City Council split on special tax deals in Providence

(Photo by Dan McGowan/WPRI)

PROVIDENCE, R.I. (WPRI) – They all agree that Providence should offer tax breaks to developers pursuing new projects across the city, but members of the City Council are squarely divided on the policy they should craft for offering those special deals.

The council Ordinance Committee met Tuesday to discuss the only tax-stabilization plan that has been introduced to the council to date: Councilman David Salvatore’s proposal to provide 15-year tax treaties to developers seeking to build on the land left vacant by the relocation of Route I-195.

But the group took no action after members of City Council leadership urged their colleagues to hold off on voting on Salvatore’s ordinance while Mayor Jorge Elorza and Council President Luis Aponte put the finishing touches on a new proposal. The administration says that plan could be introduced as soon as next week.

“I don’t want to preempt all the work being done between the council and the administration,” Councilman Bryan Principe, who serves a vice-chair of the committee, told his colleagues.

The recommendation to table the discussion for the time being was met with frustration from several councilors, who suggested the city finds itself at risk of sitting on the sidelines while state lawmakers move to allow 20-year tax deals for all projects on the vacant former highway land. The Senate Finance Committee is expected to discuss the proposed bill Thursday evening.

Salvatore said he’s concerned developers might walk away from the city because of the uncertainty around tax breaks. Councilman Sam Zurier called the proposed Senate bill the “elephant in the room” Tuesday, arguing that it was “less favorable to the city” than Salvatore’s proposal.

On the city side, the sticking point revolves around control over the tax breaks.

The Elorza administration has long said it favors a standardized process that would create a predictable tax structure for all developers in the city. But many councilors have balked at the idea of relinquishing their power over the process, citing concerns over transparency and the lack of flexibility stemming from an administrative tax deal.

“The administration would like the process to be completely administrative for all [tax-stabilization agreements], not just I-195,” Council President Pro Tempore Sabina Matos told the committee. “I would have a problem with that.”

Councilman John Igliozzi, the chairman of the Finance Committee, said he believes a “balanced conversation” needs to happen over tax breaks. While the council has controlled the bulk of deals offered by the city over the last 20 years, it did allow former Mayor Angel Taveras to sign off on 10 deals without council approval during his tenure – a policy Igliozzi called a mistake.

“I think it’s important we never ever exile the public,” Igliozzi said.

But Salvatore, whose ordinance has languished in committee for much of the year, said he supports a standardized plan, particularly on the I-195 land. He explained that his proposal would require the phase-in of tax payments over the course of 15 years, with the goal of the developer paying full taxes by the end of the deal.

When Salvatore chaired the council Ways and Means Committee, he led a comprehensive review of all tax-stabilization agreements in the city. The group later issued 18 recommendations for improving certain policies around tax breaks, but the council never adopted a proposal to create a standardized plan. By the start of 2015, Salvatore was no longer a member of council leadership and his calls for a new tax-stabilization ordinance largely fell on deaf ears.

“While I don’t think it’s the magic bullet, I do believe it’s a step in the right direction,” Salvatore said.

Tuesday’s meeting occasionally got contentious when Salvatore and others suggested developers may be scared off by Providence’s failure to adopt a new tax-stabilization policy.

At least two developers that have reached deals to purchase parcels on the I-195 land have said they would need tax-stabilization agreements from the city in order to move forward with their projects, but Majority Leader Kevin Jackson said no formal proposals have been made to the council. That doesn’t include the proposed life-sciences complex downtown, which would also likely require a tax break.

Off the I-195 land, developers on several hotel projects are expected to seek deals from the city in the coming months, but none of those plans have been formally introduced. Another smaller project, at 32 Custom House Street in downtown, is currently in front of the council.

“If there’s urgency why isn’t anyone knocking on our door?” Jackson asked.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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