R.I. pension fund getting refund of taxes on AmEx building

PROVIDENCE – Six months after paying $80,000 in conveyance taxes on its sale of the former American Express Building, the Employees Retirement System is to get the money back.
General Treasurer Frank Caprio Friday said the State Division of Taxation and the City of Providence would refund the money to the state pension fund, without interest.
In August, the state retirement system sold the four-story office building, which is now called the Gateway Building and houses offices of Fidelity Investments, for about $20 million. At the time, the pension fund argued that it was exempt from paying the transfer taxes, but it agreed to pay the taxes under protest, then seek a refund, so the sale could go through, Caprio said.
The pension fund became the building’s owner by purchasing the bonds used to finance its 1989 construction. In 1999, the fund renegotiated the mortgage with the property’s developer, Gateway Eight of Boston, based on two guarantees from the R.I. Economic Development Corporation: that Gateway Eight would repay the mortgage in full, and that a payment of $3 million worth of the loan would be paid in the event the building were foreclosed and sold at a loss.
When the mortgage came due in December 2004, Gateway Eight was unable to pay and. filed for Chapter 11 bankruptcy.
The pension fund sold the building in August to to R.I. Gateway Properties LLC, a joint venture led by real estate investment and development firm Commonwealth Ventures LLC, and paid taxes on the sale of $36,000 to the state and $44,000 to the city.
At the end of last month, the Tax Administrator for the State of Rhode Island issued a ruling granting the pension fund’s request for a refund.
The fund is still seeking payment on the RIEDC’s loan guarantees.