City Council OKs Financing Plan for Kettle Point Housing Development

The Kettle Point housing development got the approval it needed for financing public improvements and remediation at the 48-acre site from the East Providence City Council Tuesday night. Expect a ground-breaking within 6 months.

The councilors voted unanimously to approve the ordinance that will set up a tax-increment financing plan and authorize the issuance of up to $9.7 million in bonds to build the roads and lay the water and sewer lines to the former petroleum tank farm on Watchemoket Cove.

The 5-0 approval came after several hours of testimony from the developer, Churchill & Banks of Providence, and several residents opposed to the city taking on the so-called risk of the development failing.

“The risk is being assumed by the bondholders,” said Mayor James Briden, “and the risk is a small one that is covered in a number of different ways by the developer.”

“It’s a well thought out plan and a huge asset to the city,” said Assistant Mayor Thomas Rose. “A lot of time and effort has been put into this. This project is so much more scrutinized. They’ve gone above and beyond.”

Rose was referring to a host of city officials, and the bond counsel and the Waterfront Commission who have weighed on the 407-unit development. 

“There has been an intense amount of due diligence on this project,” added City Manager Peter Graczykowski. “It’s entirely a win-win for the city and the developer.”

Kettle Point is an $80 million project designed as a combination of rental luxury apartments and condominiums for sale that is expected to generate more than $14.15 million in additional taxes for East Providence over 25 years.

Churchill & Banks said the development is not feasible without the TIF bonds for public roads, water and sewer lines and for remediation of the part of the site that has not been cleaned up. Revenues from the development will pay off the bonds. The city has no legal liability to repay the bonds. That was repeated numerous times at the public hearing on the financing plan.

“This is an opportunity to take unused land and open it up to the public,” said Jay Gowell, attorney for Churchill & Banks. “Even if it’s not successful, there is not a city obligation.”

“This is a private developer putting real money into an unusable site,” he said. “If there is anything that is positive in the city, this is it. This project does not take one penny from taxpayers.” 

Thomas Riley, chair of the board of canvassers, was probably the most vocal critic of the City Council agreeing to the financing plan.

“We’re not in the business of taking risks,” he said. “That is not government’s job.” 

Eugene Saveory, chair of the Zoning Board and a condo association official, said he was concerned about the impact of the development on the city’s infrastructure and police and fire services. He also questioned the $300,000 and up sales prices for the condos and the $1,000 a month rents.

A detailed analysis has studied the impact, said Jeanne Boyle, director of the planning department. And she said the housing development will not have a negative impact. 

Raymond Lavey, a consultant to Churchill & Banks, said “market studies indicate a demand for these condos and apartments” among certain targets, including medical students, younger professionals and older workers with two incomes and no children.

The development, in fact, said several consultants and officials with Churchill & Banks, will create 757 jobs for local contractors and businesses during construction over 4 or 5 years and 10, which equates to $42 million in wages, and 10 permanent jobs at the development for caretakers and maintenance workers.

“We’re confident that the market is right for this project,” he said.

The development also will include new parks, a fishing pier, a beach, and parking for public use, and new access to the adjacent Squantum Woods Park on about half of the 36 acres that is buildable.

Here is the complete ordinance that was approved by the City Council:

1.  ADOPTING AN AMENDED EAST PROVIDENCE WATERFRONT SPECIAL DEVELOPMENT DISTRICT TAX INCREMENT FINANCING PLAN (THE “AMENDED PROJECT PLAN”) AND AUTHORIZING THE ISSUANCE OF BONDS TO FINANCE CERTAIN PUBLIC INFRASTRUCTURE AND PUBLIC IMPROVEMENTS NECESSARY IN CONNECTION WITH THE KETTLE POINT PROJECT

WHEREAS, by Ordinance No. 516 adopted October 5, 2010 and October 19, 2010 (the “2010 Redevelopment Ordinance”), the City Council adopted and approved the East Providence Waterfront Special Development District Plan (the “Redevelopment Plan”) and designated the area within the City described in the Redevelopment Plan as the East Providence Waterfront Special Development District as a redevelopment area (the "Redevelopment Area") pursuant to chapters 31-33 of title 45 of the Rhode Island General Laws, the Redevelopment Act of 1956 (the "Redevelopment Act"); and

