PROVIDENCE, R.I. (WPRI) — The Providence City Council has officially launched a legal war against the mayor’s office, accusing city officials of knowingly breaking the law in 2021 when they agreed to an estimated $42.5 million tax break for a prominent developer.
Max Wistow, the attorney hired by the council, filed a motion this week to intervene in the 2021 consent agreement struck between former Mayor Jorge Elorza’s administration and developer Arnold “Buff” Chace.
The court-ordered agreement effectively gave Chace a 30-year tax break on 10 of his downtown properties in exchange for him designating some units to affordable housing under a state law known as “8 Law.”
But Wistow alleges the Elorza administration entered into the agreement illegally because it didn’t seek approval from the council before entering into the deal. And he argued the council has since been “stonewalled in its investigation of this matter.”
“This case involves the unlawful usurpation of the exclusive authority of the City Council over the taxation of real estate and seeks to rectify that abuse,” Wistow wrote in the motion filed in R.I. Superior Court.
“As will be seen, this usurpation was done in order to grant illicit benefits to one person through the gross and knowingly illegal misapplication of state statue intended to promote low-income housing,” he added. “All of this, at a time when the city faces a massive crisis of housing and homelessness.”
Spokespeople for Mayor Brett Smiley and Chace declined to comment.
The legal filing is the latest development in a behind-the-scenes fight that’s been growing for months between City Council officials and the mayor’s office, both of which have gained new leadership since the deal was put in place.
Wistow’s motion also provides a first glimpse at the legal strategy the council is taking to attack the consent agreement, which Wistow estimates would cost city taxpayers $42.5 million over the next three decades. The deal was made at the same time 20-year tax deals were expiring for several of the properties owned by Chace.
“This motion to intervene is a first step to recoup improper benefits already received by Buff Chace; to prevent further stress on the City’s fiscal health; to avoid the necessity for future tax increases to virtually all Providence taxpayers to pay for the benefits given Buff Chace; and to aid low-income residents as intended and required by state law,” Wistow wrote.
The motion contains hundreds of pages of legal arguments, emails and other exhibits Wistow is using to make his case. But the allegations of impropriety focus heavily on the actions of city solicitor Jeffrey Dana, who signed the consent agreement on behalf of Providence — despite correspondences from his team seemingly questioning the legality of the deal.
Wistow blasted Dana for moving ahead with the deal, but he also pointed a finger at Elorza for likely pulling the strings.
“The city solicitor swallowed hard and followed orders from the ‘client’ knowing of their illegality,” Wistow argued. “Most likely the client was then-Mayor Elorza. That can be fleshed out in discovery.”
The council hired Wistow earlier this year in part because its auditor, Gina Costa, advised the councilors that outside counsel was needed because of Dana’s role in making the deal with Chace. And the motion shows the City Hall infighting has become contentious at times.
In one document, Costa said she obtained internal documents that she argued show Dana “knowingly violated the 8 Law when he agreed to the consent order.”
“I believe that we were dealing in large part with questions of law,” Costa said. “Normally, I would seek advice from the City Solicitor’s Office. However, under these circumstances, I concluded that it would be absolutely necessary to get outside legal counsel.”
In a separate affidavit, former City Council deputy chief of staff Sean Bouchard complained of not receiving responses from the solicitor’s office when seeking information about the deal.
“I believe this is the only time in my over two and half years with the City that I have been unable to receive any written response to an email I’ve sent,” Bouchard said. “That is both credit to the administration’s responsiveness over the years and a glaring issue for me on why these questions are proving so problematic.”
In addition to accusing city officials of breaking the law, Wistow also alleged the tax collector refunded “hundreds of thousands of dollars in taxes to Buff Chace.”
If a judge rules in favor of the City Council becoming a party to the consent agreement, both the Smiley administration and Chace will likely have to lay out arguments for why they believe the deal was legal.
Smiley has said he doesn’t like the deal either, writing in a letter sent last month to councilors that it “reflects the intent of the previous City Council leadership and mayor.” But he also argued “the mayor’s office can resolve tax disputes through a consent order.” And he called on councilors not to take the issue to court, saying the law department was actively renegotiating the terms of the agreement with Chace.
“There is an enormous risk of undermining the work of the city to attempt to modify the settlement by any other methods,” Smiley wrote. “Two years have passed since the agreement was entered by the courts, and new leadership is not grounds to bring legal action.”
Smiley said the negotiations would have resulted in the city receiving $1.3 million for affordable housing, and Chace having to pay full commercial taxes on the commercial components of his properties.
Those negotiations ended after the council decided to take the issue back to court.