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Opposition grows against Tax Stabilization Investment Act in Providence



Jenna Karlin

A unique and diverse coalition of community organizations, labor unions and concerned Providence residents co-signed a letter to Providence City Council President David Salvatore (Ward 14) and the rest of the Providence City Council today urging reconsideration of the proposed “Tax Stabilization Investment Act.” As currently written, say coalition leaders, the proposed act would allow for big developers to receive a tax break whether or not they are needed, and without any public hearings.

The coalition publicly announced the letter and their opposition to the bill outside the entrance to The 903 at 903 Providence Place, Providence, the site of new luxury apartments near Providence Place Mall. The spot was chosen, said Jenna Karlin of Unite Here Local 26, because the project “symbolizes everything that is wrong with Providence tax policy” and the proposed Tax Stabilization Investment Act.

“This building,” said Karlin, “is a 330 apartment and condo units in Smith Hill. The building’s website boasts of its amenities including resort style swimming, surround sound movie theater, a club house and a 24 hour concierge. The rents are listed somewhere from a thousand dollars a month all the way up to $2450 a month to live here.

“This building received a ten-year tax stabilization agreement, or as I like to say, a tax break, from the City of Providence and according too press at the time, that would be a savings of $5 million in tax revenue that I believe the City should have received.”

Michael Araujo

Michael Araujo, executive director of Rhode Island Jobs With Justice called tax stabilization agreements “a wealth transfer.”

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“Developers are allowed to come in and get this guarantee which is both trade-able and something they are able to build off of. Then there’s no actual measured return for the City. For example, the City has First Source legislation passed, which requires local hiring. There’s almost no measurement, no enforcement, yet developers come in and build without consideration of the local community.”

“If we must have it, it must be done in a way that benefits and centers the people of Providence first, long before it centers developers or anyone else.

TSAs [tax stabilization agreements] is the local version of trickle down economics. There’s no economist on the face of the earth that says trickle down economics works. TSAs are just not an effective tool. TSAs, when they were first developed, were designed for factories in Providence. They were designed to bring in manufacturing. They have not been used that way in the past 20 years. And until we start to see long term jobs and economic gains, it’s just not a good way to d business.”

Kat Kerwin is a community organizer and resident of Ward 12. “Here in Ward 12,” said Kerwin, “people struggle everyday to make ends meet and maintain the rents that everywhere in our city are being driven up so quickly. But at the same time… we are being flooded with luxury apartment buildings” and “developers of such buildings are receiving huge tax breaks while our residents don’t see any of thee benefits…”

Brian Bishop spoke on behalf of the Providence Apartment Association. “Apartment owners are concerned because we’re essentially being asked, through these TSAs… to subsidize our competitors,” said Bishop. “We pay one of the highest tax rates in the country for small apartment buildings, and essentially we are expected to cover whatever additional revenues needed for police and fire protection…”

“To date, I know of no push back on this proposal [from any Providence City Councilors],” said Karlin. “So now that we’re in the new year and through the snowstorm the group that signed the letter thought it was important to come out in unity and release the letter to show that there really is a broad base of concern across different viewpoints and different types of residents in the City.”

For more on tax stabilizations see Dan McGowan’s excellent reporting here:

Report: Providence tax deals lack compliance, transparency

Also, check out the report McGowan writes about here:

Review of Tax Stabilization Agreements

You can read the full letter here:

January 9, 2018

Dear Council President Salvatore and members of the Providence City Council,

We, the undersigned, write in strong opposition to the proposed “Tax Stabilization Investment Act.” As currently written, this proposal would allow for big developers to receive a tax break whether it is needed or not, and without any public hearings. The decision would be made solely by the City’s appointed Tax Assessor with only token input from the elected City Council.

City residents would no longer have a say in who received these tax breaks. Politically connected developers could use their connections to make backroom deals for the subsidies, out of sight of the general public and their elected representatives. These subsidies would then be paid for by the very people that lost their right of input in the process. This proposed system would set us many steps back in the battle to close the door on our city’s troubles with ethics. We cannot afford to go back.

In its current form, this ordinance provides larger tax breaks for wealthier developers with more expensive projects and better connections, while smaller developers and business owners are hobbled. These smaller developers and businesses are part of the DNA of the neighborhoods of the city. More troubling, working families are entirely cut out of the process, yet they will bear the burden of these tax breaks to the wealthy. Typically, in cities with strong Democratic leadership, low-income and affordable housing receive significant subsidies. Yet in Providence, far too many subsidies have gone to wealthy developers for luxury apartments and hotels who then cry poverty and say that they cannot afford to pay a fair wage to those building and maintaining the apartments and hotels. Meanwhile, investments in affordable housing have been far too small, and ordinary renters suffer from a draconian tax surcharge on apartments, with fewer opportunities for good paying jobs. Under this proposal, our misguided subsidy policy would become even worse.

The pain of housing policies geared towards the wealthy is being felt across our city. As rents rise, family budgets are squeezed, and neighborhoods are disrupted and uprooted. Ordinary Providence homeowners and businesses also need relief. For every tax dollar subsidized, all other taxpayers foot the bill—not the wealthiest luxury housing or hotel developers. What about our police, our firefighters, and our other city employees?

Providence needs good schools, working street lights, clean playgrounds, and good paying jobs. We face grave fiscal challenges, and we simply cannot afford to give up so much tax revenue in gifts to those who already have so much. We have so many better uses for our limited funds than subsidizing our wealthiest, most politically-connected developers.

Moreover, we find the timing of this ordinance deeply distressing. At a time when Trump and the Republican Party are making massive tax breaks for the wealthiest their top priority, for Providence to follow in their footsteps aligns Providence with an ideology and agenda that most residents of our city find repugnant and un-American. Providence deserves better.

For all these reasons and more, we urge the Council to stand with Providence residents and reject this ordinance.

Aaron Jaehnig, Business Owner and Community Advocate Carpenters Union Local 330 DARE Dwayne Keys, Business Owner and Providence Tax Payer James Monteiro, Ward 3 Resident and Community Activist James Taylor, Ward 8 Candidate for City Council Johanna Harris, former Chairwoman of the Board of Licenses John Jacobson, Business Owner and Real Estate Investor Kat Kerwin, Ward 12 Resident and Community Activist Providence Apartment Association, RI Jobs With Justice, RI Progressive Democrats, Teamsters Local 251, Unite Here Local 26

Kat Kerwin

Brian Bishop

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About the Author

Steve Ahlquist is Uprise RI's co-founder and lead reporter. He has covered human rights, social justice, progressive politics and environmental news for nearly a decade.