Donna Perry: Superman Building Tax Credit Not So Super

Thursday, April 04, 2013

 

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Providence Mayor Angel Taveras has, up to now, carved out a generally favorable image as a municipal leader who looks out for the taxpayer as he has had to confront numerous difficult fiscal challenges since taking office. Despite his ultimate backing away from holding his predecessor fully accountable for leaving the city in a budgetary shamble that amounted to a $100 million-plus deficit, Taveras has been deservedly credited with diligent oversight of the painstaking process to repair the capital city’s finances. But the affable, articulate Mayor should recognize his notable successes up to now have not transformed him from mere mortal to “Superman”, and his fall from high standing with taxpayers could occur if he attempts to leap a certain iconic building in a single bound in the days to come.

In recent weeks, the revelation that his Administration favors the awarding of a huge historic tax credit package to the owner of the almost vacant Superman building represents a politically dangerous crossroads for the Mayor. The tax credit proposal for High Rock Development—pegged at $48 million—or higher---should be viewed as a supersized red flag to city and statewide taxpayers. It’s notable that last week, as early news reports began to shed light on the players and the strategy behind the campaign to win the tax credits, the prominently staged Taveras speech on his Economic Development Action Plan suddenly had no mention of the Superman building redevelopment issue.

There’s no question the speech offered up several strong, smart initiatives that could translate into favorable economic development activity and several seemed to be long overdue, including updating a comprehensive inventory of all vacant properties, and implementing a freeze on commercial property tax rates to spur development. But the ghost of 38 Studios does—and should--- haunt taxpayers as they hear a new round of promises of an improved Providence tied to a publicly subsidized tax credit package.

The proposal sprung from the fact that the Chafee Administration plans to open up already existing historic tax credits that have gone untapped, at least in the amount of $25 million. But the developer desires to acquire a tax credit package roughly double that, to convert the historic 428-foot skyscraper into 21st century residential use. Though it may not be a perfect analogy to the 38 Studios debacle, it’s the overly cozy relationships that have been revealed that gives taxpayers an unsettling sense that this is a done deal, whether or not it’s prudent. Nick Hemond, the lead lobbyist for High Rock Development, is a prominent player with entrenched political ties to the very officials who will ultimately decide on the tax credits. He’s worked in the campaign apparatus of Speaker Fox, and has secondary firms and partners with intertwined relationships to Tavares himself, one as an advisor to the Mayor on the 195 land development, and another, who serves as finance chairman for Taveras’ likely campaign for Governor.

It’s not unexpected that the capital city Mayor, with statewide office ambitions, would want to find strategies that will help Providence appear to be a city on the move again. A city choked by a glut of abandoned buildings is not the image to propel one into higher office. But government fiscal adviser Gary Sasse, who has seasoned expertise with the finances of the city, cautions that the Superman tax credits proposal appears headed to unfold as the next chapter in the state’s long running narrative of economic development by crony capitalism and “insider deals”, a misguided approach that has not carved out a winning track record for the state. Sasse is right, and one can only hope that the Taveras Administration, as well as legislative leaders, will recognize the “ghost of 38 Studios” is a formidable foe to confront, even for Superman.

Donna Perry is Executive Director of the RI Taxpayers organization, www.ritaxpayers.com.

 

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