December 15, 2008 Special City Council Meeting

 

CITY OF PROVIDENCE

RHODE ISLAND

CITY COUNCIL

JOURNAL OF PROCEEDINGS

 

 

No. 28 City Council Special Meeting, Monday, December 15, 2008, 6:00 o’clock P.M. (E.S.T)

 

PRESIDING

 

COUNCIL PRESIDENT

PETER S. MANCINI

 

ROLL CALL

 

PRESENT:              COUNCIL PRESIDENT MANCINI, COUNCILMEN APONTE, DELUCA, COUNCILWOMAN DIRUZZO, COUNCILMEN HASSETT, IGLIOZZI, JACKSON, LOMBARDI, NARDUCCI, SOLOMON, TEJADA, WOOD, COUNCILWOMAN YOUNG and COUNCILMAN YURDIN – 14.

 

ABSENT:              COUNCILMAN LUNA – 1.

 

              (SUBSEQUENTLY COUNCILMAN LUNA JOINS THE METING)

                                         

ALSO PRESENT:              Anna M. Stetson, City Clerk, Lori L. Hagen, Second Deputy City Clerk, Sheri A. Petronio, Assistant Clerk,  Adrienne G. Southgate, Deputy City Solicitor and` Fred Stolle, Senior Assistant City Solicitor.

 

 

INVOCATION

 

              The Invocation is given by COUNCILMAN CLIFFORD J. WOOD.

 

 

PLEDGE OF ALLEGIANCE TO THE FLAG

OF THE UNITED STATES OF AMERICA

 

              COUNCILMAN JOHN J. LOMBARDI Leads the Members of the City Council and the Assemblage in the Pledge of Allegiance to the Flag of the United States of America.

 

 

CALL FOR SPECIAL MEETING

 

COMMUNICATION FROM

COUNCIL PRESIDENT PETER S. MANCINI

 

              Request, filed with the City Clerk, December 11, 2008, Requesting a Special Meeting of the City Council to be Called on the 15th day of December, 2008 at 6:00 o’clock P.M., in the City Council Chamber, Third Floor, City Hall.

             

              Receive.

 

 

WARRANT FOR SPECIAL MEETING

 

              Warrant of the City Clerk to Vincent J. Berarducci, City Sergeant with Return Certification that he has notified each Member of the City Council of the Special Meeting Called for the 15th day of December, 2008 at 6:00 o’clock P.M., in the City Council Chamber, Third Floor, City Hall.

 

              Receive.

 

              COUNCILMAN LUNA JOINS THE MEETING.

 

 

REPORTS FROM COMMITTEE

 

COMMITTEE ON FINANCE

COUNCILMAN JOHN J. IGLIOZZI, Chairman

 

              Transmits the Following with Recommendation the Same be Severally Adopted, As Amended:

 

              An Ordinance to Adopt the City of Providence Promenade Center Redevelopment Project Plan and Tax Increment Financing Plan, As Amended. 

 

              Read and Passed the First Time, on Motion of COUNCILMAN HASSETT, seconded by COUNCILMAN DELUCA, by the following Roll Call Vote:

 

AYES:              COUNCIL PRESIDENT MANCINI, COUNCILMEN APONTE, COUNCILWOMAN DIRUZZO, COUNCILMEN HASSETT, IGLIOZZI, JACKSON, NARDUCCI, SOLOMON, TEJADA, WOOD and YURDIN – 11.

 

NAYES:              COUNCILMAN DELUCA, LOMBARDI, LUNA and COUNCILWOMAN YOUNG – 4.

 

ABSENT:              NONE.

 

              The Motion for Passage the First Time is Sustained.

 

              An Ordinance to Establish and Grant a Tax Stabilization Plan for Jacob Licht, Inc., on behalf of Tax Assessor’s Lots 5 and 16 of Plat 27, being designated the “Jacob Licht ALCO Project”, As Amended. 

