Should Barrington give affordable housing developer a tax break?

Some council members call for a vote on the issue

By Josh Bickford
Posted 2/21/18

Steve Primiano is worried about the schools.

More specifically, the Barrington Town Council member is concerned about how Barrington's public schools will be impacted by the new Palmer Pointe …

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Should Barrington give affordable housing developer a tax break?

Some council members call for a vote on the issue


Steve Primiano is worried about the schools.

More specifically, the Barrington Town Council member is concerned about how Barrington's public schools will be impacted by the new Palmer Pointe affordable housing project if the town decides to extend the developer a significant tax break.

More than 10 years ago, a prior town council offered a tax abatement to the East Bay Community Development Corporation when it built the Sweetbriar affordable housing project in West Barrington. That development featured 51 rental units and brought dozens of new students to Barrington's public schools.

Now, EBCDC is on the verge of beginning construction on the Palmer Pointe affordable housing project on Sowams Road. School officials have estimated that the development will bring more than 30 additional students to Barrington schools.

Mr. Primiano said the additional student enrollment is a good reason EBCDC should be required to pay the full property taxes. The council member said he wants to put the tax abatement issue on a future council meeting agenda. 

"I would vote against giving it (the tax break) to them. I support the schools," said Mr. Primiano. "What about the schools? That's school money we're talking about. It's all about schools. That's what drives our economy."

Tax bills

The tax deal for Sweetbriar required that EBCDC officials pay 8 percent of the annual rents collected at the housing development, instead of the full property tax bill.

Sweetbriar has 51 rental units and the monthly rents range from $603 to $943. 

In 2016, EBCDC officials collected a gross rental income of $457,428 at Sweetbriar, and their tax bill to the town of Barrington — 8 percent of the gross rental income — totaled $36,594.

In 2017, the rental income for Sweetbriar went up to $463,572. And when the tax bills go out in August, the affordable housing developer will need to pay 8 percent of the income, which equals $37,086.

So how does that compare to other property owner's tax bills?

Barrington's current tax rate is $20 per $1,000 of assessed value. The approximate assessed value of the Sweetbriar development is $5.2 million, meaning that without the tax deal, EBCDC would have a tax bill totaling about $104,000 this year.

Barrington resident Gary Morse believes the town is breaking the law when it requires all other property owners pay the $60,000-plus in taxes that are afforded by EBCDC's tax abatement.

"It's clearly illegal," said Mr. Morse. "Providence is not giving these tax breaks. Cases have established these are illegal for new construction… They all want affordable housing tax breaks — every Democrat on the council is dead-set on granting these developers these tax breaks. What they don't realize is these are for-profit enterprises."

Mr. Morse is referring to the Sweetbriar Limited Partnership, which operates under the EBCDC umbrella. Mr. Morse said that shortly after a previous council extended the tax abatement to EBCDC, officials from the non-profit moved ownership rights of the affordable housing development to Sweetbriar LP, which is listed as a for-profit entity. (Council members including Michael Carroll and Steve Boyajian said that the move was a necessity for EBCDC to receive federal tax credits.)

Mr. Morse said tax documents from EBCDC show that Sweetbriar LP declared a $174,306 profit in 2016, and a $171,353 profit in 2015.

Why, Mr. Morse questions, should the town be extending a tax deal to a company that is clearing a heavy profit, year after year?

"You have to look at Palmer Pointe the same way you look at Sweetbriar," said Mr. Morse. "I think the same thing is going to happen with Palmer Pointe. In the case of Palmer Pointe, taxpayers would subsidizing a waterfront development. We're effectively enriching the EBCDC group."

A tax document from 2011 showed that the former executive director for EBCDC was paid more than $100,000 annually. She also received a pension.

Mr. Morse said Sweetbriar LP or a similar limited partnership for Palmer Pointe stands to cash in on the project — Palmer Pointe, like Sweetbriar, will carry a 30-year deed restriction, meaning that the properties must remain "affordable" for that period of time. But before the deed-restrictions ever run out, the owners can sell the properties to real estate investment firms or other companies. 

