No Free Lunch, But Valet Parking

Brown University finally rose to the occasion, albeit kicking and screaming, and settled its long overdue tax bill with the City. The $31,000,000 deal couldn’t have come at a better time and will last for the next 11 years. It’s an important element that hopefully will help our beloved city stave off bankruptcy, though there are a lot more pieces that need to be fit into puzzle before we get a true financial picture of Providence.

The negotiations were arduous and often contentious and certainly left both sides bruised. Both deserve to be commended for turning down the heat and concentrating instead on the importance of getting a deal done. But before we all bestow an honorary degree on the University for Magnanimousness, a reality check might be in order as well.

In dealing with the City, Brown has historically been opportunistic and does not hesitate to throw its considerable weight around. And, it doesn't usually lose. But this time it appeared the City and State were prepared to go to the mats.

There was a proposal with considerable momentum in the state legislature that would have taxed Brown at 25% of the assessed value of their $1,000,000,000+ property in the City of Providence. It would have provided considerably more revenue for the City, but certainly negotiating a settlement is the preferred way to move forward in such matters. And it helps both parties avoid the sticky quagmire called “endless litigation.”

However, as generous as the agreement may appear, the backbone of the deal is in its Conditions to Payment section and suggests Brown has done very nicely in this deal as well. First, they will now receive the conveyance of four College Hill streets, 65,000 sq. ft. of city land. Not bad. And then there are those 250 parking spaces Brown will get use of for twenty years.

Now, we don’t claim to have a PhD in Mathematics but here’s the way we compute the value of that gift. If each spot brings in $1.25 an hour six days a week that comes to about $10/day, $60/week or $3,000 a year. Multiply by 250 meters and that’s an impressive $750,000 a year of revenue that City won’t be receiving for the next twenty years.

Then add in one $30 parking ticket per meter per day (the minimum according to the Parking Enforcement officers we talked to) and you can add another $2,250,000 in annual fines and you’re now up to $3,000,000 a year (or $60,000,00 for the full twenty years) of potentially lost revenue! Let’s assume the real numbers are only 80% of our rough calculations. That’s still well over $50 million in savings to Brown, well more than the value of the new deal.

Plus, Brown can now postpone building its much-needed parking garage for a while. (For the record, a 250-space garage costs about $40,000/space or in this case $10,000,000 to build). And they get those four streets to boot.

We’re hoping there’s more to this story or that our numbers are way out of line. But if they’re not, is Brown being magnanimous? Or opportunistic? And more importantly, does this deal portend the start of a real partnership between the City and Brown, or is it one more example of the politicians thinking short term while the institutional planners think long?