AN INVESTIGATION OF THE COSTS OF MUNICIPAL SERVICES TO TAX-EXEMPT INSTITUTIONS USING BROWN UNIVERSITY AS A CASE STUDY

Granting exemptions from the property tax has been criticized because it eliminates a source of municipal revenue. Exempt properties appear to be concentrated in urban areas, so this effect is especially problematic for cities because of the existence of urban fiscal stress. Recent writers have indicated that exempt institutions may provide valuable services to their communities, but the cost of municipal services to their properties represents a significant fiscal impact on local governments. This paper investigates the fiscal impact of a single exempt institution, Brown University, on the City of Providence, R.I. Fiscal impact analyses were used to measure the. cost of municipal services provided to the university. The results of this investigation are that the costs of services to exempt educational institutions are minimal, and are not significant in view of the total municipal budget.

. Due to the cost of municipal services exempt users consume, a negative fiscal impact results for many of their host communities (Quigley and Schmenner, 1975: 273). The following project will contain an analysis of the fiscal impacts of Brown University, an exempt institution, on the City of Providence.
The first chapter of this project will describe the characteristics of property tax exemptions, the issues which have developed concerning their use, and the format for the research undertaken.
Chapter Two will include an investigation of the current fiscal status and trends in financial condition of the City of Providence. Chapter Three will consist of an analysis of the municipal services used by Brown University and their costs. This chapter will also include an evaluation of the significance of the costs of municipal services to exempt institutions using the results of this analysis. Chapter Four will provide conclusions which can be drawn from this project.
Chapter One will include sections on the significance of the property tax, the historic use of exemptions, the legal basis and practical rationales for using exemptions, estimates of value and distribution of exemptions, and issues raised about their use. This chapter will also cover the major research questions addressed in this project, the methodology used for analyzing the data, and data sources.
The Role of the Property Tax in Local Government Revenues The significance of property tax exemptions depends in part on the importance of the property tax as a source of local government revenue.
Since approximately the middle of the twentieth century, the property tax has gradually decreased as a proportion of total local government revenue. According to the U. S. Bureau of the Census, property taxes accounted for 57.6 percent of local revenue in 1946, decreasing to 39.9 percent by 1970, and constituted only 29.5 percent in 1978. These declines were caused by the increased use of intergovernmental transfers, user charges, and local sales and income taxes. Despite its decline in relative importance, and recent initiatives limiting the growth of the property tax (i.e., Proposition 13 in California and Proposition Two-and-One-Half in Massachusetts), the property tax remains a major source of local government revenue. This is particularly true for New England, as the property tax constituted more than 45 percent of total local government revenue in each of the region's states in 1979 (Spain andWooldridge, 1981: 117). Although cities enjoy a broader set of alternative revenue sources than suburban or rural municipalities, the property tax continues to be an important source of financing for large urban centers. This is suggested by the fact that per capita tax burdens in cities were twice as high as those of other municipalities in 1972 (U. S. Bureau of the Census).
Several features of the property tax make it likely to continue in use. These are its local availability and ease of administration, which support the autonomy of local governments; the permanent nature of the tax base; and strong ties to the established political and economic structure (Netzer, 1966: 171).

History of the Use of Property Tax Exemptions
Exemptions to the property tax have historically been granted for two major reasons. Municipalities gave exemptions to institutions which provided services considered desirable for the community at large.
In other cases, government ownership of land made taxation superfluous (Balk, 1971: 4). Exemption of charitable and educational institutions had a long history in England, dating to the Elizabethan period, before it was introduced to the colonies in the 18th century. The exemption of these institutions met little dispute in its introduction into the

The Legal Basis for Granting Exemptions
The legal bases for granting property tax exemptions vary from state to state. In some states, state constitutions have been interpreted as granting exemptions to certain types of property. Other states have enacted laws granting certain types of exemptions. In both cases, the language used often implicitly includes many different types of land use among potential exempt properties. For example, Pennsylvania provides that any uses which "serve a public purpose" are exempted by state law, while New York's state constitution has been amended to provide exemptions to private charitable, educational and religious properties. In some states, including Rhode Island, additional exemptions to those constitutionally designated can be granted by acts of the state legislature. This reduces legal control over the granting of exemptions. In states where specific categories for exempt property are described in state law, there are many instances where the actual exemptions granted do not strictly follow these laws (Balk, 1971: 6). Custom, rather than law, appears to have determined the properties which receive exemptions in many cases (Myers, 1969: 77).

