Critics Question Tax Breaks Given to Providence Properties
Monday, April 14, 2014
Kate Nagle, GoLocal Contributor
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The Biltmore Hotel was one of six delinquent TSAs in Providence as of January 31, 2014.
Scrutiny over tax stabilization agreements in the City of Providence is heating up, with one City Council member calling for a freeze on TSAs until a full review is done.
"There's a lot of information we should be paying into attention to....we don't have anyone in the city who's monitoring them. It's a disservice to the taxpayer," said City Council member Sabina Matos. "So I put in a resolution last week asking for the city council to call for a moratorium, to take no new obligations until we fully review the process. I'm not against TSAs, but we don't have a clear process."
At the end of January, City Auditor Matt Clarkin issued a review of tax stabilization agreements at the request of the City Council, reporting that the 36 current TSAs in Providence had a total assessed valuation of $429.4 million at end of 2012, and paid $5.2 million in taxes in 2013.
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SLIDES: See Current Providence Tax Stabilizations BELOW
"The residents of Providence need to be having a conversation about this. I don't think people fully understand the level of property tax breaks that have been given out over the years," said John Jacobsonn, local real estate professional, entrepreneur and RISD professor. "Everyone points fingers at nonprofits and their tax exempt status, but these [TSA] deals amount to over a hundred of million of dollars in taxpayer money over the years."
While pending TSA projects are currently awaiting approval, Jan Brodie with the I-195 Commission spoke to the importance of TSAs in attracting development to the city.
"We've had a couple of information sessions, I've taken calls from interested parties. Without exception, I'm asked what kind of incentives are there -- are there tax stabilizations," said Brodie, Executive Director of the Commission.
Brodie continued, "It's as much important as the taxes be in proportion to income levels -- rent from office, housing -- that proportion part is critical, but so is predictability. And there is a gap, and it needs to come from somewhere. Developers and interested parties to come and understand its a partnership, but everyone got to give something -- the the state, the owners, the developers. There are no freebies."
Closer Examination, Oversight
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Providence Internal Auditor Matt Clarkin provided the following graphic as to how TSAs are currently overseen.
In his report, Clarkin noted, "TSAs when used judiciously and wisely are an important tool for the city to grow its economic base," adding that the "city should have a vision on what type of projects it prefers or will consider as well as a frame of how an agreement should be structured. At the same time, the city should remain flexible enough to respond to any opportunity that might arise."
Clarkin however added that of the process at present, "Currently, no one person is responsible for the compliance monitoring of the TSAs," adding that the "Director of Planning should be responsible for the task of confirming compliance."
Of the 36 properties, six were listed as delinquencies as of January 31st including the Bitlmore Hotel -- and for the affordable housing TSAs, under the category of "20% Rentals Below Market Value," Clarkin reported that "compliance is unknown at this time."
Real estate investor and broker Ric Santurri with First Realty offered his perspective on oversight of the tax agreements.
"TSAs do have an important role in helping developers re-use buildings, and helping cities change and grow," said Santurri. "However, in a city like Providence, where so much of the property is tax exempt, there is tremendous pressures on full paying taxpayers that their interests have to be considered and protected when evaluating whether a for profit entity gets a virtual free ride on contributing their fair share of property taxes for a decade or more."
Santurri continued, "There should be a vetting committee for granting TSAs and each TSA should be evaluated periodically for compliance with all clauses in the TSA, with the reports posted for taxpayer review. If I as a full boat paying taxpayer am forced to subsidize these for profit ventures with my tax dollars, I should at least get full transparency. Providence taxpayers pay 3% higher taxes because of the existing TSAs ($10 million in lost tax revenue yearly from existing TSAs on a $330 million tax levy)."
Looking Ahead
Jacobson noted what he saw as problematic as new TSAs are being considered, in light of the financial status of the current agreements.
"One of the most shocking things is that there is a portion of these TSAs that negotiated a 5 year extension on their 10 year TSAs behind the backs of City officials with the Statehouse. These deals will finally expire in 2016. It amounted to a bailout for these properties that cost the taxpayers of Providence over 11 million dollars at a time when the City was in a financial tailspin," said Jacobson. "It is not clear how these developments are going to absorb the property taxes into their business models in 2016 and some are seeking yet more extensions. We are talking over $200 million in commercial real estate. If these properties start to fold, the financial implications for the City and State are very serious. It calls into question, the effectiveness of how these TSAs were structured."
"To put things into perspective, according to information provided by [Clarkin], Rising Sun Mills pays only $80,535 of its $615,559 tax bill and it expires in 2016. Monahasset Mills is paying only $12,836 of its $396,300 tax bill and its TSA expires in 2016. Peerless Lofts pays $33,407 of its $438,599 and it too expires in 2016. These are just some examples," Jacobson continued. "These types of increases are difficult for investors to adjust to and will effect the people that occupy these buildings with increased fees and rents. The money has to come from somewhere. It would be unwise for the City to give these developments yet another extension as the City needs the money and enough is enough. It is a tough situation which could have been avoided by better oversight and structuring of the TSAs."
Councilwoman Matos noted that her resolution is not intended to shelve TSAs altogether, but to examine the manner in which they are chosen -- and awarded.
"I think that with all the development that's coming, we don't have a clear process, we're picking winners and losers," said Matos. "While we're granting these, our commercial tax rates are the highest -- the regular tax payer is making up the money those TSAs are not paying. We really aren't ready to take on more if we're not able to slow down what we've already granted."
Related Slideshow: Current Tax Stabilization Agreements in Providence
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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