Providence City Council Finance Committee to consider controversial tax agreements tonight

44 Hospital St
Share this story

Under a plan being unveiled at the Providence City Council Finance Committee meeting this evening at 5pm, a new “six-story, 45,000-square-foot apartment building with street-level commercial spaces” located at 44 Hospital Street in the Jewelry District of Providence may become eligible for millions of dollars in tax relief.

In a letter to Finance Committee Chair John Igliozzi (Ward 7), several union and elected officials including incoming Providence City Councilor Rachel Miller (Ward 13) have expressed their displeasure with the proposed tax stabilization agreement. The amount of money the City of Providence is giving up in this proposal is unclear, as the first three years of tax payments “shall remain at the 2017 assessed value and tax rate.” The present tax rate is for a “circa-1940, two-story building” that has been demolished for the new six-story mixed used building. From year 4 to year 12, the payments will increase over time from 11 percent of the new projects assessed value to 95 percent. After year 12 the owners will pay their full share of taxes.

The developer is real-estate investor Henry Mu. The tax stabilization agreement identifies the owners as “Option B, LLC and Option C, LLC.”

One problem with giving the tax cut to the developer now, says the letter, is that since “construction of the building has been completed, it is now difficult if not impossible to assure that the developer abided by the construction requirements that are contained in Section [9] of the standard agreement.”

Section 9 includes assurances that “the construction is performed by a percentage of Minority Business Enterprises, construction workers are properly classified as W2 employees, the developer enters into a First Source Agreement, apprentices perform a percentage of the construction work and a good faith effort is made to ensure materials are purchased from Providence vendors.”

The letter points out that:

“To retroactively grant a TSA to a developer that has already constructed a building makes it impossible for anyone to monitor the construction while it is taking place, which is the only meaningful way to be sure that the developer actually complies with this important section of the agreement.”

Another reason to oppose the tax relief for the project expressed in the letter is that, “the fundamental purpose of the Providence Tax Stabilization Investment Act, pursuant to which TSAs are issued, is to ‘encourage investment in Providence.’ By constructing the building in the absence of any tax relief, the developer of 44 Hospital Street plainly demonstrated that it did not need any such “encouragement” to invest in Providence. Providing tax relief to a developer that did not ask for or need it serves no legitimate purpose under the Act.”

Given the date of the meeting, two days after Christmas, and about a week before a new City Council is to be sworn in, turnout at tonight’s meeting is expected to be low.

Tonight’s meeting will also take into consideration a tax stabilization agreement for 1290 Westminster Street, LLC located at 1292 Westminster Street.

Here’s the full letter sent to City Councilor Igliozzi (Note that it seems Section 9, not 5, contains the “further assurances” mentioned in the letter.):

Providence City Council Finance Committee
25 Dorrance Street
Providence, RI 02903
December 20, 2018

To the honorable chair of the Providence Finance Committee John Igliozzi,

The undersigned write today to express our opposition to the granting of a Tax Stabilization Agreement for 44 Hospital Street. Since construction of the building has been completed, it is now difficult if not impossible to assure that the developer abided by the construction requirements that are contained in Section 5 of the standard agreement.

Section 5 of the agreement provides “further assurances” for the construction of buildings subsidized by the city’s tax stabilization agreements, including assurances the construction is performed by a percentage of Minority Business Enterprises, construction workers are properly classified as W2 employees, the developer enters into a First Source Agreement, apprentices perform a percentage of the construction work and a good faith effort is made to ensure materials are purchased from Providence vendors.

To retroactively grant a TSA to a developer that has already constructed a building makes it impossible for anyone to monitor the construction while it is taking place, which is the only meaningful way to be sure that the developer actually complies with this important section of the agreement.

We also believe that granting a TSA to Option B, LLC with Section 5 excluded from the agreement, or simply including it in the agreement and hoping the construction would have complied with the requirements of the Section had the agreement been in effect prior to the start of construction, would be a violation of the spirit of the agreement and the important work and deliberation that went into including these assurances in the first place.

Finally, the fundamental purpose of the Providence Tax Stabilization Investment Act, pursuant to which TSAs are issued, is to “encourage investment in Providence.” By constructing the building in the absence of any tax relief, the developer of 44 Hospital Street plainly demonstrated that it did not need any such “encouragement” to invest in Providence. Providing tax relief to a developer that did not ask for or need it serves no legitimate purpose under the Act.

In solidarity,

Paul Lander
Business Representative
Carpenters Local Union 330

Osmond Weekes
Business Representative
Carpenters Local Union 330

Benjamin Branchaud
Researcher/Field Activist
Carpenters Local Union 330

Justin Kelley
Business Representative
International Union of Painters and Allied Trades
District Council 11 Local Union 195

Erica Hammond
Executive Director
Rhode Island Jobs With Justice

Rachel Miller
City Councilor-Elect

Samuel Bell
State Senator-Elect


UpriseRI is entirely supported by donations and advertising. Every little bit helps:
Become a Patron!


Share this story
retro
About Steve Ahlquist 979 Articles
Steve Ahlquist is a frontline reporter in Rhode Island. He has covered human rights, social justice, progressive politics and environmental news for half a decade.Uprise RI is his new project, and he's doing all he can to make it essential reading.atomicsteve@gmail.com

1 Comment

  1. The grey metallic cube,
    Yellow for month upon month, upon month
    Now looms over South Street
    Like an attenuated Hartford Park hi-rise
    – TOD chic.
    Shades and shapes of things to come?
    How cold to the touch?
    Last week at the Children’s Museum,
    The posters across the way advertising the mix –
    Commercial and residential space for rent.
    Space for people coming to work at the Wexford?
    Subsidized rents, the nutty aroma
    Of freshly brewed Ethiopian Yergacheffe
    From below, mingling with the odor
    Of molten bitumen wafting across the museum parking lot
    Over to 44 Hospital Street just north of
    The Narragansett Improvement Company
    Established in 1893?
    How much more will it take
    To beat gold plated chains into market shares?
    When will the Jewelry District finally emerge
    From its gritty cocoon and finally achieve
    What will ultimately be its storied destiny –
    Tha Knowledge District!!!?
    RIP Proho.
    You died in 1985.

Comments are closed.