PROVIDENCE, R.I. (WPRI) — Prompted by recent tax disputes settled by the city, a Providence city councilor wants to change the law so the council is looped in before the city agrees to high-dollar settlement.
Councilor Justin Roias, D-Ward 4, said his newly proposed ordinance was prompted in part by a $10.7 million settlement the city agreed to pay to the Manchester Street Power Station, one of Providence’s largest taxpayers.
Roias said he only learned of the settlement from Target 12’s report earlier this month.
“We’re sending a message that there needs to be council oversight over tax settlements,” Roias said. “All we’re asking is to be treated as a co-equal branch of government.”
Roias’ proposed ordinance would no longer give the city solicitor sole authority to settle tax appeals, requiring such settlements be approved by the council’s Committee on Claims and Pending Suits, which considers other types of legal settlements.
While the ordinance as written doesn’t include a minimum dollar figure, Roias said he would be willing to limit the provision to settlements over a certain amount. The proposal was referred to the Committee on Ordinances for consideration.
The Manchester Street Power Plant filed suit under the former Elorza administration, disputing the tax assessor’s valuation of its real estate and tangible property, which determined the business’ tax bills in 2020 and 2021.
Mayor Brett Smiley’s administration settled the suit in January, agreeing to pay $10.7 million over two years. Roias said councilors were in the dark about the settlement.
Smiley officials later mentioned the existence of a large tax settlement in a budget presentation to the Council Finance Committee on May 1.
A spokesperson for Smiley said the administration has “serious concerns” about Roias’ proposal to bring settlements to the claims committee.
“It would further slowdown the process to settle these claims and incur additional legal costs,” Smiley spokesperson Josh Estrella said. “Additionally, it has the potential to cost the taxpayers more, as these cases continue to accrue interest until they settle according to state law.”
But as the City Council currently weighs Smiley’s budget proposal, which contains tax increases to balance the city’s spending, Roias said it’s important for the council to be kept in the loop on tax settlements.
“It kind of makes us all feel incompetent that we’re not doing our job and protecting taxpayers,” Roias said.
Roias said he and other councilors are also “outraged” by a consent order between the former Elorza administration and real estate developer Buff Chace. The agreement applied an “8-law” provision to ten of Chace’s properties, providing tax breaks for having some low-income apartments in the buildings.
Gina Costa, the internal auditor, said the city will lose out on $1.5 million per year as a result of both the 8-law tax breaks on the ten properties and some existing tax stabilization agreements.
The City Council has now hired a law firm to investigate the deal.
“There was not a whole lot of transparency around that,” Roias said.
Smiley has separately proposed in his budget $100,000 for an 8-law compliance program “to ensure that developers that benefit from this tax break meet affordability targets.”
Steph Machado (firstname.lastname@example.org) is a Target 12 investigative reporter covering Providence, politics and more for 12 News. Connect with her on Twitter and on Facebook.