In opposition to the Mayor, the PVD City Council votes to oppose state 8-Law reform bills

"The bill as written... opens the door to abuse, undermines local authority, and offers long-term tax breaks without adequate public benefit in return," said Councilmember Roias.

The Providence City Council passed a resolution on Thursday urging changes to a pair of pending bills, H5688 and S0963, under consideration by the Rhode Island General Assembly. The bills would change the state’s 8% tax treatment for low-income housing, known as “8-Law.” The resolution rejects two proposed subsections and urges amendments to another. The subsections rejected in the Council resolution would apply a low-income tax treatment to commercial-to-residential conversion projects without any affordability requirements.

8-Law has been misused in Providence, most notably when the Elorza Administration secured a secret $30 million tax break for one of the richest men in Providence, Arnold “Buff” Chace. Chace received a deal so good he gave up his coveted tax stabilization agreements [TSAs] with the City of Providence in favor of being taxed under 8-Law. The deal was problematic because the Elorza Administration applied the 8% tax to all the units in Chace’s ten buildings. Under the 8-Law, only those units considered to be affordable should have been taxed at the lower rate. Chace secured a deal that even included commercial spaces. The City Council is pursuing a lawsuit to reverse the Chace deal.

One year ago, Providence Mayor Brett Smiley vetoed an 8-Law reform bill the City Council passed on a 13-2 vote.

The parts of the state bills not challenged by the City Council resolution would tighten and clarify the 8-Law to prevent its misuse in the future, and the resolution makes clear that the City Council supports incentives for commercial-to-residential conversion, but argues that using a low-income tax treatment to do so is inappropriate. The bills, as currently written, provide an escape hatch of sorts for “Buff” Chace, allowing for the continuation of existing 8-Law agreements regardless of whether they meet new affordability thresholds, thereby allowing developers who are currently misusing the low-income tax treatment on market-rate and luxury developments to continue doing so. The resolution also recommends an amendment to strengthen affordability requirements for all properties benefiting from the “8-Law” treatment.

The resolution puts the City Council in opposition to Mayor Brett Smiley, who testified in favor of the House bill in early March. “…working with the private development community who are here to testify as well tonight,” said Mayor Smiley, “the simplicity, predictability, and ease of financing of 8-Law can and will be applied to conversion of commercial properties to residential properties to solve those two problems at once - to soak up or eliminate some of the excess commercial property on the market and create new housing, which we know we have a shortage of in the city.

“We would be the first State to try to use 8-Law treatments for conversion,” continued the Mayor. “And speaking with the development community, at least here in Rhode Island, they believe this would be a workable and valuable incentive to create new housing and eliminate the risk of the surplus of commercial property.”

Representative David Morales pointed out the obvious issue: 8-Law is about creating affordable housing. The second part of the law, which would incentivize the conversion of commercial spaces into housing, has no affordable housing component. It offers all the tax savings to developers without the affordability requirements of the 8-Law, which might serve consumers.

“When it comes to adaptive reuse of converting commercial structures to residential and the eight-law treatment that would be applied, would these new residential units have to have an affordability requirement?” asked Representative Morales.

“It would not be required, nor would it be prevented,” answered Mayor Smiley. “As is the case in many developments, there is a layering of incentives and structures, and if this were to pass, you’re eligible for the 8-Law treatment for the conversion. But if you choose to do deed restrictions and make affordable units, you could go to Rhode Island Housing or apply for LITECH credits. So, some of these conversions may have affordable housing units, but they are not a requirement of the bill.”

“So a commercial building would be able to get adaptive reuse and a generous tax subsidy even if the residential units are going to take the form of market-rate or above-market-rate housing,” noted Representative Morales. “There is no affordability requirement in this portion of the bill.”

Councilmember Justin Roias spoke in favor of the city council resolution. Councilmember Jo-Ann Ryan spoke against it.

“This bill is being marketed as a tool to promote deeply affordable housing, but I don’t want to sugar coat it: This isn’t reform, it’s a blank check for developers,” said Councilmember Roias. “It doesn’t strengthen the 8-Law. What it does, in my view, is gut the 8-Law and hands the remains to luxury developers wrapped in the language of equity.

“Let me say at the outset that I believe the sponsors of this bill are well intentioned. I know they care deeply about the housing crisis in Rhode Island and share many of the same concerns about affordability, housing, supply, and the urgent need to reform 8-Law.

“Unfortunately, the bill as written does not reflect those values. It opens the door to abuse, undermines local authority, and offers long-term tax breaks without adequate public benefit in return. To make matters worse, this bill is moving forward at the same time the city is preparing to ask working class residents, homeowners, and small businesses to shoulder a potential tax increase. We're being told that revenue is tight, that sacrifices are needed, that we all need to pitch in, and yet developers, some of the wealthiest actors in the city could be handed a 30 year tax break like it's no big deal.

