New Tax Break Violations Alleged as Providence City Council Considers Proposals
Kate Nagle, GoLocal Contributor
New Tax Break Violations Alleged as Providence City Council Considers Proposals
In a letter sent to the City Council this week, real estate professional John Jacobson wrote, "I would like to point out the Kinsley Building that is going for a TSA [on] June 4. This is a project being developed by Cornish Associates. As I understand it, Cornish is also seeking another five year extension on 3 of their projects. This after already receiving 5 year extensions. This has cost the City millions of dollars. Why would the City Council grant yet another TSA to Cornish until all the previous TSAs had run out and they were paying taxes?
Jacobson added, "I was curious to look at one of these TSAs and got a copy of one of Cornish's TSAs and I was shocked. I have attached it here. It violated every stipulation of the agreement, in particularly with the building at 93 Eddy. In fact the construction did not even start at 93 Eddy until 8 years after the agreement was signed. It does not have affordable housing or meet any of the other terms of the agreement. How is this possible? How can the City Council even be considering granting Cornish another TSA for Kinsley with past violations in question?"
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTJacobson provided the council both with a copy of the TSA, as well as his notes on the sale of 93 Eddy to make his case.
In January 2014. Providence City Auditor Matt Clarkin submitted his "Analysis of Tax Stabilization Agreements in Providence" report which lists no violations of compliance with Cornish. Clarkin did speak however to lack of oversight of the affordable housing requirements.
"One of the findings in my report on the current TSAs was that there was not a process in place to determine if a recipient was in compliance with the affordable housing requirements," said Clarkin. "I cannot answer to the compliance of any recipients who have such requirements. And I do not know the answer to the timing of construction."
Cornish's lawyer declined to comment on the record on the matter.
Looking Back, Looking Ahead
Clarkin noted that the city had recently revoked the TSA for the RW brewery location and is in the process of revoking the TSA on 50 Agnes.
"The kind of TSAs the City has been granting are not the kind that helps smooth out the lack of income during construction and leasing and to provide predictable costs for financing. They are creating an actual subsidy to offset the lack of higher rents that the developers need to make their business models work," wrote Jacobson in his letter to the Council. "This is very dangerous because it involves speculation and City government should not be offsetting speculative risk in the private sector especially when the City has continually raised taxes over the years."
"It makes me very nervous to hear private developers say that they need city money so they can match the rents in Boston. Providence is not Boston and our economy or real estate market looks nothing like it," Jacobson continued. "Will it in 10 years? I am not sure. That is risk that businesses take, not governments.
Of the 93 Eddy property, Jacobson noted, "They should be paying about $30,000 in taxes and [it] pays nothing. Cornish as of this summer has received 9 million in tax relief and is now going for more."
City Councilman David Salvatore, who heads up the Ways and Means Committee, noted that compliance would be a major focus moving forward.
"The committee diligently examined current monitoring procedures relative to tax stabilization agreements. The committee anticipates issuing a report in the near future, which will include findings and recommendations," said Salvatore.
Councilman Sam Zurier offered his perspective on the increased scutiny -- and need -- for tax breaks.
"The hearings in the Ways and Means Committee earlier this year indicated historical gaps in the development and implementation of tax stabilization agreements. The Committee is preparing a reported with analysis and recommended improvements, " said Zurier.
"In the meantime, the administration has begun incorporating some of the recommendations that came out of the hearing even as the report is being prepared. I think all of us are more aware of the issues today than we were last December. More recently we received a report from the Economic Development Task Force describing the important role that tax stabilizations can play in economic development; therefore, I believe our task will be to improve the TSA process to minimize the identified problems and maximize the benefits."
Change in Protocol?
"Cornish just submitted a compliance plan with the [Kinsley Building] TSA proposal, said Aponte. "It basically states, 'We [Cornish] understand these are the terms, and here's where there's something to measure against.' I'd asked that they give us a document that shows that you've gone through, to memorialize the agreements of compliance. We will be requiring this of all TSAs moving forward."
Aponte noted that along with Zurier, they were addressing the "year 13 problem."
"[Zurier] wants to put a deed restriction for five years at that year 13 mark for TSAs," said Aponte. "If the buyer were sell to a tax exempt entity, then the city would be entitled to a portion of the profits." Aponte noted the proposal is in Ways and Means. "You get your 12 years, you get your shot, and that's it," said Aponte.
In the meantime, Jacobson said that he would "urge the City Council to think more deeply about the use of TSAs."
"They are a very powerful tool and capable of positive economic development if used properly. Providence needs TSA policy, enforcement and a way to measure their success and to keep them in check so they don't hurt existing property owners and businesses," said Jacobson, who provided his suggestions to the City Council.
"I have also included some policy ideas on TSAs. I am not an expert on this but these are the type of questions and ideas that I would be asking on the TSA issue to ensure their effectiveness," said Jacobson. "Providence's economy is at a very fragile state right now and the wrong decisions could be disastrous and stick with us for decades to come."
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
