June 8, 2014 Ward Letter

This week’s letter discusses campaign finance reform, a proposal to shift the tax burden between landlords and homeowners, the River Road meeting and tax stabilization agreements.

At last Thursday night’s meeting, the City Council gave final passage to an ordinance I introduced to require disclosure and then regulation of campaign contributions by companies doing business with the City of Providence.  Currently, the City’s government enters into contracts worth tens of millions of dollars every year.  In many cities and states, there have been scandals involving government contractors and government officials, as compiled in this study by Public Citizen.  If signed by the Mayor, the Providence Ordinance will be the first of its kind in our State, establishing a “best practice” for other Rhode Island cities and towns and for the State itself.  In approving this legislation, the Providence City Council made a clear statement that our City is open to do business with the best companies around, awarding contracts exclusively on the basis of the quality of their work without regard to the quantity of their campaign contributions.

 Also at its June 5 meeting, the City Council deferred consideration of a measure to adjust the relative property tax rates of owner-occupied and rental property.  As described in my June 1 letter, the measure, which was introduced on May 1, seeks to adjust the proportion between these two tax rates in 2015-16.  The normal procedure for this type of legislation is to refer it to committee for vetting, and then for the City Council to review it for passage at two separate meetings.  In this case, the City Council invoked a rarely-used rule to pass the ordinance for the first time prior to referring it to committee.  I opposed this vote, because the measure does not take effect for more than a year, and it raises significant financial issues for taxpayers.  Last week, the Ways and Means Committee scheduled a public hearing to take place Monday, June 16 at 6:00 p.m. at City Hall.  This hearing will allow the public to offer its input on this measure.  Among other things, I am interested in learning (1) how the recent revaluation affected the tax burden and rental market, and (2) how this ordinance, if enacted, will affect tax rates and the rental market.

 On Thursday, June 12 at 6:00 p.m. at Nathan Bishop Middle School, we will have a neighborhood meeting to discuss possible plans for River Road.  I am hopeful this forum will provide a forum for us to consider all of the issues that the proposal raises.

In the past few weeks, the administration has forwarded a series of tax stabilization agreements for the City Council to review for approval.  Last Wednesday, the Ways and Means Committee approved one for $200 million of development at Dynamo House, a building on Point Street that formerly housed an electric power station.  When construction is completed, the building will house a nursing school, offices and graduate student housing.  Over its first 15 years, the project will generate approximately $5 million in taxes, and the development will increase property values and foster further development in the surrounding area.  It is possible that the property will then be transferred to tax-exempt owners, but the City persuaded the Committee that there are no other prospects for developing this parcel, and the economic activity generated from construction and neighboring development is preferable to the alternative.  Earlier this week, the Committee approved a stabilization agreement for the Kinsley Building, which included a new commitment from the developer at my request.  This agreement follows a template the administration currently uses under which the developer must refund to the City tax subsidies if the property is sold to a tax-exempt owner during the 10-year “stabilization period” of reduced taxes, but has no restrictions following the conclusion of that period.  In the case of the Kinsley Building, the developer has no plans for such a sale, but agreed to return to the City a portion of the sales price should such a sale take place.  Going forward, I introduced a draft ordinance for the Committee to review which would require compensation to the City of the entire tax subsidy should such a sale occur during the first ten years after the conclusion of the “stabilization period.”  It is not clear whether it is possible to incorporate this requirement into the negotiated agreements currently submitted for approval, but I will ask the City Council to approve this type of change to affect the template the City uses for future agreements.