“Let me ask this: Do homeowners in my neighborhood get a tax break? Do homeowners in your neighborhood get a tax break? Or do you simply have to be a wealthy developer downtown with the access and ability to make campaign contributions to qualify for special treatment?

“That's what the state bill is reinforcing - a system where who you are and who you know determines how the law works for you. Let me be clear - this bill isn't just bad policy, it's a slap in the face to every resident we're about to ask more from.

“LThe eight law was originally designed to incentivize truly low-income housing. What this bill does is dilute that purpose, handcuff local governments, and create permanent tax shelters for high-end development. Let's start with section A. On the surface it looks like it creates affordability standards, but in reality it lowers the bar. The percentage of required affordable units is weaker than many of us have discussed for future local ordinances. Even worse, it strips out any caps on rent. So a developer can technically rent to a low-income resident while still charging them an unaffordable rent. That's not equity in my view. That's exploitation with a veneer of compliance.

“But it's sections B and D where things really go off the rails for me. Section B locks in a 30 year tax break for developers who convert commercial properties into residential use with no requirement for deeper affordability and no obligation to address community needs. Just convert and collect. That's the deal. It's great if you're a developer, but if you're a city trying to fund schools, housing programs, or basic services, not so much.

“Then there's section D, which is frankly outrageous. It retroactively blesses tax deals made before the end of 2024, no matter how lopsided or unfair, and allows developers to pass them on to the next owner like a trust fund with no expiration date. These are forever tax breaks, locking in the worst deals, not just for decades but potentially for generations - with no way for cities to claw them back.

“And let me be clear, this isn't theoretical. It should be noted that this body remains in litigation over one of these exact tax deals. In 2021, a well-known developer, Buff Chace, was given a 30 year tax break on 10 of his downtown properties in exchange for limited affordability. This council pushed back and rightly argued that the deal would cost the city nearly $43 million and a superior court judge sided with the Council on our motion to intervene in the case, which remains ongoing.

“This bill is attempting to rewrite history. Section D would hand Mr. Chace and every developer like him a retroactive legal shield. In plain terms, it could directly undermine our legal position and block our ability to seek relief through the courts.

“To make matters worse, section E of the bill strips this council of the ability to create stronger local policies. If we want to require more affordability or shorten the life of a tax break, we're not allowed. This is state preemption in its rawest form. It says, "We know better than your community. Please sit down."

“I want to say this respectfully: While I understand that our mayor has chosen to support this bill, I believe that position is a mistake. We may share the same goals around expanding housing, but this bill moves us in the wrong direction by weakening local authority, undermining accountability, and rewarding the kinds of deals that cost the city tens of millions.

“I also want to take a moment to thank and uplift the Atlantic Mills Tenant Union. The first commercial tenant union in Rhode Island, who are organizing in a building that could be affected by this bill if passed. This legislation could incentivize the new owners of Atlantic Mills to convert those commercial spaces into residential units, pending a zoning change, that puts their livelihoods and their organizing space at risk.

“Their voices and struggle are part of this conversation and they deserve to be heard. Colleagues, we weren't elected to be bystanders while bad deals get dressed up as housing policy. We were elected to fight for equity, protect our city's bottom line, and hold the powerful accountable - not sign off on handouts to developers.

“In my view, this bill hijacks the 8-Law and weaponizes it against the very neighborhoods it was meant to help. I urge you to vote yes on this resolution. Let's make it clear that Providence does not support blank check tax breaks for luxury developers. Not now, not retroactively, and not while we're asking our residents to pay more.”

“I disagree with my colleague and quite honestly, I’m shocked to see this resolution in front of us this evening,” said Councilmember Ryan, who framed her objection as a demand for due process. “I don’t understand the process. I don’t agree with being read a thesis on the floor of the council. This should be heard in committee. There are too many details. This is too important for us to unilaterally, without debating it in an open forum, in committee, allowing each council member to be heard and understand the nuances. I disagree with this process.

“I was adamant that we needed to find a solution to 8-Law. I am willing and hope to work toward that end. But this is rushed to me. We need to send it to committee and allow the council folks in this room, my colleagues, the opportunity to debate and discuss it, and try to get it right. We're better when we are open. We're better when we are transparent. We create better legislation when we all work together and give each other the opportunity to be heard. That's what I ask for tonight - transparency and an opportunity to vet this further in committee so each and every one of us can be heard and ask the questions that need to be asked on this topic.”

The resolution passed. Here’s the video:

The Providence City Council also unanimously passed an ordinance banning price-fixing rental algorithms, software designed to help corporate landlords maximize profits and drive up rents.

“We hear it from constituents – Providence residents are demanding action from city leaders to address the outrageous and rising cost of housing,” said Councilmember Juan Pichardo, chair of the HOPE committee that unanimously advanced the ordinance at their recent meeting. “This ban is a critical step that will position Providence as a national leader, as just the sixth city in the country to provide this protection to renters. This City Council is sending a message to the more than 60% of Providence residents who rent: we hear you and we are responding.”