PROVIDENCE — Acknowledging he was making “grave allegations” against current and former city officials, an attorney for the Providence City Council on Wednesday accused the former administration of Mayor Jorge Elorza of undergoing a “corrupt transaction” when they agreed to significant tax breaks for a prominent downtown real estate developer.
The hearing in Superior Court before Associate Justice Joseph McBurney was the first in the council’s efforts to intervene in a previously-settled lawsuit that ultimately granted Arnold “Buff” Chace and his firm Cornish Associates millions in tax breaks for 10 of his downtown apartment buildings.
The arguments by Max Wistow, the attorney for the council, went so long that court closed for the day before Chace’s side was able to rebut. The hearing is scheduled to continue on Friday afternoon.
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Wistow has accused city officials under former Mayor Jorge Elorza of striking a “backroom deal” with Chace that gave his properties 30 years worth of tax breaks worth up to $42 million. In court Wednesday he called the deal “corrupt” and a “scam,” while asking the judge to grant a motion for the council to intervene in the case. Ultimately, if allowed to intervene, the council is seeking to overturn the tax breaks.
Justice McBurney appeared to caution Wistow at the start of his arguments, citing words from Chief Judge Paul Suttell about lawyers making improper accusations in the course of “zealous advocacy” on behalf of a client.
“I think in this case we have some attacks made against the city solicitor’s office, by accounts some of the hardest working people in the city of Providence ... who are ethical and capable,” McBurney said to Wistow.
“I stand here prepared to justify everything we have said,” Wistow replied. “I’m open to being sanctioned by the court.”
Wistow has specifically targeted city solicitor Jeff Dana, who held the position under Elorza and remains in the job under Mayor Brett Smiley, accusing him of ignoring advice from other lawyers and the then-tax assessor about the legality of the agreement, which gives the 10 properties tax breaks in exchange for 25 percent of the apartments being income-restricted, under a state statute known as 8-Law.
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“Because this project is mixed use (not solely residential) and because the entirety of the property is not restricted, I agree with my colleagues that the project does not meet the criteria for 8 Law,” assistant city solicitor Lisa Fries wrote to Dana in January 2021. “It is my understanding that our client is well aware of the law department’s advise [sic] and wishes to move forward.”
“If this isn’t a smoking gun, your honor — no, I take that back, it’s a smoking AR-15,” Wistow said in court. He referred to the agreement, which Dana negotiated on behalf of the city, as a “profoundly collusive scheme.”
Dana, whose job also involves representing the City Council, declined to comment Wednesday. A city spokesperson previously said Dana had the authority as solicitor to enter into the court settlement to resolve the tax lawsuit from Chace’s company.
But in court documents filed in the weeks leading up to the hearing, Chace’s side claimed former Council Presidents Sabina Matos and John Igliozzi were both well aware of the tax deal, even though it was never formally brought before the council or discussed in a public meeting.
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“It was represented to the plaintiffs, through the solicitor, that numerous discussions had taken place between the law department, the tax assessor, Mayor Elorza and his staff, as well as members of the City Council, including Council President Sabina Matos and, later, Council President John Igliozzi,” attorney Nick Hemond wrote, arguing the case should not be revisited now just because there is new council leadership.
“This court should not allow the shifting sands of politics in Providence City Hall to soil the solemnity of a binding consent order entered by Justice Darigan of this Superior Court,” he added.
Matos left the council in April 2021 to become Rhode Island’s lieutenant governor.
“The lieutenant governor was not involved in the development of the consent agreement and does not recall being provided a draft of that agreement while she was council president,” David Folcarelli, a spokesperson for Matos, said Wednesday evening. Asked if she was involved in the discussions at any point, he added: “The lieutenant governor was neither party to any discussion nor, to her recollection, was she provided with information about any discussion that led to the development of the consent agreement.”
Igliozzi, who was the council president at the time the consent agreement was reached in June 2021, declined to comment.
The current council president, Rachel Miller, has argued the agreement should have come before the council.
“There is one body that has the authority to bind the city in a financial agreement,” Miller said when the council hired Wistow to take legal action. “That is the City Council. This never came before us in any way.”
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The agreement that’s in dispute was made under a state statute meant to encourage low-income housing, which allows an owner to pay 8 percent of their annual rental income as their tax bill, rather than the current commercial real estate tax rate.
The settlement allowed Chace to claim the 8 percent treatment for all 10 of the buildings as long as 25 percent of the apartments are rented to tenants making 100 percent of the area median income or less. (That’s currently $74,200 for a single-person household.)
City councilors have expressed outrage that the tax breaks apply to the entirety of all 10 buildings, including commercial space and apartments that are not income-restricted. The tax credits last for 30 years, and in some cases apply to buildings that have already received decades of other types of tax breaks.
In a statement following Wednesday’s hearing, Chace’s spokesperson Patti Doyle said “we continue to regret the actions of the City Council to seek reversal of a legal judgement designed to bolster additional, much-needed workforce housing in Providence. This clearly will have a chilling effect on all such initiatives contemplated throughout the city, resulting in slowed or very limited production of housing which will be a disservice to Providence residents, housing advocates, and state and city leaders who have worked tirelessly to stimulate investment as a means to address the critical need for more housing in our community.”
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“We underscore again today that Cornish Associates participated in a highly transparent, legal process with the prior council and administration that was subsequently validated by a court order,” Doyle added.
In a filing earlier this week by Dana’s office, city lawyers wrote the council’s motion to intervene should not be used to litigate 8-Law or “recklessly attack the city solicitor.”
Dana’s office also argues the City Council has no standing to intervene in the case, where the defendant is already the city of Providence, and the settlement was entered years ago.
But Wistow argued that “Buff Chace and the city solicitor should not be rewarded for running out the clock on the prior City Council,” which ended its term in December 2022.
Steph Machado can be reached at steph.machado@globe.com. Follow her @StephMachado.