Providence - Top 25 Corporate Tax Breaks
Thursday, April 21, 2011
More than 80 properties owned by the companies benefited from the breaks—ranging from condo developments and an equity firm to a nonprofit arts consortium and a bakery. In all, the properties are worth $196 million. Had those companies not received reductions, they would be paying approximately $2.4 million more total in taxes, according to city data.
Proponents say the purpose of the tax breaks—formally known as tax stabilizations—is to spur economic development and help create jobs. But some city councilmen question whether the city is really getting enough of a bang for its buck.
‘Absolutely essential’ to economic development
One of the beneficiaries of the tax breaks, Joe Paolino, told GoLocalProv that the tax breaks are “absolutely essential” to economic development. “I don’t think a lot of development would have happened without them,” said Paolino, who is also a former Providence mayor.
At least one of Paolino’s properties is listed in the top 25 list compiled by GoLocalProv—First Reservoir, which is a redevelopment of an old mill building on Reservoir Avenue. Without a tax break, Paolino and his other partners in the project would have been paying about $46,000 in taxes on the $2.1 million property. Instead, they owe about $26,000 for 2010. (One of his former properties, The 903, also received a tax break, but the city could not provide the exact amount in time for publication.)
Critics of the tax breaks may object to the loss in revenue for the city, but Paolino said the city would be receiving far less than $26,000 in taxes had the redevelopment never occurred. And that redevelopment, he said, depended on the tax break. “All the stabilization does is manage how big the increase [in taxes] would be,” Paolino said. “The city is still getting more taxes than they would be.”
Companies have to show benefit to city
The rules for reducing taxes are spelled out in detail in a city ordinance. Reductions can be granted in order to bring a new business into the city, remodel a building so that its value increases, or convert a former commercial or industrial building into a residential development.
Property owners have to apply for the breaks through the city assessor’s office—and the City Council ultimately approves them. The council can grant a reduced tax up to 10 years—up to a certain amount each year.
Councilman Kevin Jackson agreed that the tax reductions are necessary for economic development. He said some companies shop around for the best tax deals they can get. Without an economic carrot, Providence simply couldn't get companies to move to the city. “They’re like free agent baseball players out looking for the best deal,” Jackson said.
Are companies living up to their end of the bargain?
But, he also criticized companies for not always living up to their end of the bargain. For example, he said that as part of its tax treaty with the city, GTECH had promised to set up two computer labs in each of the districts in the city. So far, he said GTECH is behind schedule. “You’re getting millions of dollars in tax breaks, you can afford to set up 30 computer labs,” Jackson said.
A spokesperson for GTECH did not return several requests for comment. Solomon said that to the best of his knowledge, GTECH had been working hard to set up the labs.
Others say that at a time when the city is facing a serious financial emergency—with a $110 million deficit forecasted for next year—it may be time to scrutinize the tax deals. “Any receipts coming into the city, we should be looking at,” said Councilman David Salvatore. “If those receipts could be coming into this year’s budget deficit, we should be looking at it closely. Everything is on the table.”
Who’s getting the tax breaks?
Cannoli, LLC, is owned by Lisa Costantino, the sister-in-law of former mayoral candidate Steven Costantino, and her sister, Julie Zito. The property, which is located on Royal Little Drive on the North End, is set to go from cannolis to cannabis—now that the Health Department has approved an application for a medical marijuana compassion center to open at the location. (Steven Costantino also happens to be the new Secretary for Health and Human Services.)
Wildcat is an equity firm located on Elmwood Avenue on the site of the former Hope Brewery.
Peerless Keen Partners lists prominent Providence developer Buff Chace as its registered agent on the Secretary of State’s business database. Known as a booster for revitalizing Downcity Providence, he’s also locked horns on more than one occasion with another man many credit with reviving the city—former Mayor Buddy Cianci. Chace has remained active in politics, donating more than $8,000 to a number of candidates in the last election cycle, including David Cicilline and Angel Taveras.
Intercontinental Fund IV received the largest amount of tax breaks for 2010. Rhode Islanders might better recognize this company by the property it owns in Providence, the Waterplace condominium. The company, which is based in Boston, is a $200 million closed-ended commingled fund, according to its Web site. It owns properties throughout New England.
The Mercantile Block was purchased by AS220 in 2008. The building—the third acquired by AS220—is located on Washington Street and abuts the Dreyfus. The building is used for artist studios and houses “one-of-a-kind” local retail and commercial offices.
Conley’s Wharf—billed as a special function and conference center, this redevelopment was an attempt by Patrick Conley to give Allens Avenue a reputation for more than just adult entertainment venues. But the effort has hit some bumps in the road—last year, the business faced foreclosure.
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