Council passes tax treaty for downtown housing

Council passes tax treaty for downtown housing

Wildenhain proposes future changes to the process

PAWTUCKET – Citing the unusual opportunity to add housing units in the downtown area, the City Council last week approved a 10-year tax agreement with Nexus Holdings to bring a 27-unit residential development, including three commercial spaces, to the Feldman building at 49 North Union St.

But Councilor Mark Wildenhain, the only no vote despite supporting the concept of sparking investment, said he wants a more standardized process for such tax agreements, sending a proposal for changes to the finance subcommittee for review.

Nexus Property Management CEO Nicholas D’Agnillo and real estate consultant Michael Leshinsky successfully made their case for the treaty, saying the deal is needed to raise the capital needed for the project.

“Nexus bought this building five years ago with the intentions of bringing residents to an area that doesn’t see much action after business hours,” said D’Agnillo. “We appreciate the city’s backing, and look forward to our other neighbors jumping in as well.”

This $7.5 million project represents the “largest investment in recent memory” for the downtown area, said Commerce Director Jeanne Boyle, emphasizing the importance of adding new residents to patronize existing businesses. She said this “is really going to be something that’s a huge shot in the arm to the downtown.”

Councilor Terry Mercer said he’s typically reluctant to approve 10-year tax agreements. He asked the developers why they think a deviation to a 10-year agreement is appropriate. D’Agnillo said such an agreement allows a favorable appraisal to cover gaps in financing, where a five-year agreement likely wouldn’t be sufficient.

The developers said they’re excited about taking this leap in Pawtucket’s downtown through a historic rehabilitation, with development expected to last one year. Market rents would be between $1,100 and $1,500.

At the end of the 10-year agreement, taxes will jump to $94,000 annually (current $15,485) on this $7.5 million project that will bring a projected taxable value on improvements of $2.8 million when completed. There will be 31 total parking spots, with six permanent spaces reserved for the Pawtucket Library nearby.

Gregory Rice, owner of 26 and 28 Summer St. nearby, encouraged the council to approve the tax agreement, saying, “I don’t see anybody taking Pawtucket, downtown that is, by the horns,” and he gives these men credit for taking a big risk.

Wildenhain said he offered his proposed future revisions to Pawtucket’s Tax Stabilization Program “so everyone who comes to the city with an ask knows what the ask is.” Despite not supporting the tax agreement, he said he appreciates what the owners of the Feldman building are doing and hopes it will lead to further investments.

Every proposal should be evaluated on an individual basis and what’s best for the city and its taxpayers, said Wildenhain. His proposal calls for the council to have the authority to modify tax exemption schedules during the approval process.

Mercer agreed with Wildenhain about standardizing the process and taking each proposal on its merits, saying he’s long shared his colleague’s concerns about lengthy tax treaties “and whether it’s worth it for us to approve them as they come to us.” Like Wildenhain, he noted the seemingly greater attractiveness of a nearby proposal for a five-year tax agreement to make way for a new Seven Stars Bakery.

Having said that, this is a big risk by the developers, said Mercer, and after hearing from Boyle and Tax Assessor Bob Burns explaining the terms, he was willing to support it.

Mercer said he hopes tax agreements of 10 years or longer won’t become the norm in the city, imploring officials to let it be known that this isn’t the new standard.

“Simply because it’s what you need does not mean it’s what you’re going to get,” he said.

Burns explained at length why this stabilization agreement makes the project feasible. The developers are “not a Baccari, they’re not a Carpionato,” he said, referencing the state’s larger developers.

“They’re two guys who are taking a chance on doing a development in downtown Pawtucket, where no one has been in I don’t know how many years,” he said.

This investment is more than anyone’s done to date in the downtown, he said, including Pet Food Experts.

Councilor John Barry said this is a significant amount of money being put into a building that was once a furniture store and has sat empty for many years. While tax agreements sometimes feel foreign in Pawtucket, he said, “they do this all the time in Providence” to rehab old properties. In Providence, the emphasis is on developing “critical mass” where people are living, eating, working and going to the shops, he said. That is what will also hopefully happen in Pawtucket if the city takes changes.

Other council members also voiced support for allowing this project to proceed, while also thanking Wildenhain for his efforts to revamp the process.