PROVIDENCE, R.I. (WPRI) – If Providence won’t establish a plan to give developers tax breaks on the old I-195 land, we’ll do it ourselves.
That was the message Senate Majority Leader Dominick Ruggerio sent Thursday when he introduced a bill that would grant 20-year tax-stabilization agreements – including four years paying no taxes at all – to all for-profit organizations with property in the I-195 Redevelopment District.
The legislation would allow developers to gradually increase property tax payments to the city on a sliding scale over two decades, with the requirement that they be paying 100% of their taxes by year 20. Ruggerio said he modeled his proposal after existing tax-stabilization deals in the city.
“I think it’s important for potential developers to know what the game plan is,” Ruggerio told WPRI.com. “I’m looking to standardize the process.”
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As it stands now, the Providence City Council approves all tax breaks given to developers on a case-by-case basis. Mayor Jorge Elorza and City Council President Luis Aponte have said they hope to establish a formal policy, but no plan is expected to be released until after the city budget is approved next month.
“From the day I took office, I have said that we need a standardized, predictable and streamlined tax stabilization agreement process in Providence,” Elorza said in a statement. “I am working with City Council leadership to develop the ordinance that will allow us to facilitate and encourage development and am committed to seeing this plan introduced very soon.”
Ruggerio said he’s been “getting a little apprehensive” because all the developers interested in the I-195 land have said they need a tax break from the city and he doesn’t want to let any projects fall through the cracks.
He said he doesn’t consider his bill an effort to sidestep the Elorza administration, but acknowledged he’s concerned tax-stabilization deals have been placed on the “back burner” during the transition to a new administration. He noted that the state owns the I-195 land and said he sees no legal problems with providing tax breaks without city approval.
Elorza has said he wants the state to reimburse the city for any tax breaks it provides to developers on the I-195 space, but Ruggerio said he doesn’t support that plan. He said the city receives permitting fees and will eventually be paid taxes on the land.
“I feel we’ve treated the city pretty well,” Ruggerio said.
Tax-stabilization agreements in Providence have long been viewed as essential by developers who say the commercial tax rate – currently $36.75 per $1,000 of assessed value – is too high to make new projects financially viable. But critics have said the city’s current policy of approving incentives on a one-off basis has lacked oversight and led to overly generous tax breaks.
A report released last year by the City Council found that 36 tax stabilizations were considered active, generating about $5.2 million in tax payments to the city. The total assessed value of the 36 properties, which include several luxury apartments, was $429.4 million.
The council report released last year recommended the city create a uniform process for offering tax breaks, particularly on the I-195 land. Councilman David Salvatore, who represents Elmhurst, has submitted an ordinance that would grant 15-year deals to developers on that land, which would include paying a base rate for five years and gradually increase until developers pay the city’s full tax rate by the final year of the agreement.
Salvatore’s plan has been referred to the Council Ordinance Committee, but has not come up for discussion.
Ruggerio said he expects his new 195 bill to be posted for a hearing at the State House in the coming weeks. The bill is co-sponsored by Sens. Maryellen Goodwin, Joshua Miller, Frank Ciccone and Paul Jabour.