PROVIDENCE, R.I. (WPRI) – The Providence Place mall could get 50 years of multimillion-dollar tax breaks from the city of Providence under a new proposal introduced Thursday night that would extend the mall’s tax treaty for two more decades.

The proposal comes as city leaders and the mall’s owners mull the idea of turning the shopping center into a mixed-use facility.

The mall already has a 30-year tax treaty — a tool commonly used in the city to incentivize development — that began in 1998 and is scheduled to end to 2028. The deal was approved in 1996 when the mall was first proposed to be built.

Now, a new proposal introduced by City Council President John Igliozzi Thursday night would tack on a new 20-year tax agreement for the mall, requiring the shopping center to pay $4.5 million in taxes each year from 2028 to 2048.

If taxed in full, the mall’s current bill would be $25 million annually. But the owners paid $1 million this year under their existing tax treaty.

The new tax breaks were introduced as an “off-docket” item, meaning they were not on the agenda for the meeting. The council voted to suspend the rules to add the item at the end of the meeting, following a Columbus Day celebration that included multiple musical numbers.

The tax treaty was referred to the Finance Committee for consideration.

Citing the changing climate around malls, Igliozzi said Friday morning he wants to “start getting into the conversation of the mall becoming a mixed-use facility.”

He said the $4.5 million annual tax payments were proposed by the mall’s owners, and the drafted tax treaty is not the final document.

Both Igliozzi and Mayor Jorge Elorza are term-limited and leaving office in January. Seven city councilors are also leaving the council.

In a news release Thursday night, council spokesperson Parker Gavigan said the multimillion-dollar tax break was introduced off-docket because it didn’t make the deadline to be on the agenda. But he did not explain why the item couldn’t wait until the next meeting later this month, since the current agreement doesn’t expire for another six years. 

Igliozzi said Friday the mall’s owners had asked him to put the tax treaty on the docket.

“This is not about trying to rush something,” Igliozzi said. “This is about shining a light on the issue, shining a light on the problem and getting everyone to focus on this.”

But Elorza said Friday afternoon he was not in any hurry to push a mall deal through before he leaves office in three months.

“My default is to leave it to the next administration and the next City Council,” Elorza said in an interview. “I don’t think any of us should be under any time crunch to have this resolved right now.”

Elorza said he previously had talks with the mall’s ownership about negotiating a new deal, but has not spoken to them in about a year. His office was not involved in this new proposal, Elorza said, and he got a heads up about the council’s plans one day beforehand.

“I don’t think the onus is really on us, I think the onus is on the mall to present something that’s actually advantageous to the city,” Elorza said.

Brett Smiley, the presumptive next mayor of Providence, has said he wants to know more about the mall’s plans before agreeing to more tax breaks.

“I want to better understand the vision and plan for the mall long-term before committing to the right tax structure moving forward,” Smiley said Friday. “Malls have changed over the years and we need to adapt to those changes. Even still, the Providence Place Mall is a major infrastructure asset and investment in the heart of our downtown.”

The newly proposed deal says Providence Place could lease its one million square feet of space for retail, offices, dining, restaurants, entertainment, education, health and wellness, medical and residential uses, among others. The agreement explicitly bans casinos and cannabis stores.

It was not immediately clear how serious the mall’s owners are about adding residential or medical uses to the downtown shopping center. A spokesperson for Brookfield Properties declined to comment on the mall’s plans for the future, arguing the tax breaks are needed first.

“We need reassurances on the taxes so that we can build for the future,” spokesperson Lindsay Kahn said in an email. “We are not ready to publicly share plans for the shopping center.”

She said the tax treaty illustrates that the company is committed to Providence.

“What it comes down to is that we need the revised tax treaty agreement in place so we can contribute to a viable environment where our reinvestment in Providence Place can meet the changing needs of the Providence market,” Kahn said.

Other malls across the country – including the historic Arcade in downtown Providence – have been revitalized in recent years by renovating some of the space into apartments.

The future of traditional indoor malls has been uncertain for years, with the rise of online shopping and – in Providence Place’s case — the high-profile loss of one of its original anchor tenants, Nordstrom. (The mall quickly replaced the retailer with department store Boscov’s.)

The pandemic brought a new level of uncertainty, as consumers increased their online shopping or preferred outdoor malls like Garden City in Cranston, which is 15 minutes away and has several of the same chain retailers that are located in Providence Place. (Ann Taylor and Madewell are among the retailers that left the mall during the pandemic and have locations in Garden City.)

Providence’s Apple Store continues to be a huge draw for the mall, as the tech giant’s only location in Rhode Island, and the mall also has several non-retail attractions including a movie theater, arcade, restaurants and cycling studio.

“The city and its residents cannot afford to see the mall abandoned and shuttered, but any tax agreement needs to reflect equity across the board,” Igliozzi said. (He acknowledged in an interview that no one has threatened to close down the mall if they don’t get a tax treaty.)

The significant tax treaty is being proposed at a time when the city’s finances remain uncertain; there’s still a more than $1 billion unfunded pension liability, and rising interest rates may make it impossible for the city to borrow the $515 million pension obligation bond approved by voters in June.

The city’s budget projections for the next five years anticipate a structural deficit of nearly $24 million in 2025, increasing to nearly $26 million in 2028, the year the mall’s current tax treaty ends.

“If we do nothing, come 2028 the mall’s going to be paying something in the 20-million dollar range,” Elorza said. “The more time that passes, frankly the more leverage the city’s going to have in order to negotiate better terms.”

The mall is not the only property with a major tax break under consideration in the current lame-duck council session. A public hearing will be held on Oct. 19 for the public to weigh in about a tax treaty for the vacant “Superman” building downtown, which is slated to be gutted and turned into apartments.

According to the city’s own analysis, the private owners of the Superman building would get $29 million dollars in tax relief over the 30-year length of the deal. The developers have said the financing of the project is not feasible without the tax stabilization agreement.

Steph Machado (smachado@wpri.com) is a Target 12 investigative reporter covering Providence, politics and more for 12 News. Connect with her on Twitter and on Facebook.