Votes on ProvPort tax exemption, lease postponed amid public opposition

THE PROVIDENCE CITY COUNCIL decided to table on Thursday a controversial extension to the city's tax exemption and lease agreements with ProvPort Inc. / PBN FILE PHOTO/MICHAEL SALERNO
THE PROVIDENCE CITY COUNCIL decided to table on Thursday a controversial extension to the city's tax exemption and lease agreements with ProvPort Inc. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – Community pleas to delay a decision on extending the city’s tax exemption and lease agreements with its primary port operator were granted Thursday after the City Council tabled the matter rather than vote on the agreements.

That last-minute decision came after dozens of local residents and community leaders implored city officials to hold off on any decisions at a public hearing on Nov. 28. The council’s Committee on Finance ultimately voted on the proposals, forwarding the two agreements to the full council for consideration.

The new agreements with ProvPort Inc., the nonprofit operating the largest section of portside industrial land, would extend its tax treaty with the city for another 30 years, with a corresponding extension to the lease agreement between ProvPort and the Providence Redevelopment Agency. (ProvPort, a holding company, bought the land for $16.4 million in 1994 but has since leased it to the city-controlled Providence Redevelopment Agency, which in turn issues tax-free bonds to pay the city and then sublease the land back to ProvPort.)

Representatives with Waterson Terminal Services LLC, the company that operates the port, insisted that they needed the agreements to move ahead with a planned $11 million in capital improvements and expansion to the 135-acre parcel, to be paid for through new bonds issued by Providence Redevelopment Agency. 

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Critics questioned the urgency (the existing tax treaty with ProvPort Inc. runs through December 2024, while the lease agreement doesn’t end until 2036) and accused the council of “ramming” the agreements through before nearly half of its current members leave office.

William Fischer, a spokesperson for Waterson Terminal Services, said in an email Thursday that the company “reached an agreement with the council to take a pause and keep the dialogue going. We are pleased with this outcome as it will give us time to create a better understanding of what these measures will accomplish for the city of Providence.”

Fischer did not know when the agreements will return to the council for consideration but the timing could prove pivotal since the council is slated to undergo a massive shift in January, with seven members being replaced. Several of the incoming council members have already expressed concern, and even outright opposition, to the new tax and lease deals, at least in their current form.

Strengthening the agreements to require more public involvement in the ProvPort planning process while limiting the types of new businesses allowed to set up shop along the Providence River were key demands of critics. Residents who live in the surrounding South Providence neighborhood have long been at odds with their waterfront, industrial neighbors, decrying the noise, environmental pollution and health consequences. However, many of the largest offenders – metal scrap yards and recycling companies – are located outside of the area under ProvPort’s domain, a distinction that city officials and company representatives made repeatedly in response to public criticism.

The new tax exemption agreement would also increase ProvPort’s annual payments-in-lieu-of-taxes to the city from the current 5.5% of annual revenue to 9%, including specific allocations reserved for sustainability and neighborhood needs. According to Nicholas Hemond, the attorney for Waterson Terminal Services, the $840,000 revenue-sharing payment the city can expect to receive in the first year of the new agreement is higher than the $769,000 tax bill owed based on its current assessed value. The city could not confirm whether Hemond’s analysis was correct.

Also on Thursday, the council gave first passage to three tax treaties for residential-focused redevelopment projects, two located in downtown and one on the western edge of the city. Each of the approved TSAs offers a 10-year discount on property taxes to the developer, gradually increasing the annual payments to the full tax amount after the agreement ends.

The first, for the former Karma nightclub at 101 Richmond St., saves developer Dustin Dezube an estimated $370,000 in city property taxes over 10 years. Dezube, a prominent Providence real estate developer, plans to revive the long-vacant building as a set of 19 microloft apartments, similar to those in The Arcade Providence. The $3 million redevelopment project also includes space for ground-floor retail, including a local bar operator, Providence Business News previously reported.

A second agreement on Richmond Street offers a $360,000 tax discount over 10 years to developer 71 Richmond St. LLC to rehab the historic brick building with 10 market-rate apartments.

The third tax treaty grants developer E2000 Realty LLC offers a $290,000 tax discount over 10 years to remodel the brick building and surrounding parking lots at 547-533 Hartford Ave. into a 30-unit apartment building, with 18 of the units reserved as workforce housing. All three tax deals require a second passage from the council, a date for which has not been scheduled.

Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.

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