Guest MINDSETTER™ Bishop: Providence Home Owners Beware
Brian Bishop, Guest MINDSETTER™
Guest MINDSETTER™ Bishop: Providence Home Owners Beware
Councilman Sam Zurier Says It Is OK - Is It OK with You?
Councilman Sam Zurier has finally uncorked his arguments for supporting these extensions. His arguments are rhetorically careful, but logically challenged. Indeed, this is Zurier's conclusion about the projects he wants to give extensions to:
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"In hindsight, this project was an extremely inefficient investment of private and City funds, as the developer’s financial information suggests that the ratio of construction costs to added value is approximately 3:1. (This disparity results from the fact that property value for this building is based on the income it generates from rentals, which is market-based. Also, the construction costs are greater because the project involves renovations based on historical preservation goals, rather than demolition and new construction.) With that said, it would be detrimental to the City’s downtown development and long-term tax base were this project to fail. Within this analysis, a further revenue loss of $1.6 million appears to be the least expensive and most prudent course."
He adds this post note in his most recent communication:
"I expect this tax stabilization extension to be the last one the City Council will grant to any developer . . ."
Neither of these statements is at all accurate.
These buildings are renovated and occupied and will not cease to be renovated or occupied whether or not these extensions are granted. As Councilman Zurier observed in his treatise linked above, the buildings are assessed based on their rental income and not on the unwise subsidized levels of investment (a chunk of which came from state taxpayers in the form of historic tax preservation credits which are typically brokered to make them liquid to developers early in the project). Thus no harm comes to the city's tax base should the developers fail. This is NOT the least expensive and most prudent course, especially when one considers how false his second premise is.
At the first council vote on these extensions, even councilors who were opposed to the extensions pointed out that they expected comity in granting similar extensions to projects in their wards if these extensions were granted downtown. Far from appearing to be the 'last' extensions, these are a precedent for requests for 30 more representing almost $34 million in foregone revenue based on applying the conditions of these new extensions to other TSAs running contemporaneously.
Virtually all of the arguments that Zurier makes on behalf of these current extensions apply to all the other buildings with expiring TSAs. They are mostly historic industrial and commercial buildings in residential reuses. They are in areas of specific concern for development and redevelopment. (Although a few are new buildings built in those areas pursuant to TSA agreements). Zurier makes no excuse for why, if these particular extensions somehow rise above the chafe vs. others, uniquely placing the city in a critically positive light compared to other expiring TSAs, that the incoming mayor and council should not make that decision!
Special Connections.
If there is anything that distinguishes these buildings from others, it is that the principals in these projects are the very architects of the policy that Zurier criticizes as unwise. So these are the folks who designed the failing and inefficient investments and convinced the city to grant millions in forbearances -- and even Zurier recognizes must have had a hand in going above the city fathers to get an earlier extension using connections at the state legislature which inserted the following subsection into RIGL 44-3-31.2 (the section that pertains to and provides for Providence TSAs in general):
(h) The term of any special property tax consideration previously approved under this section that is still in effect upon the effective date of this section shall, notwithstanding any provision therein to the contrary, be extended for five (5) years. (public law 2010 chap. 281 at 1)
These developers had the nerve, at the public hearing on these extensions, to characterize that law as almost ministerial in function. They compared it to a General Assembly law extending the expiration of zoning permits because of the lackluster economy. Of course the economic effects on municipalities are precisely opposite in those two undertakings.
On the other hand, extending TSA tax breaks cost the City of Providence some $60 million dollars. It was a special deal plain and simple. It has not escaped apartment owners notice that the majority of this money was obtained at the close of the Cicilline administration in 2010 (notice the year of the public law passing the extensions) by drastically changing the homestead exemption which altered apartment owners’ circumstances from paying 33% more than homeowners to 77% now. If there had been awareness that these TSA interests were taking an end run on the city for $60 million at the time, we would have recognized that this was the source of the hole in the city budget and fought those extensions. Thus the circumstances that have made it appear lately that apartment owners are in a tug of war with resident homeowners might have been avoided.
