PROVIDENCE – Mayor Brett P. Smiley on April 26 vetoed the recent ordinance approved by the City Council that tightened the rules governing its use of the state’s “8% Law,” an incentive that allows municipalities to give tax breaks to residential property owners of buildings with low-income units by allowing them to pay 8% of the previous year’s rent collected as its property tax bill.
Council supporters argued the ordinance closes a “loophole” that primarily benefits real estate interests by increasing reporting requirements, expanding eligibility to include new construction, and mandating that only low-income units, defined as those restricted to tenants earning 80% or less of the area median income and rents limited to 30% of their income, can be eligible for the tax treatment.
In a letter to the council explaining his rationale, Smiley called the ordinance “broad and untargeted," and reiterated previous concerns it could expose the city to costly litigation. He also questioned the timeline and feasibility of its implementation given available City Hall resources.
Smiley said the ordinance was approved without appropriate input from those who would be tasked with implementation and suggested certain elements regarding income verification to confirm continued eligibility may conflict with federal regulations.
Instead, the administration argues the law should be amended by the General Assembly, which Smiley has requested via enabling legislation.
“This legislation creates more problems than it solves,” he said, adding that he has heard from some council members of an “intention...to apply this new ordinance retroactively or to recently submitted applications.”
Administration officials said the ordinance would increase the budget by $548,651 and require the hiring of three new staffers. There are 620 properties comprising 7,500 units currently eligible for the incentive, according to Finance Director Sara Silveria.
Meanwhile, Council President Rachel Miller is confident there are sufficient votes to override the veto, which requires a two-thirds majority.
In an April 26 press release Miller said fast-tracking the ordinance was necessary to address both “outrageous rents Providence residents can’t afford” while preventing “millions of taxpayer dollars intended to benefit low-income residents [being given] to ultrawealthy developers who are not building affordable units.”
“[8% Law] is intended to benefit low-income residents, and this new ordinance ensures that is how it’s applied,” she said. “It is disappointing that the mayor would veto a tool that addresses low-income housing in the capital city. “
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.