WHEREAS, it is the purpose and intent of the City Council to facilitate redevelopment of the Redevelopment Area to accommodate the City’s redevelopment initiatives; and

WHEREAS, pursuant to the Redevelopment Act and chapter 33.2 of title 45 of the Rhode Island General Laws (the "Tax Increment Financing Act") the City desires to raise funds for such redevelopment by the issuance of tax increment financing bonds of the City or other bonds secured by a tax increment pledge ("TIF Bonds"); and

WHEREAS, the Tax Increment Financing Act requires as conditions precedent to the creation of a tax increment, that the City Council adopt a redevelopment plan and a project plan, including the designation of a tax increment area and the calculation of the tax increment to be derived from taxes levied on real and personal property situated in or otherwise assignable for purposes of property taxation in the tax increment area; and

WHEREAS, the City Council is required by the Redevelopment Act to make certain findings, determinations and declarations in connection with the adoption of a redevelopment plan and a project plan; and

WHEREAS, pursuant to the 2010 Redevelopment Ordinance the City Council approved the East Providence Special Waterfront Development District Tax Increment Financing (TIF) Project Plan (the “Project Plan”) which designates several Special Development Sub-districts, including the Kettle Point Special Development Sub-district (the “Project Area”); and

WHEREAS, C&B Kettle Point, LLC (“C& B”) is the designated developer of certain land located in the Kettle Point Special Development Sub-district and C&B anticipates that it will develop a residential project in the Kettle Point Special Development Sub-district and incur capital expenditures of approximately $80,000,000 for such development (the “Kettle Point Project”); and

WHEREAS the East Providence Waterfront Special Development District Commission (the “Waterfront Commission”) has recommended that the City Council approve Amendment No. 1 to the Project Plan dated May 7, 2013 which amends the Project Plan consistent with  improvements contemplated by C& B for the Project Area;

WHEREAS, pursuant to the Tax Increment Financing Act, the City shall designate a portion of the tax increment resulting from the Kettle Point Project for the benefit of certain projects described in the Redevelopment Plan and the Project Plan, including the infrastructure and public improvements contemplated by the Kettle Point Project (the “TIF Projects”); and

WHEREAS, the City wishes to provide authorization, subject to Section 8 hereof, for the issuance of special obligation bonds and/or bond anticipation notes pursuant to the Tax Increment Financing Act in an aggregate amount not to exceed $9,370,000 to finance and refinance the TIF Projects related to the Kettle Point Project; and

WHEREAS, TIF Bonds will be payable solely from "project revenues" as defined in the Tax Increment Financing Act; and

WHEREAS, project revenues will include tax increments, bond proceeds and special assessments; and 

WHEREAS, it is intended that special assessments will be properly imposed on land and improvements comprising the Kettle Point Project and serve as additional security for the TIF Bonds issued for the benefit of the Kettle Point Project, such special assessments to be paid over the term of any TIF Bonds issued for the benefit of the  Kettle Point Project; and

WHEREAS, the tax increment revenues will be a credit to the payment of special assessments, all as provided in the Assessment Plan as approved by the Waterfront Commission, and further described herein; and

WHEREAS, project revenues do not include general funds of the City;

WHEREAS, the TIF Bonds will be special obligations of the City payable solely from project revenues; and

WHEREAS, the City wishes to amend the Project Plan to permit the development of the Kettle Point area by C&B, and approve the special assessment in the District as approved by Waterfront Commission for the purposes set forth above.

 NOW THEREFORE, the City Council of the City of East Providence hereby makes the following findings, determinations and declarations with regard to the East Providence Waterfront Special Development District Tax Increment Financing Plan, including Amendment No. 1 (as so amended, the “Amended Project Plan”), which findings are required by Sections 45-32-13 through 45-32-18, Section 45-32-20 and Section 45‑33.2‑4(1) and (5) of the Rhode Island General Laws:

1.         The Redevelopment Plan and the Amended Project Plan are feasible and conform to the comprehensive plan for the City of East Providence, and if carried out would promote the public health, safety, morals and welfare of the community, and would effectuate the purposes of the Redevelopment Act.

2.         The source of funds for carrying out the TIF Projects as provided in the Redevelopment Plan and the Amended Project Plan shall be proceeds from the sale of TIF Bonds issued by the City of East Providence and any other legally available revenues contemplated by the Redevelopment Plan and Project Plan.