Burdened by Tax Giveaways
These irresponsible TSA extensions reveal an area where both homeowners and apartment owners are burdened by tax giveaways. And they are something we should fight together now, or we will all pay together in the future. By careful calculation the lame duck council has given us some 3 days to turn aside 15 years of accumulated patronage.
Whether the city should have 'invested' as much as it has to create this artificial development, Zurier's articulation that the failure of these projects would somehow set the city back ignores what is meant by failure. Of course, without the city's continued forbearance, the developer may have to write down their holdings, face a more difficult borrowing environment, shed shell corporations for particular buildings, or even face foreclosure. You know, the kind of things that happened to everyone else as a result of the downturn in real estate. It is funny the city didn't come up with a program of cutting taxes an order of magnitude for any homeowner who went upside down. No, it was just for connected developers.
Failure of the developer doesn't make the projects a failure, if the effort was to catalyze downtown residential development that doesn't need subsidies. The renovation doesn't go away. The taxes due on those improvements don't go away. And if there is a fiscally responsible way to continue redevelopment, it will continue, catalyzed by these earlier investments.
Zurier’s drumbeat for a false economy.
By implication though, Zurier is suggesting that if the developers of these early signature renovations are seen to face impossible financial hurdles, this will chill downtown development. But that does not suggest that these are the last extensions, or the last inefficient TSAs. Rather this is the beginning of a drumbeat for a TSA policy that recognizes the only way anything can be maintained downtown is if it pays 10 cents on the dollar in taxes -- or maybe a quarter on the dollar if you accept that newer arrangements will be slightly less generous. TSAs must be granted or extended if they serve that purpose of developing downtown, regardless of the wisdom or cost. So, if you believe that turning downtown buildings into dormitories for yuppies at any price is the city's only hope -- despite competing with existing apartments, undermining their values and thus further increasing residential tax rates and placing continued pressure on the cap of 60% adopted for the apartment owners premium -- then you will support these extensions. I hope you believe otherwise.
To argue that projects that have already been too generously treated by the taxpayers must continue to get breaks because somehow, even though the recipients of these breaks literally wrote the ordinances themselves, we tricked them into taking these 1st breaks and we must rescue them now sounds like 1st grade logic -- and that is being generous.
Don’t Let the Clock Run-out
I am disappointed that Councilman Sam Zurier, who has taken the lead for the lame ducks here, rather than engaging the next council of which he will be a part, has waited until the very last moment to articulate his defense of these breaks. He gives his constituents virtually no time to respond or contemplate his excuses, thereby diminishing much chance of an organized response.
Nonetheless, respond we must. I hope that you will attend the Providence City Council meeting on Thursday, October 16. And beforehand, let the councilors know that they are responsible to all property owners and must wait for the new administration to be seated in order to weigh in. Extending more breaks will only lead to a larger deficit (no, there is no surplus) and will ultimately lead to your checkbook. Will you be there?
Brian Bishop’s family resides and works in residential, apartment and commercial property they own, largely in Sam Zurier’s ward. He manages these buildings and was himself a schoolmate of Sam Zurier’s at Classical.
