Worcester Polytechnic Institute’s plan to convert two hotels near its campus into student housing has outraged city leaders and prompted complaints about a state law that exempts nonprofit universities from paying a property tax.

In a recent letter to WPI President Grace Wang, Worcester officials said they were stunned to hear of the university’s plans. They pointed out that the Marriott and Hampton Inn & Suites were built years ago as part of a state and federally funded project to revitalize an area near WPI’s campus. The move to buy the hotels, officials said, would amount to the university using resources created with public money solely for its own needs.

The letter – signed by City Manager Eric Batista, Mayor Joseph Petty and business leaders – also made clear the long-term financial impact of the school’s plan, explaining that if WPI buys both hotels, the city will lose nearly $1.6 million in tax revenue each year because the school won’t have to pay taxes on the properties.

“The hotel industry is a vital part of the city’s economy,” Batista said in a separate statement, adding that tax revenues “are key to investments in public works, safety and facilities, including Worcester Public Schools and other municipal services.”

A WPI spokesman declined to comment.

By law, charitable organizations — including nonprofit colleges, hospitals, churches and museums — are exempt from property taxes. Massachusetts cities have long been particularly frustrated with the exemption for universities, as they are among the state’s wealthiest institutions. Tax revenue from the schools could be a boon to local coffers and help lower residential and commercial tax rates.

One argument for the exemption is that colleges indirectly increase local tax revenues in other ways by attracting new people and businesses to communities. Cities like Boston, Cambridge and Worcester have also tried to get around the exemption by asking universities to make voluntary payments to support city services. But while colleges like Harvard and Boston University have agreed to these programs, critics say they are inadequate.

Tim Murray, president and CEO of the Worcester Regional Chamber of Commerce, noted that some schools continue to expand, removing more properties from the local tax rolls. The state exemption, he added, was created at a time when nonprofit institutions and colleges “weren’t the giants they are today.”

“If the law were repealed and gave local governments the unilateral right to reduce the number of students a college or university could admit each year, do you think a college president and his board of trustees would sit idly by and accept such a loss of revenue?” Murray asked. “No, they would not.”

Murray, who also signed the letter to WPI, said the school’s plan to buy the hotels will likely force Worcester to raise business and residential taxes to fill the gap. He argued that high business taxes in the city already discourage some businesses from operating in Worcester.

“We have the seventh highest business tax rate in the state,” he said.

To make up for lost tax revenues from large nonprofits, some state legislators have proposed taxing college endowments when they exceed $1 billion. Murray said a tax on universities shouldn’t be too much of a burden. But as long as the status quo remains, colleges should at least be fair and respectful to their communities, he said.

“WPI has chosen not to be a good partner and not to work cooperatively with the city,” he said. “When large institutional nonprofits act unilaterally and run counter to the economic and financial interests of the community in which they are embedded, it is a travesty.”