At a raucous meeting, Providence City Council approves the Hive Hotel TSA

“I don’t know the intentions of this developer,” said Councilmember Rachel Miller, “But I would say that when we give public money out to a private project, we have an opportunity to raise the floor and we can get something back for our city… We have the opportunity to say that when the City is giving public money to a
Photo for At a raucous meeting, Providence City Council approves the Hive Hotel TSA

Published on December 6, 2019
By Steve Ahlquist

I don’t know the intentions of this developer,” said Councilmember Rachel Miller, “But I would say that when we give public money out to a private project, we have an opportunity to raise the floor and we can get something back for our city… We have the opportunity to say that when the City is giving public money to a private project, we know the standards of labor for the project that’s going to get constructed… This choice between building and people, it’s just not true.”

The seats in the Providence City Council chamber were full of people representing Unite Here Local 26, Carpenters Local 330 and members of the Providence Democratic Socialists of America, among others. They were there to oppose a 20-year, multi-million-dollar tax break to Jim Abdo, a millionaire developer from Washington DC who wants to build Hotel Hive, a project located at 203 Westminster Street that that will only guarantee low-wage, non-union, and mostly temporary jobs.

See: Providence City Council wants more tax breaks for millionaires; Protest planned for Thursday City Council meeting

The property, located at 203 Westminster Street (and an adjacent property), formerly the Providence Journal Building and the former Kresge Department Store, is planned to be turned into a hotel that would create 233 full-time construction jobs, and 154 full-time jobs after the building is completed, according to the City Council. The property owner is currently paying over $136K in property taxes per year and by the end of the proposed tax stabilization agreement (TSA) it is expected that Hotel Hive will be paying over $516K in property tax per year. Over the twenty years of the agreement, the development will have contributed an additional $3.6 million in tax revenue. This is in addition to sales tax, hotel occupancy tax, and income taxes.

Here’s the full video of the floor discussion and vote:

When the City Council began deliberations on the proposed TSA, Providence City Councilmember John Igliozzi (Ward 7) was the first to rise and speak. Igliozzi is a strong supporter of almost every tax stabilization agreement brought before the Providence City Council. Igliozzi spoke almost wistfully about his vote in support of the Providence Place Mall TSA, the very first TSA he ever voted on.

“So all the things you see down here, the buildings, didn’t exist,” said Igliozzi. “That tax treaty that we voted, 8-7, started the ball rolling. From the IGT building, to the Blue Cross building, none of that existed. It was a very difficult vote. There were pros and cons, why you should, why you shouldn’t.

“Why I talk about that is that if that vote did not go positive at that time, the very thing that all of us are living in now, which is a lot of positive build up, a lot of cranes in the sky, a lot of development and opportunity for our city, our neighborhoods and our citizens [would not exist],” said Igliozzi. The Hive Hotel “is another one.”

Igliozzi urged his fellow councilmembers to vote to approve the project. “I think in the end you’ll be happy,” said Igliozzi, “because the very council members who voted ‘no’ twenty-plus years ago for the Mall, when I’ve seen them in the past few years they say, ‘You know what? I should have voted for the Mall.'”

Igliozzi was booed by the crowd filling the City Council chamber.

Council President Sabina Matos (Ward 15) then immediately moved to a vote, before being reminded that other members of the City Council wished to speak on the matter.

“That was really nice and sweet,” said City Councilmember Carmen Castillo (Ward 9), responding to Igliozzi. Castillo questioned the kinds of jobs being offered by the Hive Hotel project, adding, “I’m done with being at City Hall to pass tax stabilizations for rich people who promise to give jobs to the community.” The money that the City Council is considering giving to the Hive Hotel, said Castillo, “is for the people of Providence.”

The crowd cheered Castillo.

“I don’t know the intentions of this developer,” said Councilmember Rachel Miller (Ward 13), “But I would say that when we give public money out to a private project, we have an opportunity to raise the floor and we can get something back for our city… We have the opportunity to say that when the City is giving public money to a private project, we know the standards of labor for the project that’s going to get constructed… This choice between building and people, it’s just not true.”