Current Tax Stabilization Agreements in Providence
130 Westminster St.
The Arcade - 103 Westminster St. Associates, LLC
Approval Date: 12/31/2012
Assessed Valuation: $1,826,200
Actual Tax Prior to TSA: $44,137
2013 True Tax: $67,113
2013 Stabilized Tax Payment: $16,742
Tax Status: Current
End Date of Agreement: 12/31/2022
122 Fountain St.
Sportsman Inn - HM Ventures, LLC
Approval Date: 4/20/2012
Assessed Valuation: $1,607,800
Actual Tax Prior to TSA: $77,010
2013 True Tax: $59,087
2013 Stabilized Tax Payment: $9,601
Tax Status: Past Due
End Date of Agreement: 12/31/2022
244 Oak St. + 33 Magnolia St.
Roger Williams Brewery, LLC
Approval Date: 1/1/2012
Assessed Valuation: $496,800
Actual Tax Prior to TSA: N/A
2013 True Tax: $18,257
2013 Stabilized Tax Payment: $18,140
Tax Status: Past Due
End Date of Agreement: 12/31/2024
1 AT&T Plaza
Hasbro - Empire LaSalle, LLC
Approval Date: 7/1/2012
Assessed Valuation: $25,092,400
Actual Tax Prior to TSA: $547,553
2013 True Tax: $922,146
2013 Stabilized Tax Payment: $47,568
Tax Status: Current
End Date of Agreement: 12/31/2024
100 Weybosset St.
Providence G Building - Providence Capital, LLC
Approval Date: 3/20/2012
Assessed Valuation: $2,575,400
Actual Tax Prior to TSA: $129,610
2013 True Tax: $94,609
2013 Stabilized Tax Payment: $32,557
Tax Status: Current
End Date of Agreement: 7/1/2025
11 Dorrance St.
The Biltmore
Approval Date: 3/15/2012
Assessed Valuation: $20,162,400
Actual Tax Prior to TSA: $694,575
2013 True Tax: $740,698
2013 Stabilized Tax Payment: $124,506
Tax Status: Past Due
End Date of Agreement: 12 Years from Commencement
1 Park Row West
Johnston & Wales University Dorms - Capitol Cove, LLC
Approval Date: 3/11/2005
Amendment Date: 3/8/2010
Assessed Valuation: $2,252,500
Actual Tax Prior to TSA: $518,247
2013 True Tax: $82,779
2013 Stabilized Tax Payment: $968,606
Tax Status: Current
End Date of Agreement: 12/31/2023
125 Washington St.
Mercantile Block Assoc., LLC
Approval Date: 11/16/2009
Assessed Valuation: $1,758,000
Actual Tax Prior to TSA: $59,851
2013 True Tax: $64,607
2013 Stabilized Tax Payment: $34,248
Tax Status: Current
End Date of Agreement: 12/31/2020
1 Sims Ave.
Milhaus LLC - The Steel Yard
Approval Date: 1/8/2007
Assessed Valuation: $323,400
Actual Tax Prior to TSA: N/A
2013 True Tax: $11,885
2013 Stabilized Tax Payment: $19,641
Tax Status: Current
End Date of Agreement: 12/31/2016
60 Valley St.
60 Valley St. LLC (c/o Armory Revival)
Approval Date: 9/26/2006
Assessed Valuation: $2,797,000
Actual Tax Prior to TSA: $14,333
2013 True Tax: $102,790
2013 Stabilized Tax Payment: $11,730
Tax Status: Current
End Date of Agreement: 12/31/2016
160 Niantic Ave.
160 Niantic Ave. Morvco Realty LLC
Approval Date: 5/27/2004
Assessed Valuation: $1,305,300
Actual Tax Prior to TSA: $50,612
2013 True Tax: $47,970
2013 Stabilized Tax Payment: $38,550
Tax Status: Current
End Date of Agreement: 12/31/2015
50 Holden St.
Promenade Building Assoc. - The Foundry
Approval Date: 5/17/2004
Assessed Valuation: $4,238,200
Actual Tax Prior to TSA: $42,802
2013 True Tax: $155,754
2013 Stabilized Tax Payment: $104,814
Tax Status: Current
End Date of Agreement: 12/31/2015
21 Gordon Ave.
South Providence Development Corp. (Keith Fernandez)
