Tax treaty is hardly a done deal

One suggestion is a 10-year freeze on building valuations in the proposed Dowling Village shopping and office complex.

Monday, April 11, 2005

By JOHN HILL
Journal Staff Writer

NORTH SMITHFIELD -- The proposed tax treaty between the town and the developers of the 120-acre Dowling Village complex is still a work in progress, the company's lawyer said, adding the town was still pressing for changes.

"We are continuing to negotiate," said Joseph Shekarchi, a lawyer for Bucci Development, the company that wants to build the complex.

Town Administrator Robert B. Lowe last week said the draft, which would set maximum per-foot assessments for buildings in the shopping and office complex and limit annual tax increases, will make it more lucrative for businesses to locate there faster, and therefore get on the tax rolls sooner.

But Town Councilman Edward Yazbak said he was concerned that at the same time Lowe is talking about increasing the tax rate by $4 per $1,000 of assessed valuation on existing businesses, he is also suggesting a tax break for a new one.

Council President David Lovett and members Linda Thibault, Melissa Flaherty and Paul Zwolenski could not be reached for comment on the proposed agreement.

Lowe released the Bucci Development proposal last week after the council voted to make it public. Among its suggestions is a 10-year freeze on valuations for buildings in the shopping complex. Office space would be assessed at $113.33 per square foot, retail space at $104.40 per square foot and enclosed restaurant space at $222.22 per square foot.

Taxes on those buildings could not go up by more than 3.8 percent a year, regardless of how much of an increase the rest of town got, and the taxes due on the buildings would get discounts for six years, starting at 80 percent due for the first two years and ending at 100 percent in the seventh year.

The agreement gives the example of a 100,000-square-foot retail store. Assessed at $104.40 per square foot, its value for taxation would be $10.4 million. At the current $14.26 per $1,000 tax rate, that would produce a tax bill of around $148,000. The 80 percent discount would drop that bill to about $119,000.

Shekarchi would not say if Bucci Development considered a tax agreement crucial to its plans.

"I don't know how to answer that," he said. "I hope we can work it out ... We'll get it done."

Yazbak, the lone holdover from the 2002-04 council, said that that council had been negotiating a tax agreement that involved assessing property at full value, but have set tax-rate increases over 10 years. He said the plan Lowe showed the council last week took a different approach and he wanted to study it.

"I don't know that they need a tax deal," Yazbak said. "But if the critics are right, maybe with the amount of traffic they say they'll get, we don't need a deal."

The proposed Dowling deal compares favorably to one the Town of Lincoln negotiated with the Target retail chain, Lowe said. In that agreement, Lincoln agreed not to tax the building in Lincoln Mall in the first year and then implement the taxes in 10-percent annual steps, reaching 100 percent in 11 years. Lowe said the proposed North Smithfield-Dowling deal starts at 80 percent and reaches 100 percent in six years.