City to create tax treaties for I-195 land and neighborhoods

PROVIDENCE MAYOR JORGE O. ELORZA and Providence City Council are proposing a new tax stabilization agreement regime, something that might help push forward development in the Interstate 195 corridor, including this student housing project that has been held up by the lack of such an agreement.  / COURTESY PHOENIX PROPERTY CO.
PROVIDENCE MAYOR JORGE O. ELORZA and Providence City Council are proposing a new tax stabilization agreement regime, something that might help push forward development in the Interstate 195 corridor, including this student housing project that has been held up by the lack of such an agreement. / COURTESY PHOENIX PROPERTY CO.

PROVIDENCE – The city has proposed two standardized tax incentive programs for development in the Interstate 195 corridor, including one that would defer full taxes for projects of at least $10 million for 13 years, Mayor Jorge O. Elorza and City Council leaders announced Thursday.

The 13-year tax stabilization agreement would provide for administrative approval, Elorza said. The program would be overseen by the city’s tax assessor.

In addition, a lengthier tax phase-in of up to 20 years would be available to developments in the I-195 district that create at least 150 permanent, career-oriented jobs, the mayor said. Those longer deals, however, would require City Council and mayoral review and approval.

Under the 13-year proposal, applications would head to the City Council for 30 days, he said. “If there are any material deficiencies with the application, then the City Council would have 30 days to raise the issue.” Otherwise, he said, the tax stabilization would go into effect. He did not define what a “material deficiency” would be.

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“This is a purely administrative TSA that takes politics out of the process, and offers certainty and consistency to the business community, things that they have been loud and clear that they need in order to invest in Providence,” Elorza said.

Elorza announced the TSA arrangements in a press conference Thursday afternoon, along with City Council President Luis A. Aponte, and council members Kevin Jackson and Jo-Ann Ryan. An ordinance on the TSA programs was expected to be introduced Thursday at the council’s meeting.

Another TSA package, one that addresses financially neglected commercial corridors in low-income Providence neighborhoods, also was expected to be introduced, Aponte said. “Our neighborhoods throughout the city, many of them are suffering from a lack of investment,” he said.

The announcement of an agreement between the council and mayor’s office in how to administer TSAs came less than two hours before the R.I. Senate Finance Committee was expected to discuss legislation that would have imposed a 20-year TSA on the I-195 properties.

That bill, sponsored by Senate Majority Leader Dominick J. Ruggerio, D-Providence, was expected to be taken under advisement, said Elorza and Aponte, who both said they spoke to the senator about the city’s planned TSAs.

Under the 13-year proposal, projects that are worth at least $10 million will pay annual taxes on the base rate for three years, followed by a 10-year phase-in of the full taxable amount, in 10 percent increments, Elorza said.

The city expects that every property on the I-195 district would qualify under the $10 million minimum.

The agreements would require participation in contracts by minority and women-owned firms, as well as an existing program that requires Providence residents to be considered first for employment.

Developers will be required to negotiate an agreement that not only the developer, but also future tenants, would abide by the local hiring requirement, he said.

If the developments converts to tax-exempt status, he said, the agreements would be voided.

“We see this as a great first step and hopefully it can be a model for future tax benefits throughout the city,” Elorza said.

In a release, a City Councilman who earlier this year introduced an ordinance that would create a 15-year TSA program, which has not been discussed by the full council, said the mayor and council president should have involved other council members in the collaborative process.
“Having members of the City Council learn of this plan through a press conference represents a ‘go it alone’ approach of political alliances that is to the detriment of the city of Providence and its residents,” wrote Councilman David A. Salvatore.

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