Amid protests, council passes tax deal for downtown hotel

Providence

Union members protest inside the City Council chamber as the council votes on tax breaks for a downtown hotel. (WPRI/Steph Machado)

PROVIDENCE, R.I. (WPRI) — In a chamber full of protesting union members, the Providence City Council voted Thursday to approve a $2.7 million tax break for a developer who promises to turn two vacant downtown eyesores into a microloft hotel with a rooftop bar.

The 20-year tax stabilization agreement was approved on a vote of 8 to 6, after a vigorous debate punctuated by shouts of “vote them out” and “shame on you” from the gallery.

The deal still needs a second vote of approval by the council, and already has the support of Mayor Jorge Elorza.

“I am very supportive of this project and of the proposed TSA as it will help us bring a vacant and blighted historic building back to life,” Elorza said in a statement. “I have reached out to the developer to convey that support and to encourage him to remain committed to this project.”

Eight councilors forced the tax stabilization agreement (TSA) from committee to the floor by using a discharge petition, a strategy not used since a tax ordinance vote in 2014, according to city clerk Shawn Selleck.

Finance Committee Chairman John Igliozzi, whose panel had refused to approve the tax deal, compared the proposal to the 1996 tax treaty for the Providence Place Mall.

“That tax treaty that we voted 8 to 7 started the ball rolling,” Igliozzi said. “From the IGT building to the Blue Cross building … none of that existed.”

But Councilwoman Carmen Castillo, who once helped unionize her fellow hotel workers, made an impassioned speech against the TSA.

“What are we doing? We have yet to support people from Providence,” she said to cheers from the crowd. “That money is for the people from Providence.”

The TSA would give developer Jim Abdo a $2.7 million break on property taxes over two decades to construct the Hotel Hive, which he plans to build in the former Providence Journal building and adjacent Kresge Department Store at 203 Westminster St.

Abdo would pay $5.7 million in property taxes over the 20 years, according to calculations by the tax assessor’s office. He has already bought the buildings.

“Many, many of the council people in that room tonight ran on a promise to end giving multimillionaires big bags of money, and not giving anything back to the city,” said Nancy Iadeluca, the Rhode Island director for Unite Here Local 26, which represents hotel, gaming and food & beverage workers. “And for whatever reason they abandoned that tonight, and we are very disappointed.”

The unions who have protested the TSA, including the R.I. Carpenters Union Local 330, have said they don’t want to give tax breaks to developers unless there are greater required protections and wages for workers. That includes the workers who construct the hotel, and the ones who will be employed there once it’s built.

“I think a good start would be the minimum wage plus four dollars an hour,” Iadeluca said. “I don’t think the city needs any more $11.50 an hour jobs.”

The carpenters’ union opposition represented a split from the Rhode Island Building Trades Council, which has 16 union members including Local 330, which was protesting against the hotel. The council has previously rallied in support of development projects, including the Fane Tower, but took a backseat on the hotel.

“The building trades council has not and will not oppose this project,” said Mike Sabitoni, the president of the council. “Whether it is this or any other project, changing the rules mid-stream is not only unfair, but creates an unstable atmosphere that undermines all of the existing positive economic development policies created by the state and the city.”

But Sabitoni said the unions support ordinances that would strengthen the requirements for the tax treaties in the future.

Councilwoman Mary Kay Harris, who was once the pivotal swing vote in a veto override for another development — the Fane Tower — said she was voting in favor of the TSA because of a requirement that 10% of the hotel’s property taxes be deposited into the city’s Affordable Housing Trust Fund.

“I came in here absolutely against TSAs,” Harris said. “Absolutely against them.” But, she said, “By adding this funding source for affordable housing, it begins to chip away at the hard work that we must accomplish to make equity a reality.”

Protesters in the gallery shouted “flip flop” as she explained her vote.

The vote represented a split among council leadership. Voting in favor were Council President Sabina Matos and Councilors Helen Anthony, Michael Correia, Mary Kay Harris, John Igliozzi, Nirva LaFortune, Nicholas Narducci and Seth Yurdin.

In opposition were Majority Leader Jo-Ann Ryan and Councilors Carmen Castillo, Pedro Espinal, Kat Kerwin, Rachel Miller and James Taylor.

Steph Machado (smachado@wpri.com) covers Providence, politics and more for WPRI 12. Follow her on Twitter and on Facebook

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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