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5/29/2024
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Sen. Bell releases report on ‘stealth subsidies’ for luxury residential properties and undeveloped land in Providence
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STATE HOUSE – Sen. Samuel W. Bell (D-Dist. 5, Providence) has released a report demonstrating the consistent underassessment of property values for luxury residential developments and undeveloped land parcels in Providence. This chronic underassessment in turn significantly lowers the amount of property taxes collected for the city, shifting the property tax burden to home owners and renters.
Senator Bell coauthored the report with his intern, Albert Cho.
“In this report, we focus on the subsidies these developers receive through the tax
assessment process. Because properties are supposed to be assessed at fair market value,
the price they could be sold for, if they get assessed for less than fair market value, they receive a stealth subsidy. To investigate the extent to which this practice takes place in Providence, we compared tax assessments for these properties to recent sales data and the results were unambiguous. Large luxury apartment buildings get massive subsidies through below-market assessments.” said Senator Bell.
“We view our findings as emblematic of a broader problem in the city and potentially the state. Assuming that these same trends of large underassessment hold true, every year, the City of Providence pours vast sums of public money into the hands of wealthy developers in our city. Until now, this form of corporate welfare has remained secret, and with state law being crystal clear that assessment must be at the open market value, this secret subsidy is flagrantly illegal. As Providence approaches a reassessment year, it is time to follow the law,” said Albert Cho.
Key findings of the report include:
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The average luxury residential property examined was assessed at just 42.1% of its sale value.
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The average undeveloped development parcel examined was assessed at just 11.7% of sale value.
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Assuming the same trends apply outside of TSA properties, the revenue loss is enormous.
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Because development parcels receive the largest subsidy, the underassessment subsidy actually inhibits development.
“This report raises concerns about the equitable distribution of tax burdens, which potentially allows wealthier entities to exploit loopholes and drain resources from the local government. We need to address these discrepancies for a transparent and just fiscal future. We must return this necessary revenue to the city. It is time for Providence to invest these funds in public services and lower taxes for everyone who does not get these special breaks,” concluded Senator Bell and Albert Cho.
The report can be found here: https://drive.google.com/file/d/1v0EX9_wB9mlVyE2H8_8kjqTCB4KTzFDM/view?usp=sharing
For more information, contact:
Andrew Caruolo, Publicist
State House Room 20
Providence, RI 02903
(401)222-6124
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