developers were speaking there. There was no commercial financing available and no one had made a dime that year. So, what was their topic? The “value” they had created. Since then, I have thought of “value” as the straw a drowning man clings to.
Posted by Mangeek
“I don’t think it’s likely that Brown would move, but it is possible for them to put a lot of their jobs elsewhere.”
It is worth noting that Harvard and MIT are moving across the river and expanding in Boston. Now, Cambridge is a city riddled with tax exempts. And a lot of noise is made about that. Still,I expect Cambridge knows that without Harvard and Tech, it would have little to offer. There may in fact be a shortage of real estate in Cambridge, but I wonder.
Another thought as girls now exceed 50% of college students. I remember when my daughter and her ilk were “looking at colleges”. There was concern among parents about sending their daughters to New Haven. A few of her friends “opted out” of Brown because an increase in rapes. These were all blamed on “outsiders”. Many chose Dartmouth. I wonder if “urban” settings are becoming less attractive.
Posted by Monique
“and, least of all but not inconsequential, the cost of moving.”
I wonder if Rhode Islanders are really in touch with the cost of moving. I haven’t done much of it in my adult life. Still, I keep hearing Virginia/North Carolina calling.
To establish a sort of baseline, I talked to U-haul a few weeks ago. Figuring 3 trips for my toys and “stuff” and over $1.00 per mile, it easily broke $8,000. And that is just the “over the road” costs. Guess what, U-Haul now has an “evironmental fee”.
Right on, Warrington. The cost of moving is tremendous, especially for an institution like Brown. The issue isn’t that Brown will leave, it’s that the city has no legal standing to ‘just tax them’, the charter predates the founding of the country and the constitution of RI gives the state (and therefore the city) no power to alter it.
Brown holds all the cards here. If you were in their position, adding thousands of solid jobs to the local economy and drawing in billions from out-of-state, would you be willing to deal with a state that just bent over backwards to bring in a single mid-size employer (38 studios)?
Mangeek writes:
This reads to me like excuse making for an expanded reach of government. In a holistic view of value, it’s patently false to say that those who interact with Providence organizations don’t “pay any of the costs.” Employees bring the value for which they are duly paid; patients pay for their treatment; audiences pay for parking, dining, tickets, and so on.
Covering the local public costs is between the organizations located in the city and the city itself. It’s up to the organizations to figure out the best way to incorporate that exchange into their costs or their prices.
Expanding the reach of the government essentially to tax beyond the city limits accomplishes nothing but further hiding internal expenditures of the non-profits that don’t pay taxes and the government agencies that spend tax revenue.
The cost of an education has already sky-rocketed beyond the reach of many…I can only imagine the impact of taxing colleges…they would surely pass on the costs directly to the students…
I agree, but I’d point out that allowing colleges and universities to soften the downward pressure on their tuitions by allowing them to offset the costs that they owe to the city with tax dollars from outside the city will ultimately result in increased tuition.
That is, whatever the institution and the city arrive at as the city’s “cost” for facilitating the institution’s service should be incorporated in the institution’s internal equation balancing the expenditures it makes and the prices it demands.
“The cost of an education has already sky-rocketed beyond the reach of many.”
Not so. The Federal Government has all the direct loans anyone needs to make their educational dream a reality.
“This reads to me like excuse making for an expanded reach of government.” Perhaps you’re interpreting it incorrectly. Providence should expand, like cities all over the world have, to incorporate nearby cities and denser suburbs. This would smooth-out the burden of the universities and hospitals quite a bit. I’m not asking for some unholy power-grab, I’m asking for Rhode Island to catch up to 1950 instead of pretending it’s 1830. “it’s patently false to say that those who interact with Providence organizations don’t “pay any of the costs.” Employees bring the value for which they are duly paid; patients pay for their treatment; audiences pay for parking, dining, tickets, and so on.” So what money did you pay towards the roads, sewers, police and fire coverage, etc. for the hospitals and universities? What you’re making is actually an argument in favor of taxing those entities, so the costs are bundled-in with the services that are provided. I’m OK with that, except I think it will hurt our only two growth industries; it would be cutting off our nose to spite our face. “Covering the local public costs is between the organizations located in the city and the city itself. It’s up to the organizations to figure out the best way to incorporate that exchange into their costs or their prices.” I’m totally cool with that. I agree. It would be easier than some sort of ‘power-grabbing funding formula’. Another way would be to just tax income statewide (instead of property locally), then give cities and towns a fixed portion per-resident and per-employee? That would absolve us of all this mess and steer the government’s resources (confiscated from the people, yes) towards areas that create the wealth in the first place. Imagine the local savings just from municipalities not having to… Read more »
Posted by Dan
“The cost of an education has already sky-rocketed beyond the reach of many.”
Not so. The Federal Government has all the direct loans anyone needs to make their educational dream a reality.”
Not so. The programs have perhaps made the costs “affordable”, but it has also relieved some of thepressure to restrain costs.
My daughter has now been out of college for 10 years. I have done the math, if I had invested her education costs in her name, she would be comfortably retired now.
Warrington – I was agreeing with you, albeit facetiously. The Federal government will give students all the quick cash they need. The catch is you have to pay it *back* and then some. It’s not a coincidence that the price of higher education has tripled over the past two decades and it certainly isn’t due to demand alone. I’ve long pointed out that these top-down progressive loan programs hurt the very people they aim to help.
“if I had invested her education costs in her name, she would be comfortably retired now.”
I’m actually considering using a non tax-advantaged vehicle to ‘save for college’ for my soon-arriving child. Why? Better rates of return and more flexibility. What if the mini-mangeek chooses a trade instead of college? They could start off at 18 with $100K in retirement savings and retire at age 45, I’ll just start pouring the brokerage account into contributions to their IRA.