Out-of-State Developer Who Owes Subcontractors is Poised to Receive $10 Million in RI Subsidies

Saturday, February 23, 2019

 

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Governor Gina Raimondo heads the Commerce RI Board

The out-of-state developer who owes at least a million dollars to Rhode Island subcontractors has received approval for $4 million in Rhode Island state subsidies from Rhode Island Commerce board chaired by Governor Gina Raimondo.

Now, the State is poised to give the same developer — Vision Properties of Pennsylvania — an additional $6 million. The total in state subsidies is now $10 million.

The Commerce Board approved Vision’s request this past fall for phase two of the development on Canal Street in Providence. “The Sponsor [Vision] estimates the total cost of the project to be $59.2 million. The Sponsor is requesting Rebuild Rhode Island tax credits totaling $6.0 million gross (approximately $5.4 million net), and an exemption from sales and use taxes on construction with an estimated value of $1.295 million."

While the company was receiving millions in subsidies and tax breaks, company executives gave thousands to key Rhode Island elected officials -- and has failed to pay subcontractors on the first project. 

Earlier this week GoLocal reported that the new apartment tower — Edge College Hill at the bottom of College Hill in Providence  — had been awarded millions in subsidies from Commerce RI and millions in tax breaks from the City of Providence in a tax stabilization. But, according to multiple sources, the Pennsylvania-based developer, Vision Properties, owes millions of dollars to the subcontractors that built the $60 million project.

Raimondo praised the kickoff of the project last fall. “When this project is done, we’ll have hundreds of new apartments and shops anchoring this part of the city, connecting the East Side to the downtown,” said Raimondo said in a statement. “That means more construction jobs, permanent jobs, tax revenue and overall more economic activity in our capital city.”

The press release for the announcement is no longer on the Governor's website. 

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Phase 1 has been approved for $4 million in subsidies IMAGE: DBVW

Project Owes at Least a Million

Rhode Island subcontractor Jose Marcano said he has not received pay for his company's work in 2018. 

"I've gotten no pay since [we finished] in September," said Marcano, who said he started on the job in March 2018. "I hear they're looking at the [Vision] tax credit at Commerce, and I've been in touch with the city of Providence regarding their tax stabilization agreement."

Marcano said that in total, he is "owed $264,000" for his company -- JoMar Painting's -- work on the project. 

Now, another major subcontractor has come forward seeking nearly $800,000 in payments from Vision. Delta Mechanical has filed a Mechanics Lien in Rhode Island Superior Court against Vision.

"As upset as I am with [Vision], that $800,000, most of that is Delta money. Our payroll is $500,000-$600,000 a week of people we employ in the state of Rhode Island. So yes, it hurts even us — I’ve got a boss who wants his money. We had to do three months of work in the last three weeks [for them],” said Delta Mechanical’s CEO and President Bruce Bookbinder.

“The State of Rhode Island and City need to do something. It doesn’t mean anything that [Vision] is an out-of-towner, they took taxpayer money.  What's fair is fair, they need to settle up,” said Bookbinder.

Commerce RI’s Brian Hodge tells GoLocalProv, “We are aware of the ongoing situation and continue to look into it. As stated previously, the contractor has received no tax credits and will not receive any tax credits until there is a review and certification of the final project cost, which includes proof of payment.”

And, while Commerce continues to review both the compliance with the Phase 1 funding — $4 million. Vision Properties in still eligible to receive another $6 million for a second phase of the properties.

"I had 25 [workers] on the job. [Vision] is now renting the units, so why can't they pay us? It puts me behind now, between being able to get workers moving forward, and now the state's got the [education bond] work for the schools.  This hurts my ability to get a line of credit,” says Marcano.

"By law, if you do work on a piece of real estate property — and you’re not paid — you have a right for a lien on the work completed 200 days prior," Greg Mancini attorney for Marcano told GoLocal earlier this week. "The public policy — even without 'contract privity,' whatever the contract relationship, if you improved that property, you have that right."

Vision issued GoLocal the following statement on Friday, “The Edge At College Hill was a significant undertaking and we are proud that it could add to the fabric of the great City of Providence. Like any large-scale project, much of the final reconciliations occur well after the project is complete. We are wrapping up that process now.  We hope to finalize all such matters within the next 30 days or less.”

“As with similar sized projects, there may be disputes as to payment and/or performance. We are committed to resolve those matters fairly and promptly.  We remain extraordinarily grateful to all of our partners in the community that helped make this project a reality,” said the statement.

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Elorza received the most donations from Vision execs. The company received a TSA from Providence

Political Contributions

Vision Properties executives have made political donations to Raimondo and to key officials in the City of Providence.  The city awarded Vision’s project a tax stabilization for the Edge which saves the developers millions over the course of the course of the project.

Providence Mayor Jorge Elorza received five donations totaling $2500 from Vision’s Michael Sears and Mary Shaffer. Raimondo received a total of $2,000 — $1,000 from Sears and $1,000 from Shaffer.

Then-Providence City Council President David Salvatore ($150), Councilman John Igliozzi ($1,000) and Jo-Ann Ryan ($500) received donations from Shaffer.

"Rick [Shaffer] has been a first-class gentleman — he told me about his problem. He’s returned all my calls.  I think he ran into hard times. If he does the right thing and settles up with everyone he owes and he can prove [the second phase] is financed, I myself would have no issue working with him," said Bookbinder.

Updated Saturday 8:55 a.m.

 

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