City, state leaders have agreement over I-195 tax breaks

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PROVIDENCE, R.I. (WPRI) – The wrangling over who should oversee special tax deals for developers on the I-195 land downtown morphed into a kumbuya session Tuesday as city and state leaders joined together to announce a revised tax-stabilization policy for the vacant former highway space.

Under the new plan, the city would grant a 15-year tax break to projects worth at least $10 million and 20-year deals to five still-unidentified projects worth more than $50 million, so long as developers agree to make an effort to hire minority contractors and that all trade construction contractors offer apprenticeship programs, a key sticking point for union shops.

The 15-year deals would be what city leaders call “administrative tax stabilizations,” meaning they would not need City Council approval. The first five 20-year tax breaks would be approved by the I-195 Redevelopment District Commission and any future deals would need to win support from the mayor’s office and the council.

“This is a better document than the one we introduced and a much better proposal than the alternative,” Council President Luis Aponte told the Council Finance Committee Tuesday night.

For the 15-year tax breaks, developers would pay no taxes in the first year, followed by three years of land taxes, before gradually increasing tax payments on the assessed value of the property over the next 11 years. The 20-year projects would be tax exempt for three years, pay land taxes for two more years and then begin paying taxes based on property value.

The Finance Committee took no action on the proposals Tuesday night, but Chairman John Igliozzi indicated he would continue to accept public comment on the plans over the next week.

The changes to the policy came after city and state officials publicly disagreed over how to proceed with tax breaks on the former highway space. Senate Majority Leader Dominick Ruggerio introduced legislation that would have granted control over the policy to the state, but the House never considered the Senate version of the bill. Aponte and Mayor Jorge Elorza introduced their own version of the ordinance, but critics at the state level said it wasn’t sufficient to spur development.

Aponte credited House Speaker Nicholas Mattiello with bringing all sides to the table to discuss the version of the policy. He said he was particularly pleased with a provision that requires tax-exempt institutions to pay full taxes if they purchase property that has been granted a tax break on the land.

During a public hearing Tuesday, Commerce Secretary Stefan Pryor, Elorza and Ruggerio all testified in favor of the new ordinance, touting the collaborative effort to piece the policy together.

The politicians weren’t the only ones praising the policy at the public hearing.

Dozens of trade workers, union officials and developers lined up to show support for a plan they say will create thousands of news construction jobs and finally breathe some life into a downtown that has seen few cranes in the sky in recent years.

“We don’t use words like ‘recession,’ we use words like ‘borderline depression,'” Michael Sabitoni, president of the Rhode Island Building and Construction Trades Council, told the committee. He urged the council to pass the ordinance.

Jenna Karlin, the political director for Unite Here Local 217, the hotel workers’ union, said she strongly supports the ordinance, but asked the committee to consider cutting new hotels out of the policy. She said there are already 10 hotels in downtown.

Not everyone is sold on the tax breaks, however. A coalition of activist groups led by Rhode Island Jobs With Justice penned an open letter to the council asking them to consider requiring developers to pay a higher minimum wage and hire more residents from economically disadvantaged communities.

“If our tax dollars are going to be used to subsidize development projects downtown, we believe that we the people should be seeing more in return for those investments of public money, and we will continue to call upon our elected officials to develop economic development policies that truly benefit all of our communities and ensure that our tax dollars are not subsidizing poverty jobs,” the group wrote.

While he supports the new policy, Aponte said there are still details that need to be worked out over the next week. He noted that there is still a disagreement between the city and the state over how to assess value to property on the vacant land.

“As we find ourselves at this crossroads where we can’t tax our way out of our problems or cut our way out of our problems, it leaves us with one defined path for greater prosperity: we need to grow our economy,” Aponte said.

Aponte, a Democrat, went on to quote former Republican Gov. Don Carcieri.

“We don’t need more taxes, we need more taxpayers.”

Continue the discussion on FacebookDan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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