Practical Rationales of Governments for Granting Exemptions
According to Jens Jensen, author of a basic volume on the property tax (1931), the general rationales for granting property tax exemptions were the ownership or uses of property. Exemptions were granted for ownership to all levels of government and certain classes of homeowners, such as veterans or the elderly. Use exemptions, on the other hand, were given to charitable, educational or religious uses that provided some form of benefit to the community. In a symposium on tax exemptions held in 1939, the Tax Policy League divided exemptions into two groups: those which provided services which would substitute for those of municipal government, and all others. Later, analysts John R. Meyer and Robert Leone used the provision of services which would have been provided by government to determine which services should be subsidized by exemptions (Meyer & Quigley, 1973: 48). John M. Quigley and Roger W.
Schmenner proposed that their productivity or benefit to the conununity provided the traditional justification for exempting certain properties (1975: 259-61).

Estimates of the Value of Exempt Property
The value of exempt properties was equal to approximately one-third the value of real taxable property in the U. S. in 1966, according to an estimate based on calculations by the International Association of Assessing Officers (IAAO) (Balk, 1971: 11). This estimate was based on U. S. Bureau of the Census data on taxable property values. In a study published in 1969, Martin A. Larson and C. Stanley Lowell estimated exempt property to be 32.6 percent of real property in the United States. This estimate was based on a sample of assessed property values in fourteen American cities (Balk, 1971: 12). An earlier estimate of the value of exempt institutions was 22 percent of the total value of real property. This estimate was made by Will Myers of the Advisory Corrnnittee on Intergovernmental Relations (ACIR) using statistics on national wealth gathered by the National Bureau of Economic Research (Myers, 1967: 268-9).
A number of factors make it difficult to estimate the real value of exempt properties. Assessments are frequently incomplete or out of date (Balk, 1971: 15;Myers, 1967: 272). Unique structures among exempt properties such as monuments or churches are difficult to assess as few standards exist for their valuation. It is difficult to compare or evaluate estimates of exempt properties because of inconsistencies in the data. For example, Louisiana is cited in the first two of the above estimates as having exempt property equal to 79 percent of total assessed value, but this includes exemptions on business inventories and equipment and private personal property. These are not included in the exempt totals of other states. However, in spite of these admitted problems in valuing exempt property, there is general agreement that sizeable amounts of property are involved in terms of taxable value and land acreage (Balk, 1971: 6).

The Distribution of Exemptions Among Different Types of Property
There is considerable variation in the types of properties which have received property tax exemptions. This has occurred because of the wide range of legal bases used to grant exemptions, the difficulty of defining which properties are properly associated with certain uses (e.g., university-owned bookstores, parking lots used by churches), and the natural variety in types of property in different uses in different regions. Included in the wide variety of exempt properties are the Chrysler Building in New York, Logan International Hotel in Boston, and luxury apartments for the elderly in Florida and California (Balk 1971: 7).
Several estimates suggest that the largest portion of exempt property is that owned by municipal governments. The next largest holder of exempt land is the federal government. All levels of government combined are estimated to hold between 70 and 85 percent of exempt properties according to estimates made in 1966 and 1973 (Balk, 1971: 7 45;ACIR, 1978: 41). The federal government has compensated local governments for services provided to federal properties. Existing programs include revenue sharing from income on timber harvesting and mineral extraction, and aid to communities impacted by defense installations. Many writers suggest, however, that these programs do not fully compensate local governments for the services provided to these properties. The primary holders of the remaining exempt lands vary from state to state. In Iowa and Hawaii, the largest portion is owned by religious institutions; in California, by charitable activities; in Minnesota, New York, Oregon and Rhode Island, by educational uses.

Significant Issues Concerning Property Tax Exemptions
Considerable scholarly research has focused on the relative equity and effectiveness of the property tax as a revenue source. These concerns are also found in the literature concerning property tax exemp- or which involve residential use of the property requiring greater fire and police protection, which also consists of schools and hospitals.
The property chosen for a case study, Brown University, was an example of a relatively large property in acreage from these two groups. Brown provides some of its own waste disposal and police protection services which are not uniformly provided by all schools. This suggests that an estimate of the costs of municipal services to schools based on Brown's costs would be a conservative estimate of these costs. Because of the differences between types of exempt properties, it was not possible to estimate the costs of services to all of these properties based on the cost of services to Brown.

