Council allows longer tax stabilization agreements

Council allows longer tax stabilization agreements

PAWTUCKET – The City Council voted unanimously last week, at the recommendation of its finance subcommittee, to approve new 15-year and 20-year tax stabilization agreements intended to promote larger investments in Pawtucket.

Until now, stabilization agreements were limited to 10 years.

The move to amend local ordinances on taxation is a precursor to consideration next month of a 20-year tax agreement for a major $20 million residential development on Freight Street.

No one spoke in opposition to the expansion at a meeting last Wednesday, Aug. 7.

The maximum duration for a tax stabilization agreement under state law is 20 years.

Under revised ordinances, companies would be eligible for a 15-year agreement for projects of $15 million or more, and 20-year agreements for projects of $20 million or more.

The percentage of a project exempt from taxes for a 15-year agreement would drop from 100 percent in year one to 20 percent in year 14 and zero percent in year 15. Twenty-year agreements would drop from a 100 percent exemption in years one and two down to 15 percent in year 19 and zero percent in year 20.

Councilors see this move as a way to encourage greater economic growth in a city with plenty of blighted properties.

Councilor Mark Wildenhain said he at first had a lot of hesitation based on long-held guidelines, but he now feels with various large projects with significant investments, some are now warranted. Investors are asking officials to take a ride with them, he said, and in some cases, the substantial gains in tax revenue are to be had.

“Those things that make sense we should do, the ones that don’t make sense we shouldn’t do,” he said.

This is all new revenue, officials emphasize, as new taxes are derived from improvements to a property. A stabilization agreement simply phases in new taxes more slowly.

Councilor John Barry III mentioned the Freight Street project as one where significant revenue, tabbed at more than $700,000, will eventually come to the city. There’s a real benefit to encouraging growth through such agreements, he said.