The Providence City Council’s recent move to pursue legal action against a local developer’s tax deal may help the city recoup revenue from previously granted breaks, which officials say were bestowed inappropriately, but some fear that the method and timing of this action could cost the city in other ways.
The tax deal, approved under the administration of former Providence Mayor Jorge O. Elorza, would have granted entities controlled by Arnold “Buff” Chace around $42.5 million in savings over 30 years, drawing from tax breaks on 10 downtown buildings that those entities own.
But since that time, concerns over the deal have arisen. In 2022, Providence Internal Auditor Gina M. Costa reported several “legal concerns” in the consent agreement, including the usage of 100% of the area median income to define “affordable units,” rather than the 80% figure used by the U.S. Department of Housing and Urban Development. The developers also used other measures to inappropriately justify tax credits, Costa says.
Messages left at
Cornish Associates LP, where Chace is managing partner, were not immediately returned.
The City Council, after a discussion meeting in a late July closed session, near-unanimously approved the decision to hire legal counsel from
Wistow, Sheehan & Loveley P.C. to form legal opinions on the agreement. City Councilor Jo-Ann Ryan was the sole dissenting vote.
Ryan, who represents Ward 5, says she believes that the tax deal – and fundamentally, the law that originally spurred the agreement – needs revising, but she adds that hiring legal counsel isn’t the right step right now.
“I agree with my colleagues, and I agree with [Mayor Brett P. Smiley that] we want to try to claw back some of the tax payments from this deal,” Ryan said.
But she fears that the council’s route will ultimately lead the city down a long, costly litigation path.
“I think there’s a lot on the table that still needs to happen … I think it would have been far more prudent to work it out and negotiate in hopes that we could recover more” than the finances currently under discussion, Ryan said.
The original deal used a tax provision that allows a property owner to pay 8% of the previous year’s rent collections instead of regular property taxes, and was supported by a court settlement.
As it currently exists, the law is overly broad and easy for developers to abuse, Ryan says, and requires legislative amendments.
Other former and current legislators involved with the original deal, including Elorza and former City Council President John J. Igliozzi, could not be reached or did not respond to a request for comment by PBN’s deadline.
City Council President Rachel Miller did not respond to a request for comment, and Councilor John Goncalves, who represents Ward 1, declined to comment.
City Council spokesperson Parker Gavigan said the council’s attorneys “are on the verge of litigation, and it would not be prudent to comment now.”
While Ryan agrees that tax breaks such as the one granted to Chace shouldn’t receive approval in the first place, she harbors concerns that the recent step to take legal action against the deal will deter other developers from Providence, stymying housing production in a statewide market that already lags the rest of the country.
“It’s a risky posture because we want developers in the city of Providence,” Ryan said. “We want affordable housing … and I just don’t want this to be a threat to that development. Being anti-development is not a good posture.”
Isn’t it time for Ryan to get off the Council?
Fighting this tax deal won’t be more costly than the tax revenue PVD is giving up.