 

              COUNCILMAN DELUCA:  Thank you Mr. President.  I would like to speak on this Tax Stabilization Plan.  First of all what I find lacking is the fiscal note that is required by ordinance to be attached to any such fiscal ordinance.  There needs to be a fiscal note attached to this ordinance detailing the financial impact of the entire term and there is no such fiscal note.  It will disqualify this body from acting although it wouldn’t be the first time we didn’t follow the Charter.  The other problem with this document is that there is no actual tax payment.  Part of this document should be how much exactly will the taxes be the first year, the second year up to the 20th year.  Also, the figures should be here at what rate this tax is going to be frozen for twenty years without any increases while you and I are getting an increase every year whether we’re here or not.  There is a technical lack of information here that’s necessary for this body to act on this and that’s the fiscal note and the actual tax appointment schedule.  Those are my objections.  I have one question for anybody that can answer it because it’s a new one to me that what we have for a twenty year period is that the residential components will be taxed at 8% of the designated length.  What are those designated lengths?  I don’t know.  So is it 8% of $25.00 a week.  Is it 8% of what?  It’s very ambiguous and there’s just not enough information here to give a twenty year Tax Stabilization Plan.  Thank you.

 

              COUNCILMAN HASSETT:  Mr. President, this is in response to Councilman DeLuca’s concerns.  There is a fiscal note that was presented in the Committee on Finance.  Why it’s not on the actual documents here.  I don’t know if the Clerk’s Office has that.

 

              ANNA M. STETSON:  I believe there is one Mr. Leader but there was a little bit of confusion with everything today and it’s not attached but I believe there is one.

 

              COUNCILMAN HASSETT:  Is it fair to say though that it’s in the record on the Committee on Finance.  It was read into the official record.  The fiscal note and that Mr. Miller representing the City of Providence stated that there is no encumbrance on the credit value of the city.

 

              ANNA M. STETSON:  I believe that is correct. 

 

              COUNCILMAN HASSETT:  Okay.  The second question I think which was some discussion about the affordable housing, the 8% is what’s charged as a part of the tax credits for affordable housing and the median income is established by Rhode Island Housing and that’s 8% of that.  It’s like all the CDC’s.  The housing groups in the city apply at 8% on affordable housing because it is subsidized.  So as a result of that Rhode Island Housing actually sets what the amount is and the 8% is then multiplied into that. 

 

              COUNCILMAN IGLIOZZI:  For additional information.  When these documents were presented to the Finance Committee they weren’t complete.  The Finance meeting was a four and a half hour meeting.  Much to the chagrin of my members we went line by line and there was several things in the document that are in now that you need to be aware of.  One is the clause dealing with the sale to a non-taxable.  That was put in at the finance meeting last Monday.  Like if you can sell to a non-taxable, not only do you get a tax stabilization but the tax stabilization goes away but now it’s off the tax roll.  So the idea is to keep some value into the city.  The second issue was we were concerned about having another Blue Cross deal and the problem with that was in the previous tax stabilization.  I don’t agree with the interpretation but they saw that there was a loophole in that previous one where you could relocate an existing business in the City of Providence and relocate it in that location.  Kind of how they go around it and that was one of the arguments is that they sold it to Blue Cross Blue Shield and the tax stabilizations although I know and most of my colleagues know, our intent in the spirit of that tax stabilization was not to allow relocation of existing businesses into that site.  I thought that we had good grounds but I guess how they kind of got around is that it said you can’t lease it or rent it.  So my concern was well we need to close up that loophole and so everybody understands it I’m going to say on the record here so this way if it comes up again and people say that’s not what the Council really thought.  I believe and I’ll reiterate my impression is the Council’s position has been that you cannot relocate existing businesses that are in the City of Providence into this site.  If you do the tax stabilization will be null and void.  That’s it.  So all you developers and everybody out there it’s on the record again.  Also, we close it by saying you can’t sell it.  What happens is that they may go around it by selling it to somebody and say, well we didn’t lease it or license it, we sold it.  The Law Department has assured me that we are covered so I’m going to rely that we are covered on that.  The other issue in here was there is hopefully I gather, there is a potential cash flow of additional revenue that will be realized in the mixed use building.  That is residential mixed use which has both affordable and market value.  Potentially, there is about $4.3 million dollars worth of revenue that will be gleamed from that.  Originally it was allocated to go to the Planning Department and the committee and I’m sure my Council colleagues.  So the wisdom of having it go into what they call the General Fund.  So now any money that’s additionally realized will go into what we call ALCO Revolving Fund and that should be in this.  Is this correct City Solicitor? 

