Providence is bringing an end to indefinite property-tax breaks for large development projects.
Concerned about the cost of “tax stabilization” agreements awarded ad hoc to developers over the past two decades, Mayor Angel Taveras has created new rules to govern the practice and make sure the breaks don’t become permanent.
Most major building projects completed in the city in the last 20 years – from the Providence Place mall to the Arcade – have taken advantage of tax stabilization. And with improvement in the real estate market and the return of state historic tax credits, a number of high-profile properties, including the Industrial Trust Tower and South Street Power Station, could be seeking them soon.
Under the new tax-stabilization framework developed by the Taveras administration, future deals will be capped at 12 years and staggered so that relief to owners diminishes during the course of the deal.
In the first three years of a tax stabilization, the owner will pay no property taxes. Then in the fourth year, taxes will begin at 22 percent of assessed value and rise 11 percentage points annually until the 13th year, when they will pay the full assessed value.
“Historically there has not been any structure for stabilizations,” Taveras spokesman David Ortiz said. “The administration believes there is a place for stabilization and that it is very helpful for promoting developing in the city. What we are seeking to do is be responsible about structuring [the deals] so they enable a project to get off the ground and bring it onto the tax role in a reasonable amount of time.”
But the new policy may not be the end of debate about the tax stabilization going forward.
City councilors, who negotiated and approved all tax stabilization deals until 2011, when an ordinance authorized the mayor to negotiate 10 agreements without having to seek individual City Council votes, have been discussing a comprehensive review of the policy.
Ward 14 Councilor David Salvatore said the Ways and Means Committee he chairs would be reviewing individual tax stabilizations within the next two weeks to determine whether recipients have been living up to their obligations under the deals.
When the review is complete, Salvatore said he expects the committee to issue recommendations for ordinance changes regarding stabilization.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.