PROVIDENCE, R.I. (WPRI) — The Providence City Council is one step closer to pursuing legal action against a court-ordered 2021 agreement that allowed ten downtown properties owned by Arnold “Buff” Chace and others to pay significantly lower property taxes over the next three decades.
Last week, the City Council Finance Committee heard a presentation from attorneys Stephen Sheehan and Max Wistow during a closed-door executive session meeting. (Wistow famously represented the state of Rhode Island in its high-profile lawsuit against former Red Sox pitcher Curt Schilling and other key players tied to the failed 38 Studios deal.)
After the presentation, the Finance Committee approved a resolution to “authorize legal counsel to make a claim by demand letter, motion practice, lawsuit, or any combination the attorneys deemed appropriate.”
On Thursday night, councilors passed a resolution on a vote of 10 to 1 to request a presentation from the lawyers regarding their investigation. (Four councilors were absent.)
The presentation will be given in executive session during a special meeting next week. Before a vote happens to potentially authorize the firm’s hiring, the city solicitor’s office will also have a chance to present to councilors.
“I do think we have an obligation given the current fiscal state of the city, [given] that we did just raise taxes, [and] given what we know about housing affordability, I think that we have an obligation to look very deeply into the agreement that was made in the past term,” Council President Rachel Miller told reporters after the meeting Thursday.
“There is a question about the authority of the past administration to enter into that agreement,” Miller added. “I think we have an obligation to see that question through.”
Miller said while she and other councilors were on the City Council when the deal was struck, she claims was never made aware of it and instead learned about it through a news report.
“There is one body that has the authority to bind the city in a financial agreement: that is the City Council,” she said. “This never came before us in any way. And so we really need to look into whether the agreements that were made, were made with proper authority. We need to investigate that fully.”
The controversial tax deal was reached in June 2021 after R.I. Superior Court Judge Melissa Darigan ordered the property owners to receive lower taxes in exchange for turning a portion of their units into affordable housing. The deal came at the same time the properties were poised to lose previously approved tax deals — some spanning two decades.
The court-ordered tax deal later drew criticism from some inside city government, including internal auditor Gina Costa, who outlined a series of concerns in a confidential memo sent to councilors in December.
“She brought this to our attention, this $42 million discrepancy over 30 years,” Councilman James Taylor said in Thursday night’s City Council meeting.
“I think by listening the other night to the law firm, I think we should proceed and move forward on this issue and hopefully in the end, won’t be right away, but could be $42 million over 30 years that we could get back to the city of Providence,” he added.
Miller said there is an agreement on the table that would authorize the law firm to receive half of what is recovered, should the agreement be overturned.
Councilman Taylor pointed some people have taken issue with the cost to hire a team of lawyers.
“We’re talking about a deal that would cost taxpayers $42 million over 30 years. I think there’s larger implications into this,” Miller said.
Last week, Mayor Brett Smiley criticized the council’s legal strategy. Smiley spokesperson Josh Estrella said the administration doesn’t support the existing tax deal, but the mayor also doesn’t see eye-to-eye with the council on how to deal with it.
“This settlement was entered into under the previous administration and Mayor Smiley does not support it,” Estrella said in a statement. “For months, the city has been negotiating with Buff Chace, working towards a solution that is better for the city and taxpayers. The council’s current approach risks both not achieving a better deal while sending more resources to an outside council.”
A date and time for next week’s special City Council meeting has yet to be scheduled.