 

              DEPUTY CITY SOLICITOR:  Yes.

 

              COUNCILMAN IGLIOZZI:  Therefore, the Council as well as the administration can track that additional cash revenue and that money will now go into a revolving fund to help elevate the tax burden for all of our taxpayers, as well as the Council and the administration through discussions and hopefully good faith negotiations, we will be able to allocate where we all deem fit and appropriate.  Councilman DeLuca is right.  There is a fiscal note.  It was given at the finance committee meeting.  It should have been attached to this package here.  They had an outside law firm handle and put these documents together and I’m sure they do a great job but in this particular instance they have a learning curve I’ll say and that’s part of it.  So I would ask the Clerk.  I know that there is a fiscal note.  It was handed out and I would ask that that be sent out this evening and hand delivered by the City Sergeant to every Council member because they have a right to know what is says.  Next, on the schedule of the tax stabilization, you’re correct, it’s really a unique kind of thing.  This doesn’t seem to be the traditional kind of stabilization aspect that we normally see.  It’s based on the market value of the rent and there was and it was requested of the Tax Assessor to put together, he had some type of schematic to have it ready and given out this evening again.  So I would ask Madam Clerk that we get that schematic in the Assessor’s Office and we make sure every Council member has it because it kind of laid it out in a better fashion.  It was something that was requested.  Now let me just say on this overall project.  I identify it and I understand everybody’s concerns.  The overall project has a lot of positive aspects for the city and the people involved and the business and the construction and the unions and the City of Providence and the State of Rhode Island.  There is benefits to go all around.  The major biggest inquiry or at least my concern was, was the financial aspect of it.  Council colleagues I agree with you.  That’s something you have to be concerned about.  These are not easy times and it’s not going to get any easier come January 1st.  So one of the things that I was very concerned about was the TIF and I didn’t get a chance to say it but I’ll say it now.  My concern was, is the city going to be on the hook for that TIF if the TIF goes bad.  Now there is a state statute.  I don’t know, I don’t have it in front of me which I become educated on by the way which is interesting through this process because I handed the administration, ALCO and any other developers involved almost 2½ pages of questions.  By the way, much to people’s dismay because questions bring answers maybe people don’t want to answer all the time, but one of the biggest concerns was are we going to be on the hook for the TIF and there is a state statute that this type of TIF, the city will not be putting forward it’s full faith and credit.  So the way it works is, if the TIF isn’t paid, they default on it, the city is not obligated.  I know it’s sounds crazy but there is actually a state statute and I’m hoping I’m reciting it correct.  I think it’s 44-33.2-2 and it needs it.  So there is that protection and why.  I think it’s important the public know and the taxpayer know that we are not putting the taxpayer in harm’s way in this particular aspect.  TIF’s are kind of an interesting thing.  I agree with you.  It’s not something we all can all take lightly.  So that state statue at least gave me and aroused my level of comfort as well as the committee members.  Believe me I know they pushed it through and it’s kind of like we have to get it done and all that stuff but for the past two weeks I’ve been dealing and arguing and going back and forth with questions and answers.  Not only with the developer, not only with the administration but also my fellow colleagues trying to iron out this thing and also to bring hopefully mine, and all of your comfort up.  I thought it was important that I also asked for an independent law firm whose not being hired on the project to review it and they did and you should have a copy of that and I would ask the Clerk make sure that gets sent out because that was also requested.  One of those particular questions about the TIF and now we’re on the hook.  Their position is and I’m just paraphrasing.  It says “that the project revenues including tax increment are not sufficient to pay the TIF bonds.  The city has no legal obligation to pay the bonds.  That was very important.  It is to me and to my colleagues and what I read into the record and I want the public to know if they cannot generate the amount taxes that are from this project the TIF is not going to be the people of Providence’s problem.  It will be the bond holders problem, the people who they sell it to and it will be ALCO’s problem.  Okay, the developer.  So that’s pretty important.  I know it maybe doesn’t answer all your questions.  I hope it answers enough of them and brings your comfort up.  The goal is hopefully come next year there will be additional jobs, hopefully there will be additional development, hopefully it will move forward and spur other development.  I also want to make a note of CAPCO.  I know CAPCO is in the audience.  CAPCO is a tenant who by the way is very prosperous in the City of Providence.  I know it was the main concern of the Council and I know of the committee.  