Prov Place Mall Got $250M+ in Tax Breaks, City Bargained Away TSA Requirements
Wednesday, March 02, 2016
When the City of Providence gave the developers of Providence Place Mall a tax stabilization for thirty years when it was built in the 1990s, it saved the company and future real estate holding companies over hundreds of millions of dollars.
As part of Tax Stabilization Agreements (TSA) executed in the mid-1990s under Mayor Vincent “Buddy” Cianci, the Mall was to develop a retail sales and management training program for prospective employees at the mall; explore with the Providence Foundation and Greater Providence Chamber of Commerce the possibility of the mall taking the lead role in establishment and operation of “Downtown Management District”; contribute 50% of the cost of a downtown advertising campaign with other stakeholders; develop and implement plans for operation of free shuttle with RIPTA linking the mall and “historic downtown Providence,” and develop a “Downcity Cinema” separate and apart from the one at the mall.
Now sixteen years after the Mall opened, and two owners later, the Mall has met several of the conditions stipulated in the TSAs, but according to the current owners, is no longer required to adhere to the provisions as put forth in the TSAs due to agreements made in the previous sale of the property.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“GGP is the third owner of Providence Place and the documents are almost 18 years old. It is my understanding that when Commonwealth Development sold the mall to The Rouse Company, the city gave an estoppel for the sale and the items [listed above] were not requirements to proceed,” said mall spokesperson Dante Bellini for owners GGP, who purchased the mall from The Rouse Company in 2004. “That said, when GGP acquired Providence Place, the mall continued to be an active part of the community with various outreach programs including establishing another major initiative called “Providence Place Gives” - an annual charity benefit that raised thousands of dollars for organizations throughout Rhode Island – by honoring women associated with those charities.”
Conditions Met, Not Met
Presently, the Mall’s payment in lieu of tax obligation per the TSA is just under $5 million a year, but if it were fully taxed at its current assessed value of $645 million, the billion dollar real estate firm GGP would pay Providence over $23 million annually.
Bellini noted which of the provisions contained in the initial TSAs he believed were met - and which ones were no longer required or had been bargained away.
“There is a retail sales and management training program being offered through the Providence Skills Center, a store located at the river level of the mall. This store is managed by CCAP, a Community Action Program, which received a Governor’s Work Bench Innovation Retail grant from the state of Rhode Island to train individuals in Retail Management,” said Bellini. “Through this study course being offered, students receive a National Career Readiness Certification and National Retail Federation Management Training.
As for the specific creation of a Downtown “Management” District — and dedicated advertising campaign — Bellini offered the following.
“The mall is a member in good standing with both the Foundation and Chamber. The existing Downtown Improvement District includes the area around Downtown Providence and not the area around the mall and the state capital building,” said Bellini. The Mall was recently the scene of two violent crimes in a two-day period.
Regarding the formation of an advertising campaign as stipulated in the TSAs, Bellini said, “Our understanding is the matching funds by the city were never budgeted and the effort indefinitely tabled.”
Items that were required of the mall in the initial TSAs — but reportedly not mandated upon subsequent sales — included the city shuttle, as well as investment specifically in a downcity movie theater.
“Our understanding is the need for a shuttle was examined by all three parties: the mall, the City of Providence and RIPTA and, like the recent ‘Trolley Car’ effort, was abandoned due to the cost being determined to be disproportionate to the benefit,” said Bellini. “Our understanding is that there was an initial effort to erect a cinema in the downtown area but with the 16plex Showcase theatres and the only IMAX theatre in the state all located at Providence Place, the need for a downtown cinema was no longer as important and the effort indefinitely tabled. That said, it is my understanding that, under the original owner, there may have been some payments to Trinity Rep in lieu of this to fund some of their programs.”
TSAs in Spotlight
Tax breaks — and tax break extensions — continue to be at the center of discussion and debate at City Hall.
In 2015, the City Council broached the potential need to overhaul the tax-break granting process; in 2016 the City Finance committee recently voted against a request for an extension of an existing TSA.
Councilman Kevin Jackson said he “didn’t know” how the city could have allowed for changes to an existing TSA, specifically the Mall, without coming before the council.
“You cannot reverse the conditions or amend [a TSA] without coming before the council,” said Jackson. “Remember, we're the only ones who can grant stabilizations.”
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