CITYWATCH Activists press Rising Sun developer on tax agreement BY STEVEN STYCOS

In return for a 10-year tax break, developers of the Rising Sun Mills project in Providence’s Olneyville neighborhood should make guarantees for low-income housing and minority employment, neighborhood activists told the Providence City Council’s Finance Committee on Monday, September 29.

The Olneyville Neighborhood Association, Rhode Island Jobs with Justice, Carpenters Union, Local 94, and other groups operating under the umbrella of Providence Works! want the guarantees to improve one of the city’s most depressed neighborhoods. They hope to capitalize on a sympathetic developer, and a supportive city council and mayor to win a model ordinance for future tax deals in Rhode Island and around the country.

Some Olneyville residents also worry that the project will spur gentrification. "Rising Sun Means Rising Taxes," says one flyer. But others, including Chris DellaVentura, 73, who remembers when the old textile mill operated three shifts, seven days a week, in the 1940s and 1950s, endorse the $56 million project without reservation.

Standing in the rear of the William D’Abate Memorial Elementary School auditorium, project developer Bill Struever worried that the complex debate may kill the project. "We’re running out of time. It needs to be resolved soon," says Struever, president and CEO Struever Brothers, Eccles & Rouse, Inc. of Baltimore. The Brown University graduate accepts that some guarantees will be attached to the tax break plan, saying, "Everybody recognizes this is the beginning of a new policy and we’re in the middle of it."

Working with The Armory Revival Company of Providence, Struever plans to create 142 loft apartments and 125,000 square feet of commercial space in the old mills. The one- and two-bedroom apartments will aim at the middle of the market, with rents ranging from $600 to $1600 a month. Because the project preserves an old mill, it qualifies for a city tax-stabilization program that freezes taxes at their current level until 2011. The tax plan, says Struever, is key to keeping the rents reasonable, especially for the commercial space. (Based on the current tax rate and assessment, says Providence tax assessor John Gelati, once the project is completed as planned, in 2005, the developer will save more than $500,000 a year in property taxes until 2011.)

Last fall, after meeting with city planners and Councilwoman Josephine DiRuzzo, developers made two promises. First, to try to hire minority and women contractors to perform 20 percent, but no less than five percent, of the project work, and second, to make 20 percent of the housing units "affordable." But spurred by a campaign of door knocking and leafletting that helped bring 200 people to Monday’s hearing, Providence Works! demands more.

First, it wants 20 percent of Rising Sun’s units to go to area families who earn the median family income in Olneyville, or about $19,000 a year. The proposed stabilization ordinance, however, calls for reserving 20 percent of the units for families who make about $40,000 a year. At the hearing, Jobs with Justice organizer Matthew Jerzyk cited Olneyville Housing Corporation as a model that Rising Sun should emulate. The nonprofit group this year constructed 32 units with monthly rents between $375 and $450. But Struever says such apartments require large government subsidies that are unavailable for the Rising Sun project. Olneyville Housing executive director Frank Shea confirms that a $120,000 subsidy was received to construct each of the 32 units.

"It just won’t happen at Rising Sun," says Struever, who suggests his group may build low-income housing on another site across the Woonasquatucket River.

That response prompted Finance Committee chairman Kevin Jackson to suggest that maybe the project should not receive a tax break. Construction has already started, he notes, so the project will happen. As for the pledge of low-income housing elsewhere, he says, "Let’s have that in writing, not just based in faith."

Like Providence Works!, Jackson wants guarantees on permanent jobs. Hiring local residents for construction work is not enough, he says; an apprenticeship program is needed to create permanent jobs. The developers pledge that 10 percent of the estimated 300 construction jobs will go to neighborhood residents, but Providence Works! wants 40 percent.

Providence Works! also wants developers to hire "responsible" contractors, 30 percent of them run by minorities and another 10 percent by women. M&M Ironworks & Doors of East Providence, hired to handle the structural steel work, is just the type of company that Providence Works! says it wants to avoid. In February, the state Department of Labor and Training (DOLT) found the company owed nine employees $32,387 for failing to pay prevailing wage rates on work at Kennedy Plaza. As a penalty, DOLT fined the company an additional $97,163. Thanks to the company’s perilous financial condition and DOLT’s policy to waive penalties for first-time offenders, however, DOLT collected only $25,000 for the nine workers, reports legal counsel Valentino Lombardi.

Mark Van Noppen, Armory Revival’s managing director, says he was unaware of the details of M&M’s problems, and adds that 70 percent of the contracts have been awarded to union firms. Meanwhile, Struever says local minority contractors will be hired, but he worries that they may be unable to handle a big job like Rising Sun.

The Finance Committee will meet within two weeks, Jackson says, to discuss the tax stabilization ordinance.