RACHEL MARTIN, HOST:
Brown University, a private school in Providence, Rhode Island, is being asked to do more for its hometown. The city is almost in the red and the mayor is calling on the tax exempt colleges and hospitals to help out. As Ian Donnis of Rhode Island Public Radio reporters, all of this has triggered some tension between Providence and its Ivy League school.
IAN DONNIS, BYLINE: On an overcast weekday, a tour guide leads prospective students between the series of brick buildings ringing Brown University's historic green. The tour guide mentions President Obama, Hillary Clinton, and Maya Angelou's speeches at Brown. She's highlighting the university's place as a leading educational and cultural center nestled in Providence's prosperous College Hill neighborhood. But Brown sophomore Dan Stump says you don't have to go too far to see poverty in this city.
DAN STUMP: Providence is a community that, you know, is really hurting in a lot of ways. And when you go down the hill, you know, and you look around, it's a different world than it is up here.
DONNIS: Providence Mayor Angel Taveras grew up in that different world as the son of Dominican immigrants. He went on to Harvard and Georgetown law. Within a month of taking office in 2010, Taveras received a surprise, a $110 million deficit. He's trimmed that number to $22.5 million, but he's still calling on the city's largest nonprofits to pitch in an additional $7 million. Brown already pays Providence a combined $4 million a year in voluntary payments and taxes. But if the university paid full property taxes on its more than $1 billion in real estate, that would mean $38 million each year for Providence. Taveras calls this part of a larger structural imbalance.
MAYOR ANGEL TAVERAS: Collectively, our large hospitals, colleges and universities own nearly $3 billion worth of property in the city of Providence. Because of their privileged status as tax-exempts, they avoided almost $105 million in taxes this year.
DONNIS: Providence isn't alone in seeking higher voluntary payments by tax-exempt institutions. In 2009, Yale increased its $5 million annual payment to its city by $2.5 million. Moody's credit rating agency calls agreements like this a potential revenue boon for local governments with high concentrations of tax-exempt entities. But it says putting too much pressure on big nonprofits can reduce their strength and ability to create jobs. Back on Providence's College Hill, Caitlin Beatty pushes a baby stroller across the campus green with her husband, a Brown medical resident. She says it's important for the university to put money into scholarships.
CAITLIN BEATTY: At the same time, I do think, you know, the average taxpayer in Providence probably has a pretty low income. And so, you know, I think that for that reason it might be important to have Brown contribute more taxes.
DONNIS: A meeting this week between Mayor Taveras and Brown president Ruth Simmons left both sides feeling more optimistic. Here's Brown spokeswoman Marisa Quinn.
MARISA QUINN: Brown has a stake in the success in Providence, and I think that Providence has a stake in the success of Brown.
DONNIS: Mayor Taveras has already won some victories. He recently reached an agreement with Johnson and Wales University to triple its payments to the city. He's also continuing talks with hospital CEOs. Taveras says he's optimistic about a new pact with Brown. Yet even with the prospect of more help, Providence could still run out of money in June. Taveras says annual 5 and 6 percent pension hikes for some public safety retirees pose an ongoing threat to the city's fiscal stability. And for now, those public safety retirees have shown no interest in accepting concessions. For NPR News, I'm Ian Donnis in Providence, Rhode Island. Transcript provided by NPR, Copyright NPR.