A new study shows that one third of all property in Providence, Rhode Island is exempt from property taxes. Actually it's 37 percent, as $8 billion of the city's $21.7 billion of property escapes tax. Universities and private schools accounted for $2.1 billion of the exempt property, by far the largest category. Hospital property was valued at $1.45 billion.
The value of exempt land has doubled since 2001, in part because many nonprofits have been buying up property. This is not unique to Providence, as most large cities face the same problem. Exempting some property (or in this case, a lot of property) from tax means that the taxable property (all of us not exempt) bears a heavier burden. And not only are the exempt organizations not paying taxes, they are using city services. Exemptions are usually granted at the state level, but the costs are borne by local taxpayers. Some cities have developed Payment In Lieu of Taxes (PILOT) programs. Under these programs, nonprofits voluntarily contribute to financing city services. But nonprofits never contribute anything near to what they are saving in property taxes. Personally, I do not believe that most organizations should receive exemptions. But no politician is ever going to call for an end to exemptions for religious, social, or educational organizations.