Methodology for Research Project
The methodology to be used to calculate the net fiscal impact of Brown University will reflect those of the writers mentioned above.
Raimondo's calculations were based on the projection of a hypothetical taxable use for a given exempt property. This is unrealistic because of the small possibility that an exempt institution, with historic and economic ties to a given location, willIIDve to a new site (Leone and Meyer, 1977: 44 properties providing a variety of functions and services suggests that the exemptions are of ten granted on the basis of custom rather than services provided to the host connnunity. For these reasons, the costs of services to exempt institutions was regarded as the main impact on local finances.
The allocation of costs of municipal services to different property uses performed by Leone and Meyer resembles the case study method of fiscal impact analysis (Burchell and Listokin, 1978: 45-66 Chapter One of this report has included general information concerning property tax exemptions and a discussion of significant issues surrounding their use. The conclusions of this chapter described a research project to test the cogency of some of these issues. The following chapter will discuss the current financial situation of Providence, its fiscal trends, and the impact of property tax exemptions on its financial condition.
Chapter II Financial Conditions and Trends in the City of Providence The previous chapter described the negative fiscal impacts that exempt institutions may have on their host municipalities. These im-/ pacts were seen to be particularly great for cities because they contain high proportions of exempt property. Many cities are currently facing serious financial strain due to requirements for high leve s of services and limited revenue growth. This makes the negativ fiscal impacts of exempt institutions especially problematic for cities.
This chapter will examine the general nature of urban fiscal stress, the social and economic trends of cities thought to produce fiscal stress, and the relationship of these trends to present financial conditions in the City of Providence. The chapter will conclude by describing the type and amount of exempt property in Providence, and the relationship of past and current exemptions to the city's financial condition.
The Nature of Urban Fiscal Stress Urban fiscal stress has been defined as a city's inability to adequately meet current public service demands (Burchell and Listokin, 1980: xi). The term describes a condition of strained finances marked by cash shortages, high deficits and inability to borrow funds which makes it difficult for a city to cover current expenses. This situation is created by continued high levels of spending relative to revenue, or I I slow revenue growth. It may eventually lead to bankruptcy or nearbankruptcy, as ·in the cases of Cleveland and New York. The 1970's brought an increase in the number of cities affected by some degree of fiscal stress. The high inflation of this period heightened preexisting financial problems. It increased expenses immediately, but was slower to affect revenue because of the infrequency of property revaluations (Bahl, 1981: 195). Thus, while the high rate of inflation reduced municipal purchasing power, it did not lead commensurately to an appreciated property tax base. Fiscal stress has had a tendency to become chronic, and is a continuing problem for many cities (Weinstein and Clark, 1981: 114-5).
Recent literature has focused on the causes of urban fiscal stress.
Some writers believed that the social and economic declines of cities following World War II were responsible for its development. Others felt that proper financial management could overcome the deleterious effects of these trends (Weinstein and Clark, 1981: 121-3). The following section will describe social and economic trends which have been identified as contributing to fiscal stress.

Social and Economic Trends Associated with the Development of Urban Fiscal Stress
Several coinciding social and economic trends in cities following World War II resulted in increased pressure on municipal finances.
These trends included losses of population, relocation of manufacturing firms to the suburbs, and changes in the composition of urban populations.
Losses of population and manufacturing plants were primarily responsible for reducing municipal revenue from the property tax.
Declines in population of cities in the 1950's and 1960's produced declines in many urban neighborhoods, which were marked by the deterioration and abandonment of housing. This decreased the value of the city's housing stock, and lowered the rate of growth of the total tax base (Muller, 1981: 299).
Aging housing stock also contributed to low total property value in cities (Fossett and Nathan, 1981: 65). As shown in Figure I, northern cities generally have a higher percentage of older housing than southern or western cities (Sumka, 1983). Much of the older housing in northern cities is in poor condition and there has been relatively little new construction compared to other areas. These trends led to decreases in the rate of growth of revenue supplied by the property tax.
The loss of manufacturing firms to the suburbs also contributed to declines in revenue. This occurred partly as a result of improvements to highway systems in the 1950's which enabled goods to be transported easily to and from suburban locations. Losses of industry to cities resulted in the outmigration of employees and, in many cases, direct losses of property and non-property tax revenue (James, 1981: 20-4).  This increased demands on urban revenue.
Providence shows evidence of each of these trends of social and economic decline. The following section will discuss these trends and their effect on the overall financial condition of the city.

