Commercial Property Assessments by Rhode Island Municipality, as a Measure of the Impacts of Tax-Exempts on Providence

To what degree is governing the City of Providence hampered by the existence of tax-exempt property within its boundaries? One way to begin answering this question is to start with readily available fiscal-data. Each year, all Rhode Island municipalities report tax assessment and levy information to the Division of Municipal Finance in the state’s Department of Revenue, with results separated into residential and commercial/industrial categories.

In the past, I’ve used the data collected and provided by the Municipal Finance Division to calculate the commercial/industrial tax-levy per resident in each RI city and town. However, with respect to the question of “tax opportunities” missed in Providence, this introduces at least one confounding factor. Because commercial tax-rates vary from community to community, the commercial tax levy measures both opportunities and what is made of those opportunities (for better or for worse). Since we are asking (at least for now) whether Providence is handicapped right from the beginning, before any incomes are earned or tax rates are set, we will go back one step further, to examine at how much commercial/industrial taxable property value is within each Rhode Island municipality, on a per-resident basis.

One technical note: In Rhode Island, taxes on apartments with more than five units and mixed residential/commercial properties are often classified as commercial. Since most, if not all, of the taxation levied on these properties will be passed along to residents, they will be considered residential and not commercial for this analysis. The Municipal Affairs Office collects assessment information that is detailed enough, in most cases, to allow the part of the official commercial levy due to class 3 (“apartment”) and class 4 (“combination”) properties to be determined and subtracted.

In the table below, the second column is a city or town’s reported commercial/industrial tax levy for tax roll year 2011 with any portion due to class 3 or class 4 properties subtracted out. The third column is population from the 2010 census, and the fourth column is the amount of commercial/industrial property value per resident:

Community2011 Com&Ind Assessed
Prop. Value
New Shoreham $130,939,920 1,051 $124,586
Newport $934,154,749 24,672 $37,863
West Greenwich $212,634,500 6,135 $34,659
Smithfield $643,292,510 21,430 $30,018
Middletown $478,133,706 16,150 $29,606
Warwick $2,216,473,370 82,672 $26,810
Westerly $573,347,700 22,787 $25,161
East Greenwich $323,074,200 13,146 $24,576
Lincoln $499,566,954 21,105 $23,671
East Providence $853,687,753 47,037 $18,149
North Kingstown $458,263,940 26,486 $17,302
Johnston $494,193,192 28,769 $17,178
Providence $2,718,570,863 178,042 $15,269
Portsmouth $259,361,400 17,389 $14,915
Narragansett $225,330,972 15,868 $14,200
North Smithfield $167,491,298 11,967 $13,996
Warren $146,246,352 10,611 $13,783
Scituate $141,574,476 10,329 $13,706
Cranston $1,062,342,644 80,387 $13,215
South Kingstown $369,939,495 30,639 $12,074
Cumberland $387,020,200 33,506 $11,551
Little Compton $39,773,100 3,492 $11,390
Burrillville $181,718,900 15,955 $11,389
Foster $47,954,300 4,606 $10,411
West Warwick $298,922,040 29,191 $10,240
Richmond $78,348,600 7,708 $10,164
Coventry $345,856,734 35,014 $9,877
Pawtucket $671,106,617 71,148 $9,432
Bristol $207,878,241 22,954 $9,056
Exeter $56,010,100 6,425 $8,717
North Providence $232,094,220 32,078 $7,235
Tiverton $113,794,995 15,780 $7,211
Woonsocket $295,463,687 41,186 $7,173
Barrington $111,820,800 16,310 $6,855
Jamestown $35,409,500 5,405 $6,551
Charlestown $46,429,900 7,827 $5,932
Hopkinton $47,827,200 8,188 $5,841
Glocester $38,302,758 9,746 $3,930
Central Falls $73,070,759 19,376 $3,771

Quick conclusions, not exclusive to Providence:

  1. Much to the dismay of folks who don’t like suburbs for various reasons (whom Joel Kotkin would call “urban chauvinists”), a good way to generate commercial tax revenue seems to be through strip-mall/big box commercial development, e.g. as in Warwick and Middletown.
  2. West Greenwich and Smithfield seem to be doing well in collecting revenue for their residents to use from large employers, though the conditions that make this possible are no more generalizable to every community in Rhode Island than are conditions in New Shoreham and Newport.
  3. Compared to its neighbors like Johnston and East Providence, there is plausible evidence of a bit of a dent in Providence’s available commercial revenue per resident (although Johnston is a beneficiary of the strip-mall dynamic). And East Providence is doing well, even though most of its big-box potential has been grabbed by Seekonk, MA.
  4. On the other hand, Providence, in 13th place on the list, does have considerably more commercial property to tax than do the neighboring communities of Cranston, North Providence and Pawtucket.

Moving from the table of numbers to the taxation and subsidy policy questions that are the reason for their creation suggests a question central to this issue despite being rarely a subject for explicit discussion. Is it a sign of a problem, when the largest city in a region doesn’t have the most commercial revenue per unit, i.e. does it automatically mean that something is out of balance, because Providence doesn’t have as much commercial revenue per resident to work with than does Middletown or Warwick?

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9 years ago

“a good way to generate commercial tax revenue seems to be through strip-mall/big box commercial development”
It’s a great way to turn your peaceful suburb into a snarled, polluted mess, too. Warwick is a dismal, depressing place compared to pre strip-mall days.
Did this take into account the special tax deal (the developers keep all the sales tax) for the Providence Place Mall? And the special valuation it has (MUCH lower than what it’s worth)?
Also, I think it would just benefit us all to stop leaning on property taxes and instead use some sort of statewide income tax redistribution to pay for stuff.

Warrington Faust
Warrington Faust
9 years ago

So, Providence’s population is 178,042. That has been stable for about 30 years, but represents a decline of about 30% from 1950. I wondered why there wasn’t a surplus of residential property. Searching around, I came across this.,10
Pretty candid for what seems to be a government sponsored archive (you can tell that from the grammar) and ends about 1983. It does give an interesting recital of Providence’s decline and attempted revival. Only the last two pages would seem to be relevant to this discussion.

Warrington Faust
Warrington Faust
9 years ago

Addendum to the post above. Apparently Providence welcomed the increase of exempt property with the expansion of RI hospital and the colleges. It was seem as relieving “blight”. Much is made of the revitalization of Davol Square. I have never had reason to go there, has that succeeded?

9 years ago

“Much is made of the revitalization of Davol Square. I have never had reason to go there, has that succeeded?”
It failed as a retail operation. I used to go when I was a little kid, they had a great toy shop. Davol Square’s hopes of being an indoor shopping mall were dashed by Garden City and Emerald Square, which were closer to the middle class suburban areas Davol was hoping to attract back into the city.
Now it’s mostly office space, primarily Brown, JWU, and some smaller for-profits. I’d guess that about 20-40% of the building is vacant, like pretty much all the commercial space in Providence. I think what will happen down here (I work in the neighborhood) is that Davol will form the ‘southern border’ to a swath of university expansion that extends north and east along the water into downtown.
There’s been a bait-and-switch development model going on downtown for about a decade now. Developers are given tax breaks and other incentives to renovate properties, but the properties almost always fold and the assets end up in university hands. I can’t tell you how many ‘residential condos’ and ‘retail centers’ have become dorms and non-profit offices. The bait-and-switch part is that it’s easy to convert a property that was getting a temporary tax break into a permanently untaxable one; it’s an easier sell to the city than converting tax-paying properties into non-payers.
And yes, ten years ago I was sat down and told this directly by one of the people behind it. This is the plan, and it transcends the tenure of individual politicians.
Many of the businesses that you do see are mostly artificially propped-up by a bunch of development loans, not naturally-growing out of local demand:

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