"They (investment companies) know they can hold on to these properties for a long term and then turn them into market rate units," Mr. Morse said. "These properties become valuable to anyone before the deed restrictions even come off… They increase in value far beyond the tax credits. There is no restriction to turn around and flip them at any time and they can make a profit. This is the scam that is affordable housing."

Mr. Carroll and Mr. Boyajian do not believe that EBCDC officials have any plans to sell Sweetbriar or Palmer Pointe to investment firms. The council members seem more confident that EBCDC officials would renew or extend the deed restrictions in the future.

Legislation is flawed

Barrington Town Council President Michael Carroll said the town would be following the law if it offers EBCDC a tax deal for the Palmer Pointe development.

He said the town is obligated to offer the tax abatement, and he points to a pair of state statutes as the reasons. (Mr. Morse argues that the statutes only require towns to give the tax break to rehabilitated properties and not new construction such as Sweetbriar and Palmer Pointe.)

The council president said the bigger issue may be the affordable housing legislation, which states that each community's housing stock include at least 10 percent that is "affordable." When the legislation was first passed, Barrington had less than 2 percent of its housing stock deemed "affordable." A more recent estimate puts Barrington at about 4 percent, said officials.

"I believe that we want to preserve some housing in Barrington as affordable and I believe that the current act is the wrong way to do it," Mr. Carroll said. 

Mr. Carroll said Barrington offers a unique set of challenges in reaching the 10 percent goal. He said much of the town is built-out and despite a concerted effort to improve the stock of affordable housing, officials would need to build a skyscraper to close the gap. The town's comprehensive plan would not allow that type of construction in Barrington.

Members of the council recently met with local legislators Jason Knight, Joy Hearn and Cindy Coyne to discuss the affordable housing situation. Mr. Carroll said the lawmakers told councilors that Barrington was not alone in its concerns.

"Barrington is not the only one struggling with this act. There are other suburban communities who would like to see some relief," said Mr. Carroll. "One way is to give extra credit for rental properties — that would give us a boost."

Mr. Carroll said the state could also give towns that show progress toward reaching the 10 percent mark a slight advantage when they appear before the State Housing Appeals Board.

Mr. Primiano agreed that the affordable housing legislation is a bad fit for communities such as Barrington. He also said that the ever-changing real estate market has already corrected some of the issues that were facing the state when the legislation was drafted. Mr. Primiano said there are plenty of homes currently on the market that are affordable, but because they are not deed-restricted, they do not count toward Barrington's 10 percent.

But Mr. Primiano questions why a homeowner would purchase a deed-restricted home for an affordable price when he or she could purchase an affordable home that is not deed-restricted. The home that does not carry the deed-restriction offers the homeowner a greater chance to profit on their purchase in the future.

"Why would anyone want to buy a deed-restricted home?" he said.

How they would vote

Right now it is not clear if or when the 8 percent tax deal will appear on a council agenda.

Council member Steve Boyajian said he believes the developer will make the request at some point in the near future, and when they do, he plans to ask for guidance from the town's solicitor.

"I'm going to ask the town's lawyers what to do," he said. "And we'll go from there."

Mr. Primiano has already made up his mind. 

"I want to make my case that we don't have to give it to them," Mr. Primiano said. 

Mr. Primiano added that the town has already set a precedent in voting on the potential tax break when the prior council did so more than 10 years ago.

"I don't know why, if they voted on Sweetbriar, they wouldn't vote on this," he said.

Lawsuit pending

More than a year ago, Mr. Morse filed a lawsuit against the Town of Barrington over the tax abatement issue. A Superior Court said Mr. Morse did not have standing to bring the suit against the town, but the Westwood Lane resident has appealed to the Rhode Island Supreme Court.

"The Barrington taxpayer is subsidizing a for-profit company," he said. 

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