3.         The Redevelopment Plan does not directly result in changes to streets except for the extension and construction of a portion of Waterfront Drive, the entrance features at Lyon Avenue, the construction of Kettle Point Loop Road, the construction of the road extending to the new parking area for the East Bay Bike path, the relocation of existing curb cuts on Veterans Memorial Parkway and internal roads within the Kettle Point Project.

4.         The Redevelopment Plan and Amended Project Plan do not presently provide for acquisition by the City of property by negotiation or by eminent domain.

5.         The Redevelopment Plan contemplates financial aid from the federal government.

6.         The Redevelopment Plan provides for the retention of controls and the establishment of any restrictions or covenants which may run with the real property sold, leased, or otherwise disposed of for private or public use as are necessary to effectuate the purposes of the Redevelopment Act.

7.         The findings of fact regarding “blighted and substandard conditions” set forth in the Redevelopment Plan are hereby accepted.  Based on those findings of fact, the Redevelopment Area is hereby found to be a "blighted and substandard area" as that term is defined in Section 45-31-8 of the Redevelopment Act and requires clearance, replanning, redevelopment, rehabilitation and improvement.

                            8.         That the Project Area would not by private enterprise alone, and without either governmental subsidy or the exercise of governmental powers, be developed or revitalized in a manner so as to prevent, arrest, or alleviate the spread of blight or decay.

                             9.         That the Amended Project Plan will afford maximum opportunity to privately financed development or revitalization consistent with the sound needs of the City as a whole.

10.       The facilities and other assistance are needed and that the financing of the project in accordance with the Amended Project Plan is in the public interest.

11.       There is not within the City an adequate supply of low rent housing for persons or families of low income available for rents they can afford to pay, the rents which those persons or families can afford to pay would not warrant private enterprise providing housing for them, and the financing of public improvements in accordance with the Amended Project Plan is in the public interest.

12.       The City Council intends that the Project Area be redeveloped in accordance with the City’s Redevelopment Plan and Comprehensive Plan and intends that such redevelopment promote the health, safety and welfare of the City.

13.       Unemployment or the threat of unemployment exists in the City, and it is expected that the Amended Project Plan will create approximately 10 permanent and 757 temporary full-time equivalents jobs.  It is expected that wages and benefits from such job will be comparable to current market rates resulting in increased personal income tax for the State of Rhode Island.

NOW THEREFORE, the City of East Providence ordains as follows:

SECTION 1.  The Kettle Point Special Development Sub-district is designated as a project area for the purposes of the Tax Increment Financing Act. The Redevelopment Plan is the official redevelopment plan for the Project Area. The Amended Project Plan, incorporated herein by reference, is adopted and approved as a project plan pursuant to chapter 45-33.2 of title 45 of the Rhode Island General Laws.  The public improvements shall be in the Project Area, and shall be identified as "Kettle Point TIF Project Number 2013-1."

SECTION 2.  There is hereby authorized, subject to Section 8 hereof, the issuance of special obligation bonds and/or bond anticipation notes pursuant to the Tax Increment Financing Act in an aggregate outstanding amount not to exceed $9,370,000 to finance the TIF Projects contained in the Amended Project Plan relating to the Kettle Point Project (the “Bonds”).

SECTION 3.  The Bonds shall be issued for the purpose of carrying out any project or projects described in the Amended Project Plan including the TIF Projects.  Without limiting the generality of the foregoing the Bonds shall be issued for TIF Project costs, which may include interest prior to and during the carrying out of any such project and for a reasonable time thereafter, such costs, reimbursements and reserves as may be required by any agreement or arrangement securing the Bonds, and all other expenses with respect thereto, including, without limitation, reimbursement of expenses previously paid from any other source, incidental to planning, carrying out and financing any such project.

SECTION 4.  The Bonds shall be payable solely from "project revenues" including tax increment as defined in the Tax Increment Financing Act and shall not be deemed to be a pledge of the faith and credit or the taxing power of the  City.

            SECTION 5.  The City hereby pledges not more than 60% of the tax increment resulting from the Project Area to the repayment of the Bonds.  Notwithstanding anything contained herein to the contrary, the debt service on the Bonds shall not exceed 50% of the estimated tax increment supporting the Bonds.

