Tax-stabilization agreements have played a major role in turning derelict, abandoned properties in Providence into residential and commercial complexes that bring people into the city and revitalize down-in-the-mouth neighborhoods.
The deals are simple – the city accepts a reduced tax payment for a given amount of time, thus reducing the cost for the developer. For example, under a 10-year, 2006 deal, Armory Revival Co. paid $11,730 in property tax in 2013 for The Plant, a mixed-use complex in Olneyville, instead of the $102,790 that the property’s assessed value normally would produce.
That shortfall (as well as similar shortages in the other 35 tax-stabilization deals in the city) is viewed by some as a luxury the city cannot afford. That is a short-sighted observation.
Tax-stabilization deals are an important tool for developers in an urban environment, where costs (and taxes) are high. In fact, a number of projects now underway or just beginning are shut down because the city and the developers cannot come to an agreement.
If these deals do not take place, then the city loses twice – first, when the redevelopment investment does not take place, and second when the economic activity that new residents and businesses produce does not happen.
Some specific tax deals may not have been well-conceived, but that does not mean the concept is a bad one. The city needs to accept their necessity and then manage them well. And it needs to move on this issue before interest rates and construction costs have a chance to rise. If it does not, Providence may lose the up-and-coming vibe it strives so hard to create. •