I-195 corridor should allow
profit, nonprofit growth

The health and education sector, which employs more than 35,000 people in Providence, is one of the most important foundations of the city economy. Between 2002 and 2007, this sector created 3,500 new jobs – while the rest of the city economy lost more than 6,000. Brown University, Rhode Island Hospital, Johnson & Wales University and other health and education institutions are among the state’s biggest employers. They have large endowments and offer services that are relatively recession-proof. They have the capacity to expand in the near future.

For that reason, these employers should be encouraged to expand, using the best land we have available, including the prime real estate that will be opened up when the old Interstate 195 is demolished in a few more years.

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Providence Mayor David N. Cicilline has said that mixed-use development that includes building commercial office space that would create high-paying jobs and pay property taxes to the city would be his preference for the 19.2 acres of land this is going to open up for development (see City of Providence special section in this week’s edition for more on the topic). As a former mayor of Providence, I understand and respect Mr. Cicilline’s desire to increase the city’s revenue.

But attracting new banks, insurance companies and corporate headquarters is very difficult to achieve. Class A office development has been minimal in Providence over the last decade, in large part because banking and insurance employment in the city fell by more than 4,000. In Capital Center, the Citizens Bank and Blue Cross & Blue Shield of Rhode Island buildings are transfers from elsewhere in the downtown, and GTECH is a transfer from elsewhere in the state.

Instead of looking to attract new occupants to the city, we must embrace what is here now. For instance, Johnson & Wales University is looking to expand into the I-195 corridor. JWU, which has 10,000 students in Providence and 1,200 employees, is preparing a $126 million plan to consolidate its campus in the downtown area, for which it would purchase about 25 percent of the land that will become available.

And JWU is not alone in its expansion dreams. The health and education sector continues to expand, adding almost 5,000 jobs in the city over the last 10 years. In 2007, the sector’s payroll reached $1.7 billion – by far the highest in the city. Average salaries are about $45,000, well above the state average.

The 35,000 employees pay millions in income, sales and property taxes. Another plus: The institutions have a good mix of professional, clerical and manual jobs, meeting the needs of the city’s diverse population. In addition, the colleges bring more than 20,000 full-time college students to the city, many from out of state.

In the I-195 corridor, we want large-scale investment and job creation, and we want it to happen soon. The large universities and hospitals that dominate the health and education sector are more likely to meet this objective than finance, insurance or other commercial ventures. JWU and RISD already have a major presence on the northern edge of the corridor; Brown and Rhode Island Hospital already have a major presence on the southern edge. In the near future, JWU wants to construct eight new buildings, and Brown plans to create a new campus for its medical school near Rhode Island Hospital. A downtown medical school could attract private medical companies and research centers.

In my view, all land in the highway corridor should be open to tax-exempt as well as tax-paying institutions. The property tax payments that we give up will be more than offset by economic and community benefits in other forms. This includes new personal income and sales taxes for the state government.

In addition, it is appropriate to negotiate a tax treaty that provides for some level of annual payment by the institutions in lieu of taxes, such as exists already for the city’s educational institutions. The important thing is to continue building a strong partnership with the universities and hospitals of Providence so that they will continue to expand and enrich our city. •

Joseph R. Paolino Jr., a real estate owner and developer, was mayor of Providence from 1984 to 1991.