Tax deal between city and state for former I-195 land moves forward

THE DEVELOPER OF THIS student housing project in the former Interstate 195 land in Providence has been granted three extensions to finalize its purchase of land in order to come to a tax stabilization agreement with the city. The new proposed agreement between the city and state could pave the way for the Friendship & Clifford project to proceed. / COURTESY PHOENIX PROPERTY CO.
THE DEVELOPER OF THIS student housing project in the former Interstate 195 land in Providence has been granted three extensions to finalize its purchase of land in order to come to a tax stabilization agreement with the city. The new proposed agreement between the city and state could pave the way for the Friendship & Clifford project to proceed. / COURTESY PHOENIX PROPERTY CO.

PROVIDENCE — The city has begun reviewing a two-tiered proposal for standardized agreements for tax incentives in the Interstate 195 redevelopment district, including a 20-year phase-in of property taxes for five companies that propose projects of at least $50 million.
The 20-year tax stabilization agreement would be awarded to projects through an administrative process, without City Council or mayoral approval required, as long as the development met established criteria.
These deals would be limited to five in number, according to city officials, an attempt to create competition among companies for land in the redevelopment district, because after the first five, developments seeking a 20-year term would need both mayoral and council approval, according to Council President Luis A. Aponte, speaking at a meeting of the council’s Finance Committee.
“What we’re saying to the marketplace is get in and get in early,” he said.
The city is at a crossroads, and cannot continue to operate by cutting services or raising taxes, Aponte said. “We need to grow ourselves. We need to grow our economy.”
Under the process, once approved, the developer would pay no taxes for the first three years, followed by payments of only the land value for the next two years, before property taxes generated by the improvements would begin to kick in.
The city also is considering a shorter-term TSA that would be available, also through administrative approval, for developers of projects exceeding $10 million, for terms of 15 years. That standardized agreement would involve payment of no taxes for the first year, followed by three years of paying taxes only on the land value. The phase-in of property taxes would start in the fifth year.
Under the proposed ordinance, properties adjoining the I-195 district also would be eligible as long as their development is tied to a project in the district itself. This will take care of several projects that include properties straddling the line between city-controlled land and I-195 Redevelopment District Commission land, Aponte said.
Under the process, the city assessor and planning director would develop procedures to carry out the ordinance, in consultation with the director of the I-195 commission. Applications for TSAs will be reviewed by the director of planning and development, the department of inspections and the city assessor. Once completed, and a TSA drafted by the city solicitor would be forwarded to the City Council “for review as to form only.” The council will have 30 days to review the document, unless it spots a material deficiency in “the application or associated documents.”
The ordinance, a significant lengthening of the tax deferral terms initially proposed by the city, is the result of negotiations between city and state leaders and representatives of the I-195 commission. Discussions have taken place over the past several days, after the state Senate last week approved a measure that would have allowed the state to take control of the tax stabilization authority. The Senate move did not find traction in the House of Representatives.
Several of the players in the negotiation process attended a nearly two-hour public hearing on the new city proposal Tuesday, advocating for a standardized tax policy for the district that would make Providence more competitive for commercial development. The city has a high property tax rate relative to other cities, including Boston, where the tax rate is lower and the rents significantly higher.
Mayor Jorge O. Elorza, in brief comments, said the proposed policy is the result of collaboration between state and city officials. “We all want the exact same things,” he said. “With this ordinance in place, not only will it make the I-195 land more attractive, it will also push many developers over that point, that decision point, so they will come and invest their money and their resources in Providence.”
Senate Majority Leader Dominick J. Ruggerio — who had sponsored the Senate bill that could have wrested control of the process from the city — told council members that they had a rare opportunity to develop land in the heart of the downtown. “The potential for the development of that land is absolutely phenomenal. It will make Providence a viable city for developers to come and develop these large projects.”
The Council’s Finance Committee took the matter under advisement. The chairman said it would be brought up again, with a second public hearing, at the next meeting of the committee.

No posts to display