Dowling Village tax proposal would freeze assessments

The 10-year agreement would also cap tax increases.

Thursday, April 7, 2005

By JOHN HILL
Journal Staff Writer

NORTH SMITHFIELD -- Real-estate assessments at Dowling Village would be frozen for 10 years and tax increases limited to a maximum of 3.8 percent a year under a proposed tax treaty between the town and the developers of the proposed 120-acre center.

If it were approved in its current form, the 10-year deal with Bucci Development of Warwick would set limits on how much the town could value real property for tax purposes, limit tax increases and set discounts that would shrink to zero over six years.

The main points of the treaty, which was released this week, are:

A freeze on valuations that are used to calculate the individual businesses' property tax bills. Office space assessments would be locked at $113.33 per square foot, retail space at $104.40 per square foot and enclosed restaurant space at $222.22 per square foot;

Setting a ceiling of 3.8 percent for property tax rate increases;

Discounting taxes due. Businesses would owe 80 percent of the bill in the first two years, 85 percent in the second and third years, 90 percent in the fifth and sixth years and 100 percent in the seventh year.

A 50-percent discount in inventory taxes, though the inventory tax is scheduled to be phased out by 2009.

The agreement said the tax rate to be used would start at $14.26 per $1,000 of assessed value. Lowe has asked the Town Council and General Assembly to approve a plan to raise the commercial property tax rate to $18.26 per $1,000.

But the agreement states "the town further agrees that in event the town at any time adopts a two-tiered or other multi-tiered tax rate system or any other system that taxes all retail, office, restaurants or other commercial property in the town at a rate or in a manner higher than residential property, such system will not apply to any portion of the project site until the applicable ten-year term" expires.

An example included in the agreement supposes a 100,000-square-foot retail store. With the $104.40-per-square-foot assessment, its assessment for tax purposes would be $10.4 million. Applying the existing $14.26 per $1,000 tax rate would produce a tax bill of $1.48 million.

That amount would then be eligible for the percentage discounts. In the first two years, 80 percent of that bill would be $1.19 million.

The only way that rate goes up is if property tax rates are raised to the maximum of 3.8 percent per year. If the town raises the property tax rate higher than that, it can only increase it by 3.8 percent in Dowling Village.

Town Administrator Robert B. Lowe said some terms of the deal could be changed, but he added he didn't think there was much more the town could get from the company.

Lowe defended the discounts as an incentive for Dowling Village tenants to get in the complex sooner, increasing town tax income earlier. He compared the agreement to one reached by the developers of the Target store at Lincoln Mall. In that agreement, Lincoln agreed to phase in the taxes due the department store building, starting with zero in the first year and increasing by 10 percent a year thereafter.