UPDATED: Court Rules Providence Council’s Lawsuit Against Developer “Buff” Chace Can Move Forward
Monday, November 27, 2023
The lawsuit filed by the Providence City Council intended to unwind an agreement between the City of Providence and developer Arnold “Buff” Chace cleared a critical hurdle today.
Superior Court Judge Joseph McBurney granted the Council's motion to intervene on Monday.
The city’s internal auditor estimates that the city could recover as much as $42 million.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTAttorneys representing the Providence City Council filed a motion in August to intervene in Providence Superior Court in the case entitled Harrisburg Associates, LLC, et al. v. The City of Providence et al.
The motion is intended to be the first step in a challenge by the City Council to a 2021 Consent Order entered in that case.
Providence Mayor Smiley, who has opposed the City Council's lawsuit, said he would appeal McBurney's ruling.
"While we want to thank Judge McBurney for his careful consideration of this matter, we are concerned with the incredible impact this decision will have on Providence moving forward. My Administration honors agreements that are settled. This decision allows Wistow to attempt undoing an agreement with Cornish Associates and signals that settlements with the City may have no finality to them. After today, we plan on filing an appeal and are still committed to finding a way forward that doesn't intervene on a settled matter," said Smiley.
“We’re disappointed in today’s procedural ruling but it has no impact on the merits of the case. Cornish Associates entered into a legal and fully transparent consent decree with the prior Administration. We look forward to the Court’s full review of this matter,” said Patti Doyle, a spokesperson for Chace.
Internal Auditor's Investigation
A December 2022 report from Providence’s Internal Auditor, Gina Costa, identified several legal issues regarding the settlement of a consent decree without approval before the city council. The auditor recommended hiring outside counsel to review the matter. Through a resolution in March, the city council authorized the council president to engage outside attorneys.
Specifically, she identified that “This consent order was approved and implemented without the approval of the City Council, the Committee on Claims and Pending Suits or the Board of Tax Assessment and Review. The City Solicitor claims that his authority to enter into the Consent Order rests in Code of Ordinances Sec 2-99 (b) (4). This section does allow the Solicitor to settle. However, that settlement authority requires the city Tax Assessor's consent. My research has been unable to identify any such consent from the Tax Assessor at the time the Consent Order was signed, but a response from the Solicitor is pending."
In addition, Costa found the leases that are being used to justify restricted "low-income" units includes students with zero income level. Housing and Urban Development (HUD) does not include students as eligible for qualification in other HUD-approved properties.
Further, Costa unveiled, "These properties are mixed-use and contain both commercial and residential space. Under this Consent Order the entire property, including commercial space such as restaurants and stores, is now being taxed the same as the residential - 8% of the previous year's gross income. The Tax Assessor is empowered to separate the commercial from the residential, however, the Consent Order does not allow for that separation."
And, "There is retroactivity to abate taxes to July 24, 2020, even though there was no restricted covenant in place at that time, as required. Approximately $626,000 has been abated for six of the ten properties. The Assessor did ask for the HUD forms that would confirm the qualification of "affordability" after the Consent Order was entered with the Court but was instead simply provided with the leases themselves."
According to Costa, there are other questions about income qualifications and proper reporting.
Updated 11/27/2023 at 8:45 PM
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