SECTION 6.  Each of the Bonds shall recite on its face that it is a special obligation bond or bond anticipation note, as the case may be, payable solely from "project revenues" as defined in the Tax Increment Financing Act pledged for its repayment.

SECTION 7.  The Bonds shall be dated and may be made redeemable before maturity with or without premium.  The Bonds may be issued in one or more series.   The Authorized Officers defined below shall determine the terms, details and manner of sale and other conditions of the Bonds and the security structure therefor for each issue of Bonds in accordance with the Tax Increment Financing Act and the Amended Project Plan, including the manner in which tax increment received and to be received under the Tax Increment Financing Act and the Amended Project Plan and other "project revenues" under the Act shall be escrowed, pledged or otherwise used to secure any such Bonds issue, and shall also determine the date or dates of the Bonds, their denomination or denominations, the place or places of payment of the principal and interest thereon, which may be at any bank or trust company within or without the state, their interest rate or rates, maturity or maturities, redemption privileges, if any, and the form and other details of the Bonds.

SECTION 8.   The Mayor, the City Manager and the Director of Finance (the “Authorized Officers”) are authorized to negotiate and determine the terms and provisions of such documents required for the sale and issuance of the Bonds and the documents required to complete the TIF Projects described in the Amended Project Plan, including a Development Agreement, Trust Indenture, Series Indenture and Bond Purchase Agreement and other necessary documents and certificates and any two of such Authorized Officers, acting jointly, are hereby authorized to execute and deliver such documents.

SECTION 9.   The Authorized Officers are authorized to prepare and deliver an Official Statement or Preliminary Limited Offering Memorandum, if required, in connection with the sale of the Bonds.

SECTION 10.  The Bonds shall be signed by the Director of Finance, shall be countersigned by the Mayor, either manually or by facsimile, and shall bear the seal of the City or a facsimile thereof.

SECTION 11.  In case any officer whose signature or a facsimile of whose signature shall appear on any Bonds shall cease to be an officer before the delivery thereof, such signature or facsimile thereof shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until the delivery.

SECTION 12.  The City may sell the Bonds in such manner, either at limited public or private sale, and for such price, as the Authorized Officers may determine will best effect the purposes of this ordinance and the Tax Increment Financing Act.

SECTION 13.  Notwithstanding any provisions of any general or special law to the contrary, Bonds issued under the Tax Increment Financing Act and hereunder may provide for annual or more frequent installments of principal in equal, diminishing, or increasing amounts, with the first installment of principal to be due at any time within five (5) years from the date of the issuance of the bonds and the last installment of principal to be due not later than twenty-five (25) years from the date of the issuance of the Bonds.

SECTION 14.  The Authorized Officers are authorized to execute and deliver a Continuing Disclosure Certificate in connection with the Bonds, in such form as shall be deemed advisable by the Authorized Officers.  The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate, as it may be amended from time to time.  Notwithstanding any other provision of this Ordinance or the bonds or bond anticipation notes, failure of the City to comply with any Continuing Disclosure Certificate shall not be considered an event of default under such bonds or bond anticipation notes; however, any bondholder or noteholder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section and under each Continuing Disclosure Certificate.

SECTION 15.  From and after the issuance of the Bonds, any two of the Authorized Officers, acting jointly, are authorized to execute and deliver other documents, certificates, agreements and amendments thereto, in furtherance of the development of the TIF Projects in such forms as said officers deem advisable, consistent with the best interests of the City, the execution and delivery thereof by any two of such Authorized Officers to be conclusive evidence of such approval.

SECTION 16.  The City Council hereby accepts and approves the Kettle Point City of East Providence, Rhode Island East Providence Waterfront Special Development District Commission Assessment Plan (the "Assessment Plan") as heretofore adopted by the Waterfront Commission in accordance with chapter 345 of the public laws of 2003.

SECTION 17.  The execution and delivery of an Assessment Pledge Agreement are hereby authorized.  Any two of the Authorized Officers, acting jointly, are hereby authorized to execute, acknowledge, and deliver the Assessment Pledge Agreement in such form as may be approved by said Authorized Officers, the execution and delivery thereof by such Authorized Officers to be conclusive