Post-World War II Social and Economic Trends in Providence Which Affected Municipal Finance
The growth of property tax revenue in Providence has been affected by losses in population, aging of the housing stock, and declines in manufacturing employment since World War II. As shown by Table I  Providence lost a considerable number of commercialand industrial firms between 1960 and 1980. This decrease and the change in total and manufacturing employment during this period are shown in Table II.
The increase in total employment from 1970 to 1980 was due to increases in employment in the service industries. However, manufacturing employment decreased steadily from 1950 to 1980. The closings of manufacturing firms during this period also contributed to a reduction of the real property base.
Providence's municipal expenses have been affected by significant changes in the composition of its population from 1950 to 1980. Table   III shows increases in the city's percentage of minority, the elderly , and poor populations during this period. The increase in non-white populations reflects the recent immigration of Southeast Asian Hmong .

Recent spending in this area has covered extensive renovations to City
Hall, remodeling of the city zoo and an overhaul of Roger Williams Park.
One factor which increased expenses in all departments of the city is that the majority of municipal employees are unionized. In 1981, the city's independent auditors stated that they believed that savings from the layoff of 506 employees would probably be wiped out by negotiated salary increases throughout the city.

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with the blizzard of that year. These amounts will have to be repaid eventually. These repayments and the unionization of employees are likely to create continuing high expenses for the city. Investor Service threatened to reduce the city's bond rating from Al to 2 Baa , although they did not actually do so. A supplemental property tax levied in 1981 provided the city with the additional revenue needed to overcome these cash flow problems.
Although the financial crisis of 1981 has passed, Providence continues to face financial problems. This crisis was the culmination of continued high levels of spending relative to revenue during the second half of the 1970's. At the end of fiscal year 1982, the city still had a $6.1 million deficit. In the summer of 1983, the city again had cash shortages which led to the layoff of sixty-seven temporary employees. Unless the city can reduce its levels of expenses, or its heavy dependence on the property tax, Providence will probably face continuing fiscal stress.
The city has made some progress towards developing policies to deal more adequately with its financial problems. The Mayor formed an Advisory Commission on Finance in 1981 to develop recommendations for ilnproving the city's financial health. This commision has proposed ilnplementation of user charges for municipal parks and the city zoo, and fees for services for exempt institutions, to increase municipal revenue.

Amount and Types of Exempt Property in Providence
Early writers on tax exemptions believed that exempt property had a negative fiscal impact on the conununity in which it was located because of the direct loss of tax revenue (Balk, 1971: 10-17). More recently, attention has focused on the amount of taxable land that exemptions remove from the real property base (ACIR, 1978: 44). This is a particular problem for central cities whose tax bases are growing at slower rates than those of other areas. The growth of exempt property in Providence provides evidence of this problem.
As shown by Table IX  A little less than two-thirds of the city's exempt land is publicly owned. The city itself holds title to almost half of total exempt property. The largest amount of land in the privately owned category is owned by private schools, whose holdings constitute 11 percent of the total exempt land area and approximately one-third of privately owned exempt property.   The majority of property that is exempt because of an "Act of Legislature" consists of the previously taxable acreage owned by Amtrak.  Unless this trend changes, there is likely to be little change in the volume of services used by Brown in the immediate future.
The following chapter contains an investigation of current costs and volumes of municipal services provided to Brown. The chapter will include an explanation of the methodologies used to determine these amounts.

Surmnary
Social and economic trends in Providence beginning after World War II included the loss of population and manufacturing employment, and changes in population composition to include more minorities, low income and elderly • These changes led to increased demands for municipal services and slow growth of the property tax base in Providence, as in other central cities. However, Providence has continued to rely heavily on the property tax as a source of revenue which resulted in the recent incidence of fiscal stress.
Exempt properties in Providence impact the city's finances both by removing land from the tax base and through the costs of municipal services to the properties. The growth of exempt property in Providence in the last five years has been a modest 5 percent but still represent s Year: Number of Students: Brown University was the largest property owner of this group and was chosen on this basis as a case study. At present, there is a level trend in student population, suggesting that there will be a limited amount of growth in municipal services to Brown. Therefore the present cost of services is a good indication of future costs.
The actual level of costs of services to the university as determined through fiscal impact analysis is presented in the following chapter. While schools are not representative of all exempt properties, they make up a sizeable percentage of all exempt property.
Brown will be investigated as representative of this group of properties.