Approval Date: 1/16/2004
Assessed Valuation: $1,042,600
Actual Tax Prior to TSA: $5,708
2013 True Tax: $38,316
2013 Stabilized Tax Payment: $10,984
Tax Status: Past Due
End Date of Agreement: 12/31/2016
10 Memorial Blvd.
GTECH Corp. Headquarters
Approval Date: 7/15/2003
Assessed Valuation: $54,767,800
Actual Tax Prior to TSA: $236,619
2013 True Tax: $2,012,717
2013 Stabilized Tax Payment: $1,100,000
Tax Status: Current
End Date of Agreement: 12/31/2026
65 Eddy St.
Peerless Lofts
Approval Date: 11/22/2002
Assessed Valuation: $12,843,700
Actual Tax Prior to TSA: $80,100
2013 True Tax: $472,006
2013 Stabilized Tax Payment: $33,407
Tax Status: Current
End Date of Agreement: 12/31/2016
235 Promenade St.
Promenade Building Assoc. - The Foundry
Approval Date: 11/22/2002
Assessed Valuation: $15,810,300
Actual Tax Prior to TSA: $58,201
2013 True Tax: $581,029
2013 Stabilized Tax Payment: $30,345
Tax Status: Current
End Date of Agreement: 12/31/2015
236 Westminster St.
Alice Building LLC c/o Cornish Associates
Approval Date: 12/28/2001
Assessed Valuation: $3,680,500
Actual Tax Prior to TSA: $25,531
2013 True Tax: $135,258
2013 Stabilized Tax Payment: $13,439
Tax Status: Current
End Date of Agreement: 12/31/2014
100 Providence Place
The 903
Approval Date: 12/21/2001
Assessed Valuation: $68,573,700
Actual Tax Prior to TSA: $200,000
2013 True Tax: $2,520,083
2013 Stabilized Tax Payment: $620,474
Tax Status: Current
End Date of Agreement: 12/31/2015
95 Chestnut St.
Hacht Development, LLC
Approval Date: 4/15/2012
Assessed Valuation: $3,091,300
Actual Tax Prior to TSA: $110,665
2013 True Tax: $113,605
2013 Stabilized Tax Payment: $20,453
Tax Status: Past Due
End Date of Agreement: 12/31/2022
265 Oxford St.
Institute for Non-Violence
Approval Date: 1/1/2012
Assessed Valuation: $1,393,700
Actual Tax Prior to TSA: $32,928
2013 True Tax: $51,218
2013 Stabilized Tax Payment: $1,000
Tax Status: Current
End Date of Agreement: 12/31/2021
145 Globe St.
Victory Square - JAG Investment Realty, LLC
Approval Date: 7/18/2011
Assessed Valuation: $7,234,800
Actual Tax Prior to TSA: $294,485
2013 True Tax: $265,879
2013 Stabilized Tax Payment: $252,750
Tax Status: Current
End Date of Agreement: 12/31/2013
25 Eagle St.
Butcher Block Mill, LLC
Approval Date: 1/1/2011
Assessed Valuation: $590,500
Actual Tax Prior to TSA: $23,469
2013 True Tax: $21,701
2013 Stabilized Tax Payment: $11,431
Tax Status: Current
End Date of Agreement: 12/31/2023
50 Agnes St.
50 Agnes, LLC
Approval Date: 1/1/2012
Assessed Valuation: $521,800
Actual Tax Prior to TSA: $21,422
2013 True Tax: $19,176
2013 Stabilized Tax Payment: $16,807
Tax Status: Current
End Date of Agreement: 12/31/2024
103 Dike St.
Music House, LLC - Fete
Approval Date: 1/1/2012
Assessed Valuation: $589,700
Actual Tax Prior to TSA: $17,555
2013 True Tax: $21,671
2013 Stabilized Tax Payment: $5,417
Tax Status: Current
End Date of Agreement: 12/31/2024
41 Central St.
Yet Another LLC - Art Recreation Center
Approval Date: 4/16/2007
Assessed Valuation: $287,100
Actual Tax Prior to TSA: $12,879
2013 True Tax: $10,551
2013 Stabilized Tax Payment: $5,862
Tax Status: Past Due
End Date of Agreement: 12/31/2024
200 Allens Ave.
200 Allens Ave. LLC (Capstone Properties)
Approval Date: 1/8/2007
Assessed Valuation: $1,834,300
Actual Tax Prior to TSA: $74,754
2013 True Tax: $67,411
2013 Stabilized Tax Payment: $23,537
Tax Status: Past Due
End Date of Agreement: 12/31/2016
35 Hylestead St.
65 Pavillion LLC
Approval Date: 8/1/2005
Assessed Valuation: $675,500
Actual Tax Prior to TSA: $13,345
2013 True Tax: $24,825
2013 Stabilized Tax Payment: $9,752
Tax Status: Current
End Date of Agreement: 12/31/2016
203 Weybosset St.
Zampalis Realty (Zampalis Realty LLC)
Approval Date: 8/1/2005
Assessed Valuation: $547,900
Actual Tax Prior to TSA: $12,565
2013 True Tax: $20,135
2013 Stabilized Tax Payment: $31,300
Tax Status: Current
End Date of Agreement: 12/31/2024
166 Valley St.
Rising Mills Project (166 Valley St. LLC, Struever Bros)
Approval Date: 12/1/2003
Assessed Valuation: $16,749,900
Actual Tax Prior to TSA: $91,763
2013 True Tax: $615,559
2013 Stabilized Tax Payment: $80,535
Tax Status: Current
End Date of Agreement: 12/31/2011
100 Exchange St.
Intercontinental Fund IV F/K/A Cap Hill Prop
Approval Date: 1/16/2004
Assessed Valuation: $107,237,400
Actual Tax Prior to TSA: $1,888,763
2013 True Tax: $2,910,464
2013 Stabilized Tax Payment: $1,086,829
Tax Status: Current
End Date of Agreement: 12/31/2023
5 Avenue of the Arts
Masonic Temple - RP Providence Owner LLC
Approval Date: 7/15/2003
Assessed Valuation: $45,974,100
Actual Tax Prior to TSA: $79,072
2013 True Tax: $1,689,548
2013 Stabilized Tax Payment: $215,843
Tax Status: Current
End Date of Agreement: 12/31/2025
532 Kinsley Ave.
Monahasset Mills LLC
Approval Date: 11/22/2002
Assessed Valuation: $10,857,600
Actual Tax Prior to TSA: N/A
2013 True Tax: N/A
2013 Stabilized Tax Payment: $12,836
Tax Status: Credit
End Date of Agreement: 12/31/2017
210 Westminster St.
Harrisburg Assoc. LLC and Lerner Assoc. LLC
Approval Date: 11/8/2002
Assessed Valuation: $1,188,300
Actual Tax Prior to TSA: $19,404
2013 True Tax: $43,670
2013 Stabilized Tax Payment: $6,349
Tax Status: Current
End Date of Agreement: 12/31/2016
220 Westminster St.
Harrisburg Assoc. LLC and Lerner Assoc. LLC
Approval Date: 11/8/2002
Assessed Valuation: $2,004,800
Actual Tax Prior to TSA: $10,302
2013 True Tax: $73,676
2013 Stabilized Tax Payment: $10,302
Tax Status: Current
End Date of Agreement: 12/31/2016
100 Fountain St.
Steelwood (Palmer Building) (LAF Realty LLC Inc.)
Approval Date: 4/25/2002
Assessed Valuation: $503,300
Actual Tax Prior to TSA: $48,935
2013 True Tax: $18,496
2013 Stabilized Tax Payment: $22,970
Tax Status: Past Due
End Date of Agreement: 12/31/2016
77 Reservoir Ave.
Mashpaug Associates LLC
Approval Date: 11/9/2001
Assessed Valuation: $6,953,300
Actual Tax Prior to TSA: $113,538
2013 True Tax: $255,534
2013 Stabilized Tax Payment: $108,829
Tax Status: Current
End Date of Agreement: 12/31/2015
