Providence Tax Breaks Under Fire from City Auditor, Labor, and Progressives

Wednesday, January 10, 2018

Kate Nagle, GoLocal News Editor

Progressive organizers joined community and labor leaders on Tuesday to blast the proposed changes to the City of Providence’s Tax Stabilization Agreement (TSA) process, which proponents say would take politics out of awarding tax breaks, but opponents decry for taking out public input.

“We find the timing of this ordinance deeply distressing,” said Jenna Karlin of Unite Here, of the recently proposed Tax Stabilization Investment Act, intended to fast-track the tax-break process. “At a time when Trump and the Republican Party are making massive tax breaks for the wealthiest their top priority, for Providence to follow in their footsteps aligns Providence with an ideology and agenda that most residents of our city find repugnant and un-American. Providence deserves better.”

VIDEO: See Press Conference BELOW

The press conference held outside the 903 apartment building in Providence, one of 52 properties with a TSA, came on the heels of the city internal auditor’s recent report that Providence “continues to struggle at clearly defining and coordinating roles, responsibilities and processes” concerning the controversial tax breaks.

“Typically, in cities with strong Democratic leadership, low-income and affordable housing receive significant subsidies. Yet in Providence, far too many subsidies have gone to wealthy developers for luxury apartments and hotels who then cry poverty and say that they cannot afford to pay a fair wage to those building and maintaining the apartments and hotels,” said Karlin.

“The pain of housing policies geared towards the wealthy is being felt across our city.  As rents rise, family budgets are squeezed, and neighborhoods are disrupted and uprooted. Ordinary Providence homeowners and businesses also need relief. Providence also needs good schools, working street lights, clean playgrounds, and good paying jobs. For every tax dollar subsidized, all other taxpayers foot the bill—not the wealthiest luxury housing or hotel developers,” said Karlin.

More Below Video

Changes Proposed, Issues Raised

In November, the standardized property tax stabilization agreement — the Tax Stabilization Investment Act — was introduced by the Providence City Council, with the support of Providence Mayor Jorge Elorza.

“Creating a standardized TSA program will take the politics out of this economic development incentive and allow for more entrepreneurs throughout our City to benefit. This tool will help us build off of Providence’s strengths and assets to spur economic growth,” said Elorza. “By providing a predictable and standardized process, we are making it easier to invest while continuing to change the narrative about doing business in the capital city.”

The recently conducted review of TSAs by outgoing City Auditor Matt Clarkin found however that there is widespread noncompliance with the requirements for annual reporting by TSA recipients.

READ City Auditor Report Under “2017 Review of Tax Stabilization”

The report on the city’s 52 active TSAs — more than 50% of which were approved since 2014 — states there is not an easy or transparent way for the public to get information about the current agreements.

Questioning Public Input

In addition to the press conference, RI Jobs With Justice, RI Progressive Democrats, Teamsters Local 251, Unite Here Local 26, Union Local 330, and DARE joined business owners Aaron Jaehnig and Dwayne Keys, community activist James Monteiro, Ward 8 Candidate for City Council James Taylor, former Chairwoman of the Board of Licenses Johanna Harris, real estate investor John Jacobson, and community activist Kat Kerwin in sending the following to Council President David Salvatore.

“We, the undersigned, write in strong opposition to the proposed “Tax Stabilization Investment Act.” As currently written, this proposal would allow for big developers to receive a tax break whether it is needed or not, and without any public hearings. The decision would be made solely by the City’s appointed Tax Assessor with only token input from the elected City Council.

City residents would no longer have a say in who received these tax breaks. Politically connected developers could use their connections to make backroom deals for the subsidies, out of sight of the general public and their elected representatives. These subsidies would then be paid for by the very people that lost their right of input in the process. This proposed system would set us many steps back in the battle to close the door on our city’s troubles with ethics. We cannot afford to go back.”

Salvatore responded to critics’ concerns on Tuesday.

“A fundamental aspect of democracy is the ability of citizens to freely and openly voice their opinions, and the City Council encourages the robust discussion of issues and policies affecting our community,” said Salvatore. “That being said, I strongly support the Tax Stabilization Investment Act, which will create a predictable, transparent and fair administrative process for tax stabilization agreements, while eliminating the backroom deals that for too long have benefitted political insiders.”

“This legislation sends a clear message that you don’t have to ‘know a guy’ in Providence to get things done. By leveling the playing field and creating a more standardized process for development, this legislation makes it easier for developers to invest in all of our neighborhoods in Providence.”