News Column

Providence council weighs ordinance to regulate multi-year tax breaks

July 3, 2014

By John Hill, The Providence Journal, R.I.



July 03--PROVIDENCE, R.I. -- The City Council is considering an ordinance that would regulate how multi-year real estate tax breaks are handed out by the city, setting specific criteria for developers and removing the City Council from the approval process.

The ordinance was proposed by City Council President Michael A. Solomon, who is also running for mayor. It would replace the current system of individually negotiated tax treaties that require council approval with a system of review and approval by the city tax assessor, building inspector and Planning Department.

It was presented Wednesday night and referred to the council's Ways and Means Committee for review.

Removing the council from the review process was a problem for Ward 10 Councilman Luis A. Aponte, a member of the Ways and Means Committee, which currently reviews tax-stabilization agreements.

"I am immediately skeptical of relinquishing that authority to a nameless, faceless group of administrators," Aponte said.

Ward 10 Councilwoman Sabina Matos, another Ways and Means Committee member and a frequent critic of how Mayor Angel Taveras' administration handles tax-break agreements, said the ordinance was "a start," adding that she was open to making it an administrative decision.

Ways and Means Committee Chairman David Salvatore was more circumspect, saying he wanted to see more in committee before passing judgment on Solomon's proposal.

Solomon said the proposed ordinance sets specific and objective thresholds all developers would have to meet and would award the same kind of tax break to all.

Under his plan, any developer of a commercial or multi-family project seeking a tax treaty would have to be planning at least $500,000 worth of new construction or $500,000 worth of improvements to an existing building.

The developer would have to be current on city taxes not only for the target property but any others it owned in the city. The same rule would apply to building code violations.

It would set a 15-year schedule of gradually increasing tax payments. For the first five years, property taxes on the development would be frozen. In the sixth year the property would be reappraised and the owner would pay the old tax amount plus 10 percent of what would be due under the new appraisal.

That additional share would go up by 10 percentage points a year -- the original payment plus 20 percent in year seven, plus 30 percent year eight, etc. -- until the 15th year, when the property would be taxed in full.

If a project is sold, the tax break would continue under the new owner, unless the new owner is a tax-exempt business. Then the original owner would be responsible for the full amount of taxes that would have been due without the agreement.

Tax-stabilization agreements have been a popular tool with the Taveras administration. In 2012, 12 of them were granted. And in the past month, they've been approved for the new owners of Roger Williams Hospital, developers of the proposed University of Rhode Island-Rhode Island College nursing school in the old South Street power station and the Foundry mill-to-condominium complex.

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(c)2014 The Providence Journal (Providence, R.I.)

Visit The Providence Journal (Providence, R.I.) at www.projo.com

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Source: Providence Journal (RI)


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