After strengthening wage protections and increasing minority-business participation requirements for developers looking to get tax deals with the city, the Providence City Council appears to be letting the companies behind two high-profile downtown developments skirt the new rules.
The tax treaties for the “Superman” building and Hive Life projects – which will save millions of dollars for the developers – do not include the more-stringent requirements that city leaders spent months developing in response to public outcry over deals that did not offer enough benefit to workers and disadvantaged businesses.
The changes, approved in May 2021, included new wage minimums for construction and post-construction jobs, stricter reporting requirements for developers about payroll and women- and minority-business participation, and greater City Council power to enforce the rules.
The tax stabilization agreements omit the new requirements, and some council members say the move sets a bad precedent.
“It’s a city agreement, so it’s important that we set the standard,” said Councilwoman Rachel Miller, who did not vote for either of the TSAs because the updated city ordinance was not being applied.
But proponents of the two projects say the need to revitalize two long-vacant downtown buildings outweighs concerns over setting a bad example. For the $223 million Superman building project, separate agreements ensure some of those city requirements are met anyway.
The TSA for the Superman project does not apply the city’s prevailing-wage requirements, which would set minimum pay based on industry and market wages with approval by the R.I. Department of Labor and Training director. But developer High Rock Westminster LLC has agreed to meet those requirements anyway under a separate union labor agreement, according to High Rock spokesman Bill Fischer.
In an emailed statement, Fischer said the separate agreement makes the wage standards of the city TSA “superfluous.” He also pointed to project agreements with the state that guarantee minority- and women-owned business participation, affordable housing and private investment.
However, there are no guarantees involving wages for the project’s post-construction jobs, estimated by the developer at 170 full- and part-time positions in the first year of operation.
Michael Sabitoni, president of the Rhode Island Building and Construction Trades Council, says the pros of the project far outweighed the cons of ignoring the protections that were supposed to be included in TSAs.
“There is a bigger benefit for us to go forward, considering what is at stake,” Sabitoni said.
Yet Sabitoni could not say the same for the $53 million Hive Life project, which seeks to redevelop the former Providence Journal offices on Westminster Street and neighboring Kresge Building as apartments, with retail and coworking space. The 20-year tax break requires prevailing wages for construction or post-construction jobs.
Sabitoni, who played a leading role in getting prevailing-wage requirements added to the city ordinance last year, said this was upsetting.
“We didn’t have all the answers to make official objections,” he said, but he added that he planned to seek separate project labor agreements with the developer.
The Hive Life tax deal does not apply the new TSA standards because the original tax treaty was approved in 2019, before the city strengthened its TSA policies. However, developer Jim Abdo has since ditched his original plan for a boutique hotel in favor of apartments, requiring changes to the tax treaty.
While Miller denounced the City Council's decision to let each of these projects bypass the stricter standards, Council President John J. Igliozzi said it was a good move.
“If anything, it shows the City Council is open for business and willing to evolve and modify its policies based on the complexity of the project,” Igliozzi said.
But Councilwoman Nirva LaFortune feels differently. That flexibility comes at a cost, namely the degradation of what is supposed to be an objective process not subject to the whims of individual council members, she said.
Indeed, one of the reasons then-Council President Sabina Matos introduced the stricter TSA ordinance in 2020 was to standardize the process by which the city reviews and approves tax treaties with developers. Despite this, Matos – now lieutenant governor – has backed the Superman and Hive Life TSAs despite not being held to the new ordinance. She cites the need for housing that each project will create.
LaFortune sees that stance as a contradiction.
“If this is the process we say we have, then everybody should be abiding by it,” she said. “The whole point of having these TSAs is to have a more predictable process.”