We asked, and we asked emphatically, that their issues be resolved or addressed by the developer, and of course Mr. Licht and his family who are the landlords of the property, because we do not want to be doing this substitution where we bring forth one development and we lose a business like CAPCO.  I’m saying this on the record because I can say it on my part I know I don’t believe any Council colleagues who want to be in a position where we bring in one developer and we lose three hundred plus jobs.  By the way this type of job, manufacturing jobs of iron work, which is by the way, very unique and it’s something that Providence needs as well as the State of Rhode Island needs that we’re actually building something or making something.  So that’s something that we’re concerned about and we made our voices heard loud and clear.  As for the development of additional housing, it’s the mixed use of market value and low income.  Well, those developments as they progress, there seems to be a progression that they’re not going to be coming on line next year.  It’s going to be a two or three year online process.  I would presume just like any other good business model as the years go by next year and the year after if the market does not demand for additional units I’m sure either the developer or the company that wants to run the mixed use will be coming back to the City Council to probably try to rework their agreement, because if they build them, and no one buys them it’s not to their advantage.  So I would think if it doesn’t happen they will come back, but a goal will be if they build their business plan will show that people will be able to buy them and we will have new homeowners in the ALCO area.  Hopefully, by the way, also further enhancing the area.  Also, let’s not forget there is some other aspects of the TIF bond which there is money allocated to develop an environmental revetment I think it’s called or a permeable wall dealing with the water issue, run off into the Woonasquatucket I believe.  Also, there is money allocated towards some infrastructure for streets and lights and stuff like that.  There is also money allocated to PRA I believe and for development of additional housing and to help with payment and to help with rent and leases.  I ask my colleagues to be aware of that because, we as Council colleagues, that money is just not earmarked for that location, it’s earmarked for the whole city so that will be something the taxpayer, well, the entire City of Providence will have access to.  So we will be looking upon the Planning Department to help the entire city not just one or two locations.  At the end of the day the TIF bond, we will not be on the hook per the state statute, per the legal opinion, we are not going to be legally responsible for it.  As for the tax stabilizations, as you know we generate about a half a million dollars on that footprint now.  If you do nothing at all then you continue with the half million dollars for the sake of discussion.  If you do do the tax stabilization you will generate additional funds.  In fact, it is going to generate in theory millions of dollars which will then hopefully enhance your tax base.  The interesting thing about tax stabilizations is there is really no exposure per say to the taxpayer because we’re not really giving up anything substantially.  We’re giving up potential future revenue.  Excuse me, we’re giving up a percentage of potential revenue.  We’re going to acquire some payment in lieu of taxes and somewhere we are forgoing for the sake of a greater and bigger development.  The way it looks in my little picture is that there is far less exposure to the taxpayer and, as we all know, we’ve gone through these tax stabilizations and we’ve learned many lessons along the road.  We try to fill and close up all the loop holes that we have learned through these lessons and these documents.  The Law Department has reviewed it.  Fred Stolle has been there.  So please review the documents, and by the way, even after tonight if there are things in it that should be in there that weren’t in there, by clearly you know ad ministerial process let us know.  We have to make sure it’s done right.  We have second passage on Thursday.  So review the documents.  There is a two prong attack.  Our goal is hopefully the city will prosper.  The state is going to prosper by the way, there is no doubt about that and hopefully now when we go up to the state all these wonderful unions and developers out in this audience here will be walking lock step with the City of Providence lobbying the same representatives and senators and governors to talk about how they need to help out the City of Providence too.  I ask all of you this evening to remember this night because the City of Providence here is working with you and the taxpayers to help you.  So come next legislative session I’m hoping all of you go up to the State House and help out the City of Providence taxpayer and talk about why we also need more help on our budget problems.  As we said 300 plus more construction jobs and more jobs to produce state income tax.  So I’m hoping all of you here sign up and by the way I’m sure we’re all going to be looking for you.  So I have to ask all those groups to be there that day, contact the Mayor after tonight, go down to his office and sign up on the lobbyist list to remote the City of Providence for the next legislative session and remember tell all your union workers and brothers and sisters tonight the taxpayer helped out and we hope you guys will help out the taxpayer.  Thank you.

