Providence mayor tried to privately change controversial Buff Chace tax breaks. What he proposed.

PROVIDENCE – Less than 24 hours before the City Council met to weigh legal action against controversial tax breaks for wealthy developer Arnold "Buff" Chace, Mayor Brett Smiley's administration tried to propose its own amendments to the tax agreement.

Documents obtained by The Providence Journal show that the mayor attempted to privately negotiate changes to the arrangement that questionably lowered taxes for 10 downtown buildings under Chace's control.

On Friday, the city provided The Journal with several documents, including one labeled "Amended consent order for consideration," which changed the terms of the 2021 agreement the city entered into with Chace through City Solicitor Jeff Dana. That agreement allowed Chace to receive special tax breaks under 8-law, a measure intended to promote low-income housing. Over the course of 30 years, Chace would have saved about $42.5 million in taxes on those downtown properties.

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

New agreement would have Chace paying back gains

The amended agreement would have allowed Chace to keep his gains until 2024, at which point he would have begun paying back those gains with annual $50,000 payments through 2049. The 27 years of payments would amount to less than $1.4 million. It was not immediately clear how much Chace has already saved in taxes. Furthermore, the document makes no mention of any interest that would be due on those payments.

Earlier this week, GoLocal reported that the administration had refused to provide the amended agreement.

Proposed changes to tax deal were sent to City Council less than 24 hours before crucial vote

Smiley's spokesman, Josh Estrella, confirmed that City Council President Rachel Miller received the amendments around 8 p.m. on July 24, the night before the council was to vote to take legal action against the agreement by hiring local law firm Wistow, Sheehan & Loveley. (Max Wistow's portfolio includes high-profile cases such as The Station nightclub fire and the state's case against failed videogame maker 38 Studios.)

The changes were sent in an email from the mayor's deputy director of intergovernmental affairs, Michael Napolitano.

More: Providence City Council hires law firm to review tax breaks for 'Buff' Chace buildings downtown

"In summary, we are estimating that the difference in tax liability for these properties between no consent order and the original consent order would be roughly $26-31 million (during the 30-year period), while the difference between no consent order and the amended consent order would be between $17-22 million (during the 30 year period)," the email read.

The Journal has asked the city for information on how that math was done, as it does not agree with the estimated $42.5 million that the council said Chace would have saved over three decades.

"As you know, the administration believes that this agreement will bring immediate value to the city without risking long-term litigation and unclear outcomes for years to come," Napolitano wrote.

Council president: New agreement 'just doesn't do it for us'

Miller criticized the proposed changes to the agreement on Friday in a call with The Journal. She said Chace has already saved a total of $1.3 million in commercial taxes, and that the $50,000 reimbursement payments that would have taken effect under the mayor's proposal weren't sufficient.

"I appreciate that there was money on the table, but that doesn’t go far enough when we’re talking about having to increase taxes this year to keep the city on [firm] financial footing," Miller said. "That just doesn’t do it for us."

Miller said she "can't speculate on if there was really more room to negotiate."

Tax breaks were used as settlement for lawsuit against city

In a July 19 letter shared with The Journal – the recipient of which was redacted – Smiley said the tax breaks for Chace were the result of a 2020 lawsuit against the city "challenging certain tax assessments made on properties" Chace owned.

Smiley said then-Mayor Jorge Elorza and City Council leadership told Dana to enter into the agreement in order to resolve the lawsuit. When Miller and Smiley came into leadership positions this year, Smiley said they agreed that the arrangement "did not reflect our values, and asked the law department to attempt to renegotiate."

The mayor attached to his letter a draft ordinance to change how 8-law is implemented. He contended it should not be used in situations such as Chace's.

Miller said her office and the solicitor's office worked on the draft and hope to have an ordinance introduced in September. She described the law as too general, having been passed near the end of the 20th century, when the state was looking for new tools to generate low-income housing. Miller said the point of any new ordinance should be clearly defining when 8-law should be used and how to better verify income-restricted units.

Miller said the council also intends to have a conversation with the General Assembly about updating the law.

This article originally appeared on The Providence Journal: Providence Mayor Smiley tried to change Buff Chace tax deal