How city property taxes wallop LaSalle Bakery, Old Canteen

June 5th, 2013 at 5:00 am by under Nesi's Notes, On the Main Site

LaSalle Bakery and Joe Marzilli’s Old Canteen are two favorite places for Providence residents to get a bite to eat – though the food might be cheaper if the eateries paid property taxes in Cranston, Warwick or Smithfield.

With the Providence City Council giving its final OK on Monday to Mayor Angel Taveras’s proposal to freeze the commercial-property tax rate at the highest level in any major American city, a recent report the council commissioned offers some examples of how Providence’s high taxes impact familiar local businesses.

The 41-page report by the nine-member Commission on Revenue Sustainability and Effectiveness took a look at how Providence’s commercial tax rate – which will stay at $36.75 per $1,000 of assessed value in 2013-14 – compares with those of its surrounding towns. Take a look:

tax_rate_comps_Prov_2012

At the high end, One Citizens Plaza pays Providence $1.38 million annually, $238,204 more than it would in Cranston and $782,778 more than it would in Smithfield. At the low end, LaSalle Bakery pays Providence $14,005 a year, $2,423 more than it would in Cranston and $7,965 more than it would in Smithfield.

“With a higher property tax burden, businesses pay a heavy premium to be located in Providence,” the report noted. “In some instances, this higher tax burden is unavoidable because Providence location is an important factor to the success of the business.” (The Old Canteen might get fewer patrons in Smithfield than it does on Federal Hill.) “In other cases, Providence’s commercial tax burden is an obstacle to locating in the city.”

Mayor Taveras has said repeatedly he thinks the tax rate in Providence should be lowered, not just frozen, but he’s also indicated he can’t find enough savings to offset the loss of revenue.

The tax commission ran into a similar problem. Its report proposed revamping Providence’s tax structure to set the commercial property rate at twice the owner-occupied residential rate, but acknowledged that the city would lose $35 million to $40 million in annual revenue, or about 6% of the city’s $663-million proposed 2013-14 budget, if the change was made without increasing homeowners’ taxes.

“Providence has an extremely liberal owner-occupied homestead exemption (50%) in comparison to other municipalities in Rhode Island and the region,” the report said. “As a result, it is extremely difficult to reverse history and identify property tax restructuring alternatives that improves Providence’s economic competitiveness and balances the property tax system without shifting an additional burden to homeowners.”

• Related: Study: Providence commercial tax rates highest in the US (May 10)

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20 Responses to “How city property taxes wallop LaSalle Bakery, Old Canteen”

  1. Snap Shot says:

    Cranston, and Providence are the two cities that you do not want to own a business…… Now I know why the two Mayors of both those cities are good friends………

    1. Ed says:

      The entire state of Rhode Island has been business enemies for over 90 years. It started back in the 1920′s. Your ancestors could not or did not notice how incrementally the jobs started disappearing and the pay declined. The only way now to stop the death spiral at this time is vote anti incumbent. The reason the people of Rhode Island have to vote anti incumbent, is the people who are in office will give up a little to appease the voters but will not do what helps the people who work in the private sector, the taxpayers. That means reduce or elminate government services, use alternatives that are more cost effective, than public sector employees. Public sector employees need to have their pay reduced by 20% pay 35% of the cost of their benefits and have their pensions reduced by 50%.

      1. Snap Shot says:

        The entire state of Rhode Island has been business enemies for over 90 years. It started back in the 1920′s

        History class was not your strong point.

      2. Ed says:

        Snatch. You better look at when the mills started closing down. That was in the 1920′s. In the 1930′s the population of Rhode Island nearly starved because they could not grow food nor had money. The reprieve for the state was during WWII. After the war economy picked up throughout the country but the growth of Rhode Island never kept up. The 1960′s was status quo businesses were slowly leaving nobody noticed. The seventies slow job growth low paying jobs. The 80′s and nineties were boom years for the United States. Again Rhode Islands growth never kept up. In 2000 Rhode Island still looked like it did in 1979. Old and decripit. No new building very few decent paying jobs nothing matching the growth of the rest of the United states. Now the state has how much abdandoned commerical space? How many vacant houses? How many people unemployed people? Rhode Islanders still believe that manufacturing or restaurants will save the states economy. Making crap goods and overpriced pasta in obsolete buildings is the sign of the third world. Snatch you have to be a public sector employee.

      3. steven says:

        Why do city workers have to get a pension, at all

      4. Matt says:

        Steve, what the public sector employees need is to be fired and their jobs outsourced to the private sector. Business that are not run by Rhode Islanders should be the only ones allowed to bid for the jobs. The bidding process has to be open under standard sunshine laws. Sunshine laws are something Rhode Island has never had. It is very obvious Rhode Island is a closed society.

  2. Anthony .D says:

    Snapshot,

    Taveras and Fung hadn’t made it out of elementary school by the time this state was set on a course towards epic failure. Apparently we never got the memo about the end of manufacturing, the onset of globalization and the perils of becoming a nanny state.

    1. Snap Shot says:

      Okay, so these two are just figure heads, same old, same old…. No solutions, high taxes, and now want to run for higher office…….

      I get you… Qualified for higher office….

    2. Ed says:

      Tony the worst skill Rhode Islanders as society have is you people can’t anticipate, resist change and live in the past. You people get what you deserve, which is the highest taxes and the poorest services.

  3. lost in ri says:

    keep voting democrat and this is what you get……

  4. Caroline Louise says:

    This is not to say Providence shouldn’t do more for small business. It really should, especially for the ones providing jobs, not necessarily the ones incubators think are cool. But it’s likely that on the whole, the businesses you mention would rather be in Providence than Smithfield. Meanwhile, why the discount for owner-occupancy of multifamily housing? Probably with so few affordable rentals, it’s best to have the owner caring about the properties that do exist.

    1. Ed says:

      The problem Caroline, is Rhode Islanders have a poor work ethic, cannot anticipate, and think they are entitled. In other word Rhode Islanders are the fecal matter of the United States.

      1. Jeff_RI says:

        While I wouldn’t go so far as to say fecal matter, I would say Rhode Islanders are generally very complacent/passive, or just uninformed. Not being from here I can generally say that most natives I’ve met have little desire to see things change, nor do they necessarily realize how royally screwed they are and/or how much their elected representatives are doing to keep RI at the bottom of the pile.

        It’s sad. I’d feel better if Rhode Islanders were disenfranchised – that I can understand. Unfortunately, most are either completely naive or getting rich off the buddy system. In either case, the elected convicts stay in control and nothing ever changes.

  5. Ted says:

    The Homestead program needs significant review. With 50% getting homestead & the nonprofits owning a large chunk of the other 50% (hospitals, churches, colleges, etc), there is a smaller and smaller base to tax overall. I know they have been working on the list of homestead properties; but I think a deeper review to confirm owner occupied needs to be undertaken.

    1. Matt says:

      Ted the city has to cut spending and tell the public sector employees they WORK for the taxpayers not the other way around.

    2. John says:

      Ted, with all due respect, the Homestead exemption review that took place last year was very thorough. As a Providence homeowner, I, and all my neighbors, had to provide notarized documentation to the city that we lived in our houses.

      Even with the Homestead Exemption, my residential taxes are still quite high. You also cannot forget the car tax that we pay. I pay well over $1,000 year for two cars that I own outright.

      I’m all for making Providence more attractive to business, but I think Providence has squeezed every penny out of its residents.

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  7. Steve Lemois says:

    If they don’t like it, move. Or raise the prices. What else can you do in such a business friendly environment?? (sarcasm)

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