Providence City Council can intervene in Chace real estate suit, judge rules

Updated at 3:09 p.m.

A JUDGE RULED MONDAY THE PROVIDENCE CITY COUNCIL can intervene in a court battle over a 2021 consent order that gave millions in tax breaks on 10 properties owned by Arnold “Buff” Chace and affiliates./PBN FILE PHOTO/CHRIS BERGENHEIM

PROVIDENCE A judge on Monday ruled the Providence City Council can intervene in the lawsuit filed against the city regarding a controversial tax deal struck with local developer Arnold “Buff” Chace Jr. and his firm Cornish Associates.

After Chace filed a 2020 lawsuit against the city challenging city tax assessments, part of a 2021 consent order issued in R.I. Superior Court will give millions in property tax breaks for 10 properties and net the developer $42.5 million over the next 30 years. 

On Monday, R.I. Superior Court Associate Justice Joseph McBurney ruled the City Council can be a party to the 2020 lawsuit since it was not consulted on the deal and therefore lacked critical information.

The real estate firm took advantage of a state law designed to spur affordable housing units, requiring 25% be dedicated to moderate-income tenants, though the agreements struck with the city applied to all of the units, including commercial and market-rate.

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The City Council voted 13-1 in July to pursue legal action to overturn the agreement approved by the previous administration, hiring local law firm Wistow, Sheehan, and Loveley. Council members have made clear their intentions  to terminate the agreement. 

Cornish Associates spokesperson Patti Doyle said Monday the firm remained confident in its legal standing. 

“While we’re disappointed in the judge’s ruling it has no bearing on the merits of the case,” she said. “Cornish Associates entered into a legal and fully transparent court decree with the prior Administration that helps to promote affordable housing in the city. We look forward to the Court’s full review of this matter.” 

Chace attorneys have argued in legal filings that certain city officials, including former council president Sabina Matos, were aware of the tax deal at the time it was approved.

A 2022 report by Providence Internal Auditor Gina M. Costa included several “legal concerns” regarding the consent agreement, including the inclusion of students with zero income as low-income tenants in order to justify federal tax credits, the fact that many of the properties in question are mixed-use developments without the commercial portions being separated for tax purposes, the stipulation that the city tax assessor reviews lease agreements and income levels rather than R.I. Housing, and the $624,000 in retroactive tax abatements dating to July 2020.

In a statement after the ruling, Mayor Brett P. Smiley said Monday the city will appeal the decision, which the administration fears could signal to others that settlements  “may have no finality to them.”

“While we want to thank Judge McBurney for his careful consideration of this matter, we are concerned with the incredible impact this decision will have on Providence moving forward,” he said. “My administration honors agreements that are settled.”

WSL attorney Max Wistow did not immediately respond to requests for comment. He previously said city officials, including solicitor Jeff Dana, entered into an “into an illegitimate agreement” without council oversight and the city is projected projected to forgo $1.4 million from the ten properties this fiscal year, with annual losses increasing 2.5% each year thereafter. 

(Update: Comment from Smiley added in 10th and 11th paragraphs)

Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com. 

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