Notes
Chapter II 1. The figures given by the reports for revenue and expenses for Providence include the financial activity of the city's water department. These funds are restricted to that department's own use by the City Charter, so they were eliminated from the financial data for Providence. Transfers to the General Fund from other city funds, such as the Capital Fund, were also eliminated from city revenue.
2. Moody's municipal bond ratings range from Aaa, indicating highest credit quality, to Ba, used for speculative investments. Although not the highest rating, Al indicates good credit. Baa, the next lower rating, represents credit of only medium quality.
3. Brown's property ownership increased at an uneven rate through the 1970's from 130.9 acres in 1970 to 137.4 acres in 1981. In 1982, several parcels of land located along the Seekonk River were sold, reducing the university's acreage slightly below its 1970 holdings. Some parcels of land were dropped from the exempt rolls during the 1970's because they were profit making uses. For example, the University Club with approximately one-third of an acre was added to the city's tax rolls in 1972. The university currently owns several parcels of land and buildings in the name of Farview, Inc. which are taxed. These consist primarily of property held for future use. The university bookstore and the bottom level of a dormitory which is rented out to small shops are both taxed on the value of their buildings, but their land is exempt. The total taxable property owned by Brown is assessed at $669,910.
Chapter III

Determination of Costs of Services to Brown University
This chapter contains a description of the methodology used to assign costs of municipal services to the university and the findings of costs. The significance of these costs for the city and for exempt institutions, and the implications for alternative treatment of property tax exemptions will also be discussed.

Methodology for Determining Costs of Services to Brown University
Fiscal impact analysis involves the projection of municipal costs and revenue that are associated with new development (Burchell and Listokin, 1978: 1). In contrast to the broad impacts shown by an economic analysis, such as cost-benefit assessment, fiscal impact reflects only those direct municipal costs and revenue produced for local govern- Additionally, several types of general government services receive very little use by the university because of the nature of its activities or its exempt status. These services include vital statistics department, licenses, the city council, building inspection, tax collection and assessment review. The university provides its own waste removal, so this service is not received from the city. All of the services discussed here were excluded from those whose costs were apportioned to Brown. In addition, the university pays the city sewer and water fees, which are assumed to cover the costs of these services. Based on this assessment, municipal services for recreation and culture, health and welfare and some general government services were excluded from those services whose costs were assigned to Brown.
Eliminating these services left public safety, public works, and the remaining portions of general government as municipal services provided to the university. This chapter will be organized in sections dealing with the analysis of the costs of each of these services. Public safety includes police and fire protection, which will be analyzed separately. The city provides the same services in this area to Brown a s to other institutions and commercial establishments, and to other property owners. Because the university is exempt from property taxes, services for tax collection and assessment review totalling $421,004 were not included in costs of services to the university.
Brown receives fire protection and some police protection from the city. Brown's buildings are not routinely inspected by the city, so these were not included in the costs of services to the university.
Expenses associated with the maintenance and repair of streets were allocated to Brown because these are provided to streets in the study area. Similar services are received for street lighting and cleaning catchbasins. Brown provides its own solid waste removal, so expenses of $3,085,286 associated with solid waste collection were not included in the costs of services provided to the university. There are no bridges in the study area. These expenses, together with municipal docks and environmental (pest) control, were not considered applicable to Brown. Expenses of $3,739,961 associated with sewage disposal were not included in costs of public works services to Brown because the university pays the city sewer fees.  Brown provides a wide range of rec reational facilities for its staff and students, so use of municipal facilities is assumed to be minimal.
Administrative expenses for purchases of supplies and maintenance of public buildings were considered part of general government services. Expenses associated with parks were not allocated to Brown. The university provides large amounts of cultivated open space which can be used by employee s and students, so use of public parks is probably low. Expenses of $2,192,286 were omitted from those in this category allocated to Brown because they are for services connected with public parks. Developmental and environmental services pertain to gardens and greenhouses at Roger Williams Park.

