Providence leaders can’t agree on ‘8-Law.’ Here’s where things stand in court

PROVIDENCE, R.I. (WPRI) — An attorney is expected to present an offer to the Providence City Council on Thursday that, if accepted, would resolve the dispute over a controversial tax deal with a downtown developer that has mushroomed into a complicated court battle and divided city leaders.

Council-hired lawyer Max Wistow has spent weeks in private mediation with attorneys representing Providence Mayor Brett Smiley’s administration and Arnold “Buff” Chace, a developer who received a court-ordered, 30-year tax break on 10 of his downtown properties in 2021.

The tax deal has become a point of intense debate inside city government, as councilors have argued they never approved the deal struck between former Mayor Jorge Elorza’s administration and Chace. It was approved by R.I. Superior Court Judge Melissa Darigan.

The council hired Wistow last fall to try and undo the deal, and he quickly earned a victory when a different judge ruled the council could intervene and argue its case against the agreement. Wistow has argued the deal is unlawful, is costing taxpayers and hasn’t achieved its designated purpose of creating affordable housing.

He’s even gone as far as accusing city officials of collusion.

“Each year of delay will cause injury to other taxpayers in the city, and, ironically, injury to the low-income families these transactions pretended to benefit,” Wistow wrote in court documents.

The parties have since entered into mediation, where the City Council made an offer. Chace and the Smiley administration countered, and Wistow is expected to present that deal to the council during a closed-door meeting Thursday.

In court on Wednesday, Wistow suggested he doesn’t necessarily intend to recommend that councilors accept the deal, but it’s his job to bring them every proposal.

Separate from mediation, Wistow has argued the city should turn over all communications between certain departments when the deal was made. He said Wednesday the documents could show whether the city assessor ever signed off on the deal, which he said is required under the law.

Senior assistant city solicitor Etie-Lee Schaub called his request for discovery a “fishing expedition.” She’s also successfully argued for an extension of time, saying mediation has been “fruitful,” but that the city’s Law Department needs another 60 days.

Her reasons for needing more time included mediation and the demand for legal resources needed to put together a budget for the upcoming fiscal year that begins July 1.

“The days don’t end during budget season,” she said Wednesday, adding that she’s up until 10 p.m. for council meetings and then up again at 6 a.m. responding to emails.

But Wistow has become frustrated with the delays, arguing there’s no reason the city needs to stall legal proceedings while mediation is underway. Mediation could come to an impasse at any point, he said, which would ultimately land the issue back in court.

“It’s delay, delay, delay. Enough is enough,” Wistow said, adding that each delay costs the city in lost tax revenue and hurts tenants he says are sometimes paying premium rates for housing units that are supposed to be affordable.

Wistow estimates the city loses $1.4 million in revenue each year the deal remains in place, and he took a shot at the city’s Law Department, saying everyone is busy.

“They have cases that are relatively trivial,” Wistow said. “They have a ton of cases of people who slipped and fell on a sidewalk.”

Chace’s attorney, Nick Hemond, meanwhile said he supported the city’s request for an extension of time because there’s yet another legal issue tied to the case currently before the R.I. Supreme Court.

The state’s highest court is currently mulling arguments from Chace and the Smiley administration suggesting the council doesn’t have any legal authority to undo the 2021 tax deal. If the Supreme Court rules against the council, the entire issue could get tossed out.

There’s currently no timetable for when a decision will be made.

Darigan, who is again presiding over the dispute in the lower Superior Court, ultimately approved the city’s request for an extension of time. The judge said the case has a “weird dichotomy of parties,” and that she thinks mediation could be the best way to resolve the underlying dispute.

“This is a case where there’s a significant adversarial mess between certain elements,” Darigan said, noting the ongoing butting of heads between the Smiley administration and the City Council that’s well documented in local news reports.

“One of the major benefits of mediation is preservation to parties’ relationships,” she added.

Darigan also pushed back on Wistow’s suggestion that turning over additional documentation could help mediation move forward, saying it would be “a hindrance and a deterrent to the parties coming together.”

“I respect Mr. Wistow’s argument in his experience that discovery, as he says, often assists in or is likely to enhance a settlement,” Darigan said. “That is not this court’s experience with mediating cases.”

She also expressed skepticism about Wistow’s argument that the Chace tax deal had any imminent negative effect on the city, saying this issue has been floating around for years.

“The city of Providence is not crumbling into the sea as a result,” Darigan said before granting the 60-day extension.

Separate from the Chace dispute, Smiley last week vetoed an ordinance passed by the council, which councilors argue would strengthen city oversight of the state tax law — known as “8-Law” — which regulates these types of deals.

Smiley, who is advocating for his own version of changes at the State House, argued the council ordinance was poorly crafted and would strain city resources. The council is expected to vote to override Smiley’s veto on Thursday

Ten votes are needed to override Smiley’s veto, which council leadership believes can be achieved. (The council approved the ordinance in a 13-2 vote last month.)

In an April 30 letter from Council President Rachel Miller, obtained by Target 12, Miller urged councilors to support overriding Smiley’s veto, firing back at claims made in Smiley’s veto letter.

“To the extent that the city is managing this critical tax incentive that saves developers millions of dollars by paper in filing cabinets, that should clearly be
modernized and is a worthwhile expense,” Miller wrote.

In court, Darigan said she’s hopeful mediation will help bring the legal dispute to some type of resolution, and she warned she doesn’t want to see the issue drag on forever.

“It’s going to be harder as time goes on to continue extending scheduling orders,” she said. “There will need to be some fairly significant developments.”

Alexandra Leslie ( aleslie@wpri.com ) is a Target 12 investigative reporter covering Providence and more for 12 News. Connect with her on Twitter and on Facebook .

Eli Sherman ( esherman@wpri.com ) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook .

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