East Providence mayor, council split over tax break for affordable housing project

EAST PROVIDENCE − A three-building project of 144 income-restricted housing units in East Providence will receive no help from the city after three of five City Council members declared the $40,000-a-year tax reduction was too much for the city to afford.

The 3-to-2 council majority voted against the proposed tax-stabilization agreement, citing what they see as the project's downsides: more people in the community, more children in the schools and the unfairness of tax breaks for a developer of income-restricted housing at a time when businesses large and small suffer from lower revenue because of the Washington Bridge disaster.

The "Center City" project on Taunton Avenue, a collaboration between ONE Neighborhood Builders, Foster Forward, Crossroads Rhode Island and Family Services of Rhode Island, is still moving forward as the developers try to figure out how to either raise another $400,000 or reduce costs.

The current timeline for the project is for construction to start early in 2025 and finish by September 2026. The groups are waiting on funding decisions by RIHousing.

A surprising flip-flop

ONE Neighborhood Builders housing development director, Michelle Bleau, said in an interview that one way to make up the difference in cost is to reduce the cost of materials in the building, such as switching the material for kitchen countertops to a cheaper alternative.

Mayor Roberto DaSilva said in an interview that he was disappointed the agreement was killed because he met with City Council members before the meeting and had assurances that it would be supported.

"I was really surprised by the flip-flop," he said.

Before it was downsized: Nonprofits ask state to fund 160-unit affordable housing project in East Providence

DaSilva said it seemed like many of the councilors pay lip service to the need for income-restricted housing.

"Actions speak louder than words," he said.

Council members say new students mean city loses money

During the meeting on April 2, Councilwoman Anna Sousa took issue with the prospect of new students entering the East Providence school system because "we're only losing money with our increased operation."

Council Vice President Frank Rego also complained about the potential cost of adding students to the school district.

Councilors Rick Lawson, Sousa and Rego voted against the proposed tax stabilization agreement. Lawson made the motion to kill the agreement.

Units needed to help former foster children

Foster Forward would have access to 20 units when the buildings open. Those are desperately needed, because the people in the program may have vouchers to pay rent, but rents in Rhode Island have increased so much that few if any landlords are willing to take the vouchers because they can make more money renting to someone on the open market.

Report: RI has enough apartments for only half of its lowest-income residents, report warns

Before the pandemic, they had an easier time finding units because what the vouchers paid, and what the open market demanded, was close to the same amount. Foster Forward purchased three triple-deckers and has three units set aside in another ONE Neighborhood Builders development in East Providence for their clients, Foster Forward Executive Director Lisa Guillette said.

Annually, Foster Forward needs to find 100 to 110 units to house people for all its programs, Guillette said.

DaSilva said he sees the need for the units designated for Foster Forward.

"I don't know how anyone with a heart can vote against that," he said.

How much will the project be taxed?

While commercial and residential properties are normally taxed at a town's respective property tax rates ($14.76/$1,000 in valuation for residential; $23.03/$1,000 in valuation for commercial), the Center City project will be taxed at 8% of its gross rental income, known as the "8-law." The law allows projects with income-restricted housing to pay the lower tax rate.

Once people move into the apartments, the property tax bill will be around $170,000 a year under the 8-Law.

The city's tax stabilization agreement ordinance was intended for the type of project ONE Neighborhood Builders brought, as it would revitalize blighted properties and encourage income-restricted housing, DaSilva said.

"This thing, it's a scar on Taunton Avenue, not an attractive building, and two vacant lots that look like they've been blown up, and it's just terrible," he said. "You look at the opportunity, where there's a $65-million investment to beautify, to bring in people who historically have been low- to moderate-income, working-class people, who tend to spend money within a short perimeter of where they live. Those people will go to local shops, bars, grocery stores, and spend their money here in the city. It's absolutely an economic multiplier."

Maximum parking: Zoning board killed daycare plans, reduced density

The East Providence Zoning Board wouldn't give the project relief from the city's parking requirements of one parking space for every one unit, which meant a planned daycare facility was eliminated and the number of units, originally 160, was reduced even though the project is on a bus line, Guillette said.

The developer had asked to reduce the parking requirement to 0.75 spaces per unit.

Small businesses owners in more need than low-income residents

East Providence businesses are in more need than low-income residents trying to find somewhere to live, Sousa said.

"It'd be nice to tell the business owners as well, you don't have to pay the last quarter of your taxes because we understand that your revenue is down 40%," Sousa said.

House prices across the state are up nearly 50% while rents have been on a similar trajectory.

Lawson, who repeatedly interrupted ONE Neighborhood Builders President Jennifer Hawkins, said "small business owners are hurting" and that adding 280 people to the city would be a drain on public services, from the schools to the Fire Department to the Police Department.

"I don't think it's appropriate for municipals to be the one to fund it," he said.

Guillette said it seemed ironic that the City Council members don't want to bring more people into the city when small businesses are suffering because they've been cut off from the influx of customers from Providence coming across the bridge.

Who does get tax breaks in East Providence?

While City Council members decried the proposed theoretical loss of $40,000 for 10 years to a "developer," the city also has tax breaks for homeowners, as well as veterans, unmarried widows of veterans, Gold Star parents, blind people and anyone 65 and older.

Homeowners also get a 14% decrease for one to three family homes with a homestead exemption, which was not mentioned by City Council members.

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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.

This article originally appeared on The Providence Journal: East Providence council kills $40K-a-year tax break for affordable housing