Explanation for Allocation
Costs associated with personnel expenses were included in these costs for individual departments based on the average cost per employee. Brown provides its own health care facility for employees, so the mental health center was not allocated to Brown. Other costs in this area are for services to residential users or are not statutory expenses and not consumed by the university.
Grants include $832,000 to the Providence Public Library. Other grants were not statutory expenses and were therefore not allocated to Brown.
Provided primarily to residents.
Expenses covered by water fees. municipal expenses as explained below.
Expenses in the municipal budget that were allocated among different departments or reassigned to new categories included traffic engineering, the Commissioner of Public Safety, administration and purchasing, maintenance of public properties, public buildings, custodial services, pensions, and employee benefits.  Table XV. Employee benefits including FICA, health insurance, unemployment compensation and the Public Employees' Health Service were allocated to separate departments based on average cost of $1,772 per employee per year. An actual breakdown of benefit costs by municipal department was not available.
The selection of methods of fiscal impact analysis for determining the costs of services to Brown was based on the intended use of the methods available. The proportional valuation method was designed for projection of the costs of nonresidential development. In the following section, it was used to estimate the costs of general government services provided to Brown. A second method, case study, is applicable to both residential and nonresidential development. In this analysis, the interview format of this method was used to obtain information about the current costs of municipal services. The procedures and application of these methods are further detailed in the subsections which follow.

The Proportional Valuation Method of Fiscal Impact Analysis
The proportional valuation method of fiscal impact analysis was used to determine the costs of general government services to Brown.
This method uses average costs as the basis for the current cost of services. The municipal costs for all nonresidential property are determined; then, a share of these costs is assigned to the facility in question. The method is based on the assumption that assessed values can be used as an indicator of use of municipal services.
The application of the method begins with the collection of data on municipal operating expenses attributable to non-residential (commercial and industrial) uses, total and nonresidential equalized real property value, and the number of total and nonresidential land parcels in the jurisdiction.
To calculate the municipal expenditures attributable to non-residential uses, total municipal expenditures are multiplied by the proportion of nonresidential to total real property value. This product is multiplied by a refinement coefficient to produce expenditures associated with nonresidential uses. The refinement coefficients, provided by Burchell and Listokin (1980: 124), are based on data which showed the difference between the actual expenses on nonresidential property and those derived from a simple proportion. They are needed to adjust for the different requirements for services of residential and nonresidential development. While this method is fairly simple to apply, it should be used with the understanding that it is based on refinement coefficients which were derived from a number of communities which differed in size, age, and proportions of commercial and residential development.
Because individual communities may differ from the average of these communities, this method may not always provide an accurate determination of costs. Additionally, assessed values may not always be correlated with increased use of services.
The expenses for services for general government which the city provides to Brown include central governing functions such as the Mayor's office, city courts and the city clerk; finance administration, and costs of debt service. An itemized listing of these expenses from information provided by the city budget is shown in Table XVI.  10. Real property value of facility to average nonresidential real property value (8 divided by 7) Step In spite of these problems, the proportional valuation method was useful as a means of estimating the costs of general government services provided to Brown.

