In a twist of fate, the more than $2 million owed the city in property taxes for Rocky Point could end up being the trump card that saves an additional 80 acres of the former amusement park for public access.
Last night, a resolution calling for the abatement of those taxes was docketed before the City Council. While that would seemingly forgo any hopes of that money flowing into city coffers, the abatement is contingent upon acquisition of the land by the state. On Monday, Governor Lincoln Chafee and Mark Hayward, district director of the Small Business Administration, announced that an agreement has been reached to acquire the land for $9.65 million.
However, as Hayward emphasized, there is “a process” before the deal can be finalized. That includes court approval of the agreement and a set period during which a qualified buyer can come forward with a counter offer, provided it is a minimum of 10 percent more than the state’s. If that happens, the state could lose the land, which Senator Sheldon Whitehouse called the “crown jewel” of parks in the state during Monday’s announcement. But that bid would be contingent on the bidder assuming the tax liability to the city
“That’s the leverage we have,” Avedisian said yesterday when asked about the city taxes.
He explained that, as a creditor, the city would expect to get the unpaid taxes if the Rocky Point land is sold to anyone but the state. That would immediately push the price of the 80 acres to more than $12 million for a developer interested in the site.
If that is the case, Avedisian was asked why the council is being asked to abate the taxes at this time, couldn’t it wait until the agreement gains court approval?
“It needs to be part of the agreement when it goes to court,” Avedisian said.
He added that the court will inquire into whether the $9.65 million will satisfy all creditors and, without abatement, the taxes would still be a liability.
Since the park closed in 1995, the city has continued to tax the property. For years, the taxes were paid and when (as the court appointed receiver) the SBA accepted a $25 million bid for the land, the city revalued the land to reflect that amount. Although the luxury homebuilders, Toll Brothers, backed away from its plans for 399 townhouses and condos on the land, the city continued to value the land at $25 million. SBA never formally challenged the assessment, although successive private bids for the land were as low as $15 million.
Meanwhile, SBA ceased paying taxes, meaning the amount owed continued to grow, giving the city greater “leverage” over the property. Recognizing that the issue of outstanding taxes would not be resolved quickly, the city never included those possible revenues in its budgets.
Before voting on an abatement, Ward 4 Councilman Joseph Solomon said yesterday he wanted to “see all the facts and how it would impact taxpayers.” He said there’s a “balancing” between what the park could mean in added business because of tourists and what the money could mean to the budget. He also questioned, if the city were to abate taxes under the state agreement, why it wouldn’t be required to do the same for a private developer.
“The more facts we get on this, the better,” he said.
In raising the issue of tax abatement, Avedisian says in a letter dated Sept. 17 to Council President Bruce Place, “should DEM’s efforts fail, the city would still be owed the back taxes.”
Avedisian doesn’t go into how the taxes would increase costs of a private developer in his letter, but rather focuses on what the city would gain by preserving more than 120 acres for public access and how this “is a good deal for the city.”
Asked whether he sees any negatives to abating the unpaid taxes for the state, Avedisian said, “We’re at no risk.”