 

              Read and Passed the First Time, on Motion of COUNCILMAN HASSETT, seconded by COUNCILMAN DELUCA, by the following Roll Call Vote:

 

AYES:              COUNCIL PRESIDENT MANCINI, COUNCILMEN APONTE, COUNCILWOMAN DIRUZZO, COUNCILMEN HASSETT, IGLIOZZI, JACKSON, NARDUCCI, SOLOMON, TEJADA, WOOD and YURDIN – 11.

 

NAYES:              COUNCILMAN DELUCA, LOMBARDI, LUNA and COUNCILWOMAN YOUNG – 4.

 

ABSENT:              NONE.

 

              The Motion for Passage the First Time is Sustained.

 

              An Ordinance to Establish and Grant a Tax Stabilization Plan for ALCO 85 LLC, on behalf of Tax Assessor’s Lot 85 of Plat 27, being designated the ALCO 85 LLC Project, As Amended. 

 

              Read and Passed the First Time, on Motion of COUNCILMAN HASSETT, seconded by COUNCILMAN DELUCA, by the following Roll Call Vote:

 

AYES:              COUNCIL PRESIDENT MANCINI, COUNCILMEN APONTE, COUNCILWOMAN DIRUZZO, COUNCILMEN HASSETT, IGLIOZZI, JACKSON, NARDUCCI, SOLOMON, TEJADA, WOOD and YURDIN – 11.

 

NAYES:              COUNCILMAN DELUCA, LOMBARDI, LUNA and COUNCILWOMAN YOUNG – 4.

 

ABSENT:              NONE.

 

              The Motion for Passage the First Time is Sustained.

 

 

              An Ordinance to Establish and Grant a Tax Stabilization Plan for GNL Realty Eagle LLC, RAL Realty Limited Partnership, Barbara Rubin and Betty Licht Krum, as tenants in common on behalf of Tax Assessor’s Lots 276, 280, and 281 of Plat 27, being designated the ALCO Lot 261 Project, As Amended. 

 

              Read and Passed the First Time, on Motion of COUNCILMAN HASSETT, seconded by COUNCILMAN DELUCA, by the following Roll Call Vote:

 

AYES:              COUNCIL PRESIDENT MANCINI, COUNCILMEN APONTE, COUNCILWOMAN DIRUZZO, COUNCILMEN HASSETT, IGLIOZZI, JACKSON, NARDUCCI, SOLOMON, TEJADA, WOOD and YURDIN – 11.

 

NAYES:              COUNCILMAN DELUCA, LOMBARDI, LUNA and COUNCILWOMAN YOUNG – 4.

 

ABSENT:              NONE.

 

              The Motion for Passage the First Time is Sustained.

 

 

ADJOURNMENT

 

              There being no further business, on Motion of COUNCILMAN HASSETT, seconded by COUNCILMAN DELUCA, it is voted to adjourn at 7:45 o’clock P.M. (E.S.T.), to meet again THURSDAY, DECEMBER 18, 2008 at 6:00 o’clock P.M. (E.S.T.)

 

 

 

                                                                                                                ANNA M.  STETSON

                                                                                                                CITY CLERK