Providence City Council to take legal action against Buff Chace's downtown tax breaks

PROVIDENCE – The City Council voted Tuesday to take legal action against tax breaks that may have been improperly given to 10 downtown buildings controlled by real estate developer Arnold "Buff" Chace.

The nearly unanimous vote officially hires Providence law firm Wistow, Sheehan & Loveley, of which noted attorney Max Wistow is part. Wistow previously represented the Rhode Island Commerce Corporation in litigation against failed videogame company 38 Studios.

"I’m looking forward to attempting to vacate the consent order," said Wistow. "The consent order is not only harmful to the city but completely unjustified and hurts Providence’s low-income residents."

Council, auditor took issue with agreement not including appropriate city officials

The decision comes after the council met last Thursday and weighed how to address the 8-Law treatment given to the properties in a 2021 consent decree. That year, City Solicitor Jeff Dana entered the city into the agreement without approval from the tax assessor, the Board of Tax Assessment and Review, the City Council or the Committee on Claims and Pending Suits.

Internal Auditor Gina Costa took issue with the lack of approvals in a memo drawn up late last year. Costa also questioned the legitimacy of the tax breaks, as 8-Law is intended to spur the development of low-income housing and Chace's properties are partly commercial. According to Costa, they also do not meet the Department of Housing and Urban Development's affordability standard.

Furthermore, the tax breaks were made retroactive, dating back to 2020, before the agreement existed.

Over the course of the 30-year deal, if it remains in place, Chace will have saved about $42.5 million in property taxes.

During an executive session that spanned several hours, the council was briefed by Dana, then the law firm on its findings and recommendations.

More: Buff Chace's tax breaks for 10 downtown buildings could be in jeopardy

Chace's firm responds, saying agreement was meant to create housing

Chace's real estate firm, Cornish Associates, released a lengthy statement on Tuesday night, stating it had been in talks with Mayor Brett Smiley's administration to amend the consent decree. Now, the risk of litigation has upended those negotiations.

"We regret that the actions of the City Council this evening preclude us from continuing those discussions, as it now appears that there exists the possibility of litigation," said the firm's spokeswoman, Patti Doyle. "We further regret that it also now appears as though the council is seeking to reverse a legal judgment designed to bolster additional, much-needed housing, which clearly will have a chilling effect on all such initiatives contemplated throughout Providence – slowing the development of housing across the city."

Chace and his companies own numerous buildings in downtown Providence, and are part owners of 75 Fountain Street, which houses The Providence Journal. That property is not included in the tax-break agreement.

Doyle said 25% of Cornish Associates' downtown units are dedicated to workforce and affordable housing.

Smiley, in a statement of his own, expressed skepticism of the council's vote.

More: Rhode Island house prices hit record highs in June. Is there any sign of a cooldown?

"I did not support the settlement the previous administration agreed to, and given the legal assessment of our counsel, my team entered negotiations with Mr. Chace to secure a better deal," the mayor said. "We provided the City Council a resolution that addresses the challenges of the old settlement and claws back 30% of the tax subsidy provided. The City Council has still not shared external counsel's proposal with the administration, which does not allow us to assess its likelihood of success."

This article originally appeared on The Providence Journal: Providence council votes to take legal action against Buff Chace deal