PROVIDENCE, R.I.—A Colonial charter from 1764 provides that Brown University be "freed and exempted from all taxes." That document was penned before a fiscal crisis seized Rhode Island's capital city. So on Tuesday, after months of tense town-gown negotiations brokered by the state's governor, the Ivy League university agreed to make $31.5 million in voluntary payments to Providence over 11 years in lieu of taxes. Now, Mayor Angel Taveras said at a morning news conference at Rhode Island's State House, the city is on its way to becoming America's next "comeback story." Brown, whose red-brick campus dominates a hill in Providence's toniest neighborhood, is the city's largest and most prestigious landowner. It currently pays the city about $4 million a year: $2.5 million in voluntary payments and $1.6 million on commercial property not used for educational purposes or land it leases. Under the agreement, it will pay an additional $3.9 million this fiscal year and the rest over the remaining decade. Brown is "deeply concerned about Providence's financial situation," said the university's president, Ruth Simmons, standing next to Mr. Taveras and Gov. Lincoln Chafee. Providence has said it risks bankruptcy if it doesn't close a yawning budget gap by June. Mr. Chafee, the nation's only Independent governor, and a Brown alumnus, stepped in to help Providence negotiate with the university. Brown, which has an endowment of $2.5 billion, owns 200 buildings valued at more than $1 billion in all, which if taxed would bring in $38 million annually, according to the city. Providence is one of several municipalities in Rhode Island, whose unemployment rate is 11.1%, that have been grappling with underfunded pension funds. Gov. Chafee this year introduced legislation designed to help these communities control some of the costs. The state's smallest city, Central Falls, sought bankruptcy protection last summer, saying it couldn't afford its pension obligations. A "significant minority" of colleges and universities nationwide already make voluntary payments in lieu of taxes, but more are being pressured to do so as local governments struggle with their finances, particularly in the college-studded Northeast, according to the Lincoln Institute of Land Policy in Cambridge, Mass. Six of the eight Ivies do.
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