Holiday Inn Express seeks $2.6M in tax breaks for Pine Street project


PROVIDENCE, R.I. (WPRI) – A hotel chain aiming to build a location in South Providence is hoping to get more than $2.6 million in tax incentives from the city, cutting its potential tax bill nearly in half over 15 years.

The proposed Holiday Inn Express, which is being developed by Buffalo-area company Rudra Management, would be built on the corner of Pine and West Franklin streets next to Crossroads RI, the state’s largest homeless services organization.

The developer is asking for a 15-year tax stabilization agreement (TSA), which would give the hotel incremental property tax breaks each year, reaching full taxation after 15 years.

If the TSA is approved by the City Council, the hotel would pay a total of $2.8 million in property taxes over the 15-year agreement, versus $5.4 million if it doesn’t get a tax deal.

The hotel proposal has garnered some concerns from neighbors, who fear the hotel will struggle to attract tenants because of its location, and eventually go out of business.

“We’re finding it very hard to envision any business being successful,” said Dwayne Keys, the chair of the South Providence Neighborhood Association. “We’ll be stuck with an empty building.”

He said the concern isn’t just the proximity to Crossroads, but also the general activity of the street, including people congregating outside or setting up tents to sleep at night, that might be unattractive for hotel patrons.

“Some folks have mentioned that they don’t feel safe walking around that area,” Keys said. But he said he neither opposes nor supports the hotel, citing the possibility that hotel guests would spend money at local businesses on Broad Street and other parts of South Providence.

But Jayesh Patel, the developer on the project, said he believes the hotel will be attractive to travelers because of its visibility from I-95. And he said the owners have committed to hire local workers for the 27 to 30 permanent jobs expected at the hotel.

“That side of the town needs some freshness and job creation,” Patel said in a telephone interview. “I think this is a chance worth taking.”

“The hotel is not what the neighborhood wants,” said Councilwoman Mary Kay Harris, a Democrat who represents Ward 11, which includes the proposed hotel site. She said her constituents don’t think it’s the right location for the project.

But she said she does support the fact that 10% of property taxes from projects with TSAs are deposited into the Providence Housing Trust, which funds construction of affordable housing.

Affordable housing is another issue brought up by Keys, who said neighbors believe the vacant plot of land would be better used to build more housing.

Patel said securing the TSA is “very imperative” to make the project work, though he didn’t say whether they will still build the hotel without tax breaks. He said his development company has also applied for tax-increment financing (TIF) through the state’s Commerce Corporation, which has not yet been approved.

The hotel is expected to be five stories tall with 92 rooms, according to its TSA application filed with the city. Constructions costs are estimated at about $10 million. The project was first proposed in 2016 and has been repeatedly delayed; its latest approval from the Providence City Plan Commission expires on June 30.

A rendering of the proposed Holiday Inn Express on Pine Street.

Patel said construction will be able to start almost immediately after getting the state and city tax incentives approved.

TSAs have been a hot topic in City Hall, where councilors have been debating whether so many developers should be given tax deals in order to build in the city. The proposed downtown Hotel Hive, for example — which a developer plans to build in the former Providence Journal building and adjacent former Kresge department store on Westminster Street — was almost scuttled after its TSA proposal was tabled in the Finance Committee.

But a majority of councilors forced the ordinance to the floor using a rare discharge petition, ultimately approving the tax breaks for the hotel.

Supporters of TSAs argue they provide an important incentive to get developers to build in Providence, often on land that’s currently garnering little property tax revenue. The plot where the Holiday Inn Express would be built is currently bringing in about $14,000 annually; the city estimates the hotel would pay $48,000 in its 4th year, climbing to $449,000 by the 15th year of the tax deal.

But union workers have taken up the mantle against the TSAs, pushing city councilors to consider tying the tax incentives to higher wages for local workers.

Patel said the company has committed to hiring local workers, but would not comment on the wages that will be offered.

The TSA proposal was introduced last week and will be considered by the council’s Finance Committee.

Steph Machado ( 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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