“We need more councilors like that right there!” yelled a man in the crowd as the crowd cheered.

Nirva LaFortune

Councilmember Nirva LaFortune (Ward 3) rose to speak, first thanking Councilmember Castillo for her concern for our City’s most vulnerable residents and then thanking Councilmember Miller for her thoughts on how the system for giving out TSAs needs to be reformed.

“But I do want to remind everyone that there are many people here who voted for an ordinance change for the Fane Tower,” said LaFortune. LaFortune is the only current member of the City Council to vote against the Fane Tower. Castillo voted for it. Miller was not yet a councilmember. “That is a developer that has not even purchased, not even financed the parcel” and “a majority of members voted to change” the zoning codes.

Jason Fane, the developer, “just recently asked to give a $1000 deposit on a $300M development,” noted LaFortune. “That’s an insult to our city, but you know what we did? The majority did? They voted to change the [zoning] ordinance so that he can build without even purchasing the land.”

LaFortune agrees that the way Providence gives out TSAs needs to be changed. This would include a standardized TSA procedure and a 15-year cap on TSAs. “We don’t have a standardized process,” said laFortune, “and we’ve been trying to push it, but it hasn’t gone though.”

“Now, with this particular TSA, there is a guideline for it. We also approved, in the budget, to hire someone to actually monitor the TSAs to ensure that all the things that are listed are delivered,” said LaFortune. “There is an apprenticeship requirement, there’s a WBE/MBE, there is a First Source requirement to make sure we’re hiring from our city…”

Under the terms of the TSA the Abdo is required to allocate ten percent of the construction costs on women and minority owned businesses; they are required to make a good faith effort buy construction materials from Providence based businesses; they must develop a First Source Agreement with the Director of First Source Providence; 100 percent of hours worked on the project will be performed by trade construction subcontractors who have or are affiliated with an apprenticeship program; and over the term of the TSA Abdo is required to deposit nearly $138K into the Parks and Recreation Trust Fund that goes to support the City’s parks, pools, waterparks, and recreation centers.

However, those opposed to the Hive Hotel TSA point out that enforcement of these good things in past TSAs has been lacking. In fact, it is unknown how compliant most of those granted TSAs have been.

“That has been a problem, but with the person in place now, that should be enforced,” said LaFortune. “There’s also a reporting requirement. So what I hope comes out of this is that we hold this developer accountable.”

LaFortune also noted that under a new affordable housing program, ten percent of the taxes on this new development will go into a new affordable housing fund.

“Not enough!” yelled a woman from the audience.

“You’re absolutely right,” answered LaFortune, adding that when she tried to ensure that the Fane Tower development would have a small amount of affordable housing units included, her proposal was voted down by the City Council.

The Hotel Hive TSA will be the first passed since the City Council passed the Affordable Housing Trust Fund a law that requires the City’s Tax Assessor to deposit ten percent of Hotel Hive’s annual tax contributions to the fund.

The Affordable Housing Trust Fund was passed in July of 2019, and requires ten percent of TSAs tax payments to go directly to a fund to help support affordable housing projects across the City. This TSA, by end of its 20 year terms, will have generated at least $500K for the Affordable Housing Trust Fund based on estimates provided by the Tax Assessor’s office. That’s about $25K per year.

LaFortune ended by saying that since the developer followed the process, not approving the Hive Hotel TSA means not approving any TSAs. The crowd agreed with LaFortune’s logic, but not her decision to vote in favor of the Hive hotel TSA.

Oddly dressed as Santa Claus, Councilmember James Taylor (Ward 8) rose to note that the City Council has little understanding as to whether the TSAs previously granted by the Providence City Council are in compliance.

“This particular developer (Jim Abdo of Hive Hotel) came in front of the Finance Committee and I asked him several times what type of jobs they were creating. Are they minimum wage jobs, are they middle class jobs – I asked several times and never got an answer,”said Taylor. “So that disturbs me.”

Taylor noted that Abdo paid $4M for the building, has Federal money coming in, got $6M from the state, and now wants an additional $3M over 20 years from the City, or he won’t go through with the project.

Gesturing to the crowd, Taylor said, “There are people out here who live in my district. What are they getting for the TSA?”

City Councilmember Mary Kay Harris (Ward 11) rose to speak.

“It really bothers me when workers are pitted against each other,” said Councilmember Harris. Harris defended her pending vote in favor of the Hive Hotel by recalling her vote in favor of the Fane Tower. That decision was made because she was promised that some means would be found to assure money for affordable housing, a promise delivered on with the passage of the Affordable Housing Trust Fund.

Councilmember Harris was booed by the crowd when she announced that she was voting for the Hive Hotel TSA.

“Shame on you,” said Councilmember Harris, implying that the crowd does not care about affordable housing.

In a statement released after the passage of the TSA, Councilmember Harris said, “I pushed to have the Council pass an ordinance that codified monies from our TSAs be directed to support our neighborhoods, and those that needed the support the most. When I see people without roofs over their heads, or living in fear of losing their home, or can’t afford to fix their homes because they are on a fixed income – how can I in good conscience support such projects? By adding this funding source for affordable housing, it begins to chip away at the hard work that we must accomplish to make equity a reality. This project will deposit an estimated $500K into a fund that will have a direct impact on our community’s and that is why I am standing in support of this project. This will have a direct impact on the residents we represent, and that is worthwhile.”

Councilmember LaFortune rose for a second time. She reiterated her points about the new accountability the City Council has brought to TSAs. She then doubled down on Councilmember Harris’ point about the affordable housing crisis, which the Hive Hotel will theoretically help fund through the new Affordable Housing Trust Fund.

When LaFortune said that if we do not support the Hive Hotel TSA then, “we cannot support any other TSA,” the crowd cheered in agreement. But that wasn’t LaFortune’s point. Her point was that under the present system, Abdo and Hotel Hive had complied with the rules as they are, so she felt compelled to support the TSA.

Councilmembers Castillo, Pedro Espinal (Ward 10), Katherine Kerwin (Ward 12), Miller, Jo-Ann Ryan (Ward 5) and Taylor voted against the project.

Councilmember Davis Salvatore (Ward 14) was absent.

Councilmember Seth Yurdin (Ward 1), Helen Anthony (Ward 2), LaFortune, Nicholas Narducci Jr (Ward 4), Michael Correia (Ward 6), Igliozzi, Harris and Matos voted in favor.

The TSA requires one more affirmative vote before it is officially in effect.

In a press release, Council President Matos wrote, “…some of our most precious historic buildings need a little extra help to get them back online. This building, located directly across the street from City Hall, sticks out as a sore reminder that opportunities to redevelop our most endangered buildings don’t come around often. While there is definitely room for discussion regarding the role and scope of TSA’s, this development meets a specific criteria for me: the condition of the building necessitates it, it would help save one our most storied buildings, and it’d be making a significant contribution towards affordable housing efforts across our city over the course of the agreement.”

Councilmember Narducci justified his vote for the Hive Hotel TSA in a statement by saying, “I have always stood on the side of Unions, and I still do.”

Narducci then added, “That said we must look at the bigger picture of economic development for our city and the funding that this project will provide for our Affordable Housing Trust which will have a direct impact on the most vulnerable members of our community. These buildings have stood abandoned and vacant for years. We have a developer that is willing to make a sizeable investment in our City and I believe that we need to support progress, not stand in opposition of it.”

“Most of this council ran on the promise that there were going to be no more big bags of money given to millionaires and I don’t know what happened tonight,” said Nancy Iadeluca, Rhode Island Director of Unite Here 26. “We continue to give these multi-millionaires big bags of money, and we have yet to reap anything from it of real value.”

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