STABLE ENVIRONMENT? Steve Durkee, principal at Cornish Associates, stands in front of the Kinsley Building on Westminster Street in Providence. Cornish Associates bought the Kinsley Building from Johnson & Wales University in 2012, but has been waiting for a decision on whether it will get a tax-stabilization deal before turning it into apartments.
Editor’s note: This is the first of a two-part series on Providence’s use of tax-stabilization incentives. Next week’s story will explore the challenges for property owners and occupants if the incentives don’t continue.
At the Foundry complex in Providence, owners are poised to fill the remaining vacant portions of the historic former Brown & Sharpe Mill with luxury apartments.
A few blocks southeast on Westminster Street, Cornish Associates is ready to make the Kinsley Building its latest office-to-residential conversion in a $10 million project creating 44 units of in-demand, midrange housing.
Both projects would provide a welcome economic boost for their neighborhoods, but are on hold until their owners can reach a tax-stabilization agreement with city officials to limit their future property tax bills.
Tax-stabilization agreements, the preferred local economic-development incentive in Rhode Island cities and towns, have been a part of virtually every major downtown Providence building project over the past two decades.
From the corporate headquarters of Italian lottery giant GTECH S.p.A. on Memorial Boulevard to the Monahasset Mills artist lofts on Kinsley Avenue in the Valley neighborhood, stabilizations have taken on even more importance since the city’s commercial property tax rates have risen to among the highest in the nation.
As with many tax breaks, however, tax stabilizations are currently drawing attention in Providence and other communities about how they’re awarded and whether they are too generous, or too stingy, toward developers.
Historically, the city has reached tax agreements with developers on an ad-hoc basis, with different terms for different properties subject to fractured, often minimal monitoring.
In some cases, property owners have gone directly to state lawmakers to extend stabilizations, complicating the landscape further.
At the same time it is reviewing the proposed agreements for the Foundry, Kinsley Building and two more properties, the Providence City Council Ways and Means Committee is also working on recommendations to reform the stabilization review and monitoring process.
City Councilor Sabina Matos has proposed a freeze on any new stabilizations until the end of the year, or until the entire system can be studied and overhauled.
“We cannot pretend we don’t know there are problems with the tax-stabilization program,” said Matos, who added she doesn’t want to see the program ended permanently. “I would like to see a process that is clear and transparent and gives everyone opportunity to apply.”
Estate and Corporate Income Taxes are changing next year, and business owners and executives should know the details. The PBN Summit on November 6th will provide those details and more - including how much Obamacare's Employer Mandate could cost.
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