The Case Study Method of Fiscal Impact Analysis
The case study method was used to determine costs associated with Police Protection, Fire Protection and Public Works Services.
This method was used as early as the 1930's. As a method of analysis, it assumes that local officials are the best source of information about the costs and excess or deficient capacities of local services.
It is particularly useful for municipalities which are experiencing rapid growth or whose services are near the limit of their current capacities. Excess or deficient capacities in public services are determined from interviews with public officials. These interviews also provide information on local standards for personnel and capital equipment, which may depend on population.
The procedure for performing the case study method includes several consecutive steps. First, local officials are contacted and the services and responsibilities of their departments identified.
Then, operating or capital excess or deficient capacities for these departments are determined. Next, the population added by the new development is calculated. The service demand of this population is estimated through the use of service standards and capital ratios.
The actual response of local departments to increased operating and capital requirements is determined from interviews with department officials. The cost of the actual expansion of operating and capital functions is projected for each department. Then, the total revenue generated by the development is projected and the costrevenue relationship is determined by comparing total projected costs to revenue (Burchell and Listokin, 1980: 73-88).
While the case study method is generally accepted as a means of estimating municipal expenses incurred for new development, its results should not be considered an exact prediction of future expense levels. The service standards for municipal services were derived from a small sample of fourteen cities from each region. If local standards, wealth, or traditions differ significantly from those of these cities, the standards may not be applicable. In addition, the case study method depends heavily on interviewing local department heads. When describing the capacities of their own departments, it may be difficult for these individuals to present unbiased information.
Prior to the fiscal impact analysis, a land use survey was undertaken of the university's tax exempt properties. Information on property locations was obtained from the Providence Tax Assessor's Office.
The detailed information obtained from this survey is included in the Appendix to this report.
In order to estimate the volume of some services provided to Brown, a study area was identified which included the majority of university property. This study area is shown in Figure III. The survey provided information on the types of development in the study area, the number of street lights and hydrants, and length of total miles of street.
The amounts of property in the categories identified in the land use survey is summarized in Table XVII.
In order to obtain information concerning current operating and   Brown installs and maintains its own alarm systems which are connected to the city's dispatching office. There are 69 city fire boxes on the campus. The university pays the city an annual fee of $300 for There were 25 hydrants in the Brown study area, which indicated an annual expense of $3,125.
According to the Deputy Director, the number of calls for fire service from Brown has increased significantly over the last few years.
The reason for this is the increase in the use of smoke-sensitive fire alarms at Brown. In some cases, these alarms were installed in hallways near the doors to dormitory rooms, where they are easily set off by food cooking or burning on stoves inside the rooms.
In the first ten months of 1983, there were 206 calls from Brown for fire service. There were 8,619 calls during this period from the entire city. This is the equivalent of 248 calls per year from Brown 4 and 10,343 from the city. None of the calls from Brown required hose to be laid down, which involves significant expenses for the fire department. For each of the calls at Brown, two engines, a ladder and a chief were dispatched. According to the Chief Dispatcher, the costs for each  The Assistant Chief indicated that he felt current levels of personnel were adequate for the needs of the city and that no expansion would be necessary in the immediate future. Table XXI shows current operating expenses associated with providing fire protection services to Brown University. The number of employees exceeds the service standard, and the Assistant Chief has indicated that expansion of the department in the immediate future is unlikely. Therefore, the costs of the department's services can be expected to continue at their current level in the near future.

Analysis of Cost of Public Works Services Provided to Brown
Public works services which the city extends to Brown include street repair, street cleaning, snow removal and cleaning of storm drains and catchbasins. Sidewalk repair is no longer performed by the city and is the responsibility of private property owners. Street cleaning and snow removal are contracted to independent operators.
Information about the city's public works services was obtained from interviews with the Director of Public Works and Associate Engineers in the Division of Sewer Maintenance and Construction. 5 The Director of Public Works indicated that personnel and equipment used for street repair and cleaning depend on the volume of traffic on a particular street. According to the Director, the mix of major and minor streets and traffic volumes in the Brown study area are similar to those of the city as a whole. All costs associated with street repair and maintenance, as well as snow removal, could therefore be determined for this area based on the average costs per mile of providing  *These services are contracted to independent contractors who purchase and maintain their own equipment. **Includes $335,000 in leased equipment. ***The city's payments to union pensions include coverage for employees in the public works and water departments and the parks section of the public properties department. The breakdown of these departments into union and non-union employees was not available, but the great majority of employees in these departments are union members. The pension cost allocated to the Public Works Department is based on the proportion of employees in these three sections employed in Public Works. However, the amount of increase in personnel or equipment has not yet been determined.
Purchases and leases of capital equipment for street repair for 1980-81 were $493,388. The standard for Providence based on capitalto-operating expense ratios is $551,941. One reason that capital expenses are below standard is that there is a large percentage of very old trucks in the department's fleet. The Director expects to purchase six new trucks next year to replace several of these and others whose leases have run out. This is expected to cost the department $500,000 in 1983/84. If these costs are allocated according to cost per mile, this would result in an average cost of $4,730 for the study area.
The annual expenses for public works services associated with the university are summarized in Table XXIII

Significance of Results
The total costs of municipal services provided to Brown are summarized in Table XXIV.
According to Burchell and Listokin, typical public safety costs for commercial properties average 75 percent of total municipal service costs. Brown's relatively low public safety costs may reflect provision of their own police protection. Brown's public works expenses, on the  Brown's property holdings may be larger than that of the average · commercial firm and may have a relatively greater amount of street frontage, resulting in relatively high public works costs for the university.
Unfortunately, it is difficult to estimate the margin for error in these calculations. This would differ from one area of expense to another, depending on the relative knowledge of the persons interviewed.

As noted by Burchell and Listokin, information obtained by the Case
Study method is the most reliable estimate of actual expenses of any of the fiscal impact methods because it provides information specific to the city and development being investigated. In the application of the Proportional Valuation method to estimating the costs of General Government, the calculations produced refinement coefficients which were beyond the range of those provided by the chart. For these reasons, there is most likely a substantially greater margin for error in the estimate of general government than in the other estimates of service costs.
The costs of services to schools was not used to estimate the costs of services to other types of exempt institutions because these most likely use considerably different amounts and types of services.
However, schools are the largest private owner of exempt property, with 33 percent of exempt land and costs of services provided to schools, and would therefore be significant in the total cost of municipal services to exempt institutions.
There are considerable differences among exempt educational institutions in Providence which affect the volume of municipal services they consume. The students of some schools are primarily city residents; others serve many nonresidents and therefore provide dormitories, which require additional fire protection services. Except for Brown, other institutions do not provide their own security force. Several schools do not provide their own solid waste disposal. These factors would result in higher total costs for services.
If Brown's costs were used to estimate the costs of services to all schools, this would produce a conservative estimate of these costs.
Using the costs of municipal services to Brown, shown in Table XXIV, indicates costs of $856.65 per acre. If the costs of services to all schools were the same as those of Brown, the total cost of these services to the city would be $294,942.
From the perspective of the city's total budget, the amount of costs extended to educational institutions is not particularly signif icant. The city's total expenditures for 1980-81 were $139,824,277.
Expenditures for costs to educational institutions of $294,942 would be less than one percent of this amount. However, as noted above, this is most likely a conservative estimate of the costs of services to private schools. Further study is needed to produce a more precise estimate of these costs.
The costs of municipal services also represent only a small fraction of the university's budget. With total revenues of $98,474,000 for 1981, the cost of municipal services calculated above would be approximately one-tenth of one percent of the university's budget.
The relatively small cost of services to exempt institutions suggests that these institutions do not have a significant impact on the finances of their communities. Therefore, proposed alternatives to tax exemptions compensating communities for these costs would not have significant effects on the volume of municipal expenditures.
During the investigation, several issues arose which were related to the effectiveness, rather than the cost of municipal services delivery. Brown's extensive use of smoke-sensitive alarms in its dormitories may provide a high level of safety for students, but this policy initially resulted in high costs to the city for the units dispatched.
The city subsequently reduced its costs by reducing the numbers of units According to university policy, patrolmen are not allowed to carry guns. However, according to the Manager of the security force, armed patrolmen are needed to deal adequately with these incidents. The Manager of Brown's force sees a need for his patrolmen to become more involved in connnunity police work in order to better protect the Brown community. He sees this involvement requiring higher levels of cooperation between the Brown and Providence police.

Communication between university administrators and the Providence
Fire Department could help to assure effective fire safety without excessive costs for the city Fire Department. Cooperation is definitely needed between the Brown and Providence police forces to provide adequate security for students and if there are increased needs for armed protection in the community.
The following chapter will summarize the findings of this report and contain conclusions drawn from the findings.

Notes
Chapter III 1. It would have been desirable to verify these results by using another method of fiscal impact analysis. The only other method suitable for nonresidential development was the employee anticipation method. Multipliers for this method are provided in ranges of 50,000 for cities of up to 150,000 population. Providence, with a population of 156,904, was 13 percent above the highest range. This method was experimentally applied to calculation of general government costs for Brown using the multipliers for cities of 150,000 population, but resulted in an unusually high cost of $67,311 for general government services. The proportional valuation method was therefore considered the only appropriate method for this case. There has been recent growth in the acreage of exempt property in the city. The largest amount of privately owned exempt land is owned by private schools. The largest property owner in this group is Brown University. The university was chosen as a case study for investigation of the fiscal impacts of exempt institutions in the City of Providence. In order to assess these impacts, the cost of municipal services to the university was measured using several methods of fiscal impact analysis.
The costs of services provided to Brown were found to be approxi-       .,.          ---·-·-