Providence Hits Port Business With $1 Million Tax Hike in One Year

Friday, February 26, 2016

Russ Moore, GoLocalProv Contributor

Last July, officials at Teppco, a propane terminal located in the ProvPort property, were shocked. The City of Providence had issued them a tax bill that was roughly $1 million dollars more expensive than the previous year -- an increase of more than 400%.

"This whole thing is really stranger than fiction," said Michael Marino, a Providence tax lawyer who represents Teppco.

Teppco is owned by Enterprise Products, located in Houston Texas. When the company received last year's bill, they hired Marino, their local tax attorney, to resolve the mater. Enterprise Products referred calls from GoLocal to Marino.

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Massive Tax Hike

The million dollar tax hike was frustrating enough. But what's frustrated Teppco officials are even more frustrated by the lack of communication. The city, Marino said, has ducked correspondence with Teppco for months.

"After about 12 informal requests for information from the city's assessor's office for information on this issue, I was forced to make a formal public records request with the city," said Marino on Wednesday. "Until this morning, the tax assessor's office has outright ignored every request for information that we have made."

Emily Crowell, a spokeswoman for the City of Providence, declined to comment on the issue, because Teppco is currently appealing the assessment and the city doesn't comment during the appeal process, she said.

Searching For Answers

Marino got his first correspondence from the city on the same day that his open records request was due. A couple weeks ago, he attended a hearing on the issue scheduled. But the city assessor, David Quinn, wasn't present. The city tabled the issue.

"My personal belief is I don't believe they would have provided me with anything if it were not for the specter of an open records request hanging over their heads," Marino said.
ProvPort is a tax exempt organization, but the tenants are not. The tenants of ProvPort, like Teppco, pay real estate tax and tangible property taxes.

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What's The Rationale?

This isn't the first time that the company has seen a significant spike in its tax bill. In 2006, the company saw it's assessment jump from $485,510 in 2005 to $3,323,272 in 2006.

The company then approached the city to understand the increase. The bulk of the increase, they learned, was due to the lack of an assessment of the massive tank located near the center of the property. The city failed to include that in their assessment during the prior years. The city then assessed the tank and included it in the property's real estate value.
(The tank in question has been located on the property since 1972.)

Teppco's tax bills remained about the same since 2006. There were modest increases due to changes in the tax rate as well as assessment values. Then last year, there was an inexplicably large hike in an assessment--in a non-revaluation year.

A Confusing Situation

"What occurred last year was the city created a third tax, and a second tangible tax, without explaining what it was and what it was for," said Marino.

Teppco has paid two taxes -- tangible and real estate -- for decades. This year, for some reason, the city sent Teppco two tangible bills, plus its real estate bill.

Marino is perplexed.

First off, Marino argues, the city should be taxing the tank at real estate value property rates. Real value rates are taxed at a rate of $36.75 per $1,000 of value. Tangible, property is taxed at a rate of $55.80 per $1,000 of value. Teppco has hired their own appraiser who validated Marino's argument.

"The Uniform Standards of Professional Appraisal Practice classifies personal (tangible) property as identifiable portable and tangible objects which are considered by the public as being 'personal', e.g., furnishings, artwork, antiques, gems and jewelry, collectibles, machinery, and equipment; all property that is not classified as real estate," wrote Jon A. Deluzio, a Rhode Island certified appraiser who is also certified in numerous other states and has offices in New York City and Florida, in a report on the issue.

"The tank which is subject to the assessment...is NOT (sic) tangible property."

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The Worst Conduct

The fact that the tank is now considered tangible property has Marino scratching his head.

"The fact that they have classified it as tangible is bad conduct. But the fact that they're taxing it twice is the worst conduct," said Marino.

But Marino is also frustrated with the value of the assessment. There's no possible way that the tank is worth $17,349,500, he said. The tank has been on the property since 1972, with almost no improvements made since the.

"It's a number the city has pulled completely out of thin air," said Marino.

Marino made it clear that the company will fight this bill all the way to court, if need be.

A City in Need of Money

All this takes place inside of a city that could use an extra $1 million. The city must pay down a cumulative $13.4 million deficit incurred over several years. The city closed the last financial year with roughly a $5 million deficit.

If Teppco is correct, it will put more financial pressure on the city. All those facts aren't lost on taxpayer advocates.

Providence officials need to do far more to get spending under control," said Monique Chartier, the spokeswoman for The Rhode Island Taxpayers, a good government group that advocates on behalf of taxpayers, in an email.

"They apparently find it easier to come up with ever more edgy ("innovative"?), meaning, questionable, ways of wringing revenue..This will ultimately only serve to shrink the tax base by lowering values and reducing rather than growing the number of people and companies who can afford to own property in the city."

Providence Hits Port Business With $1 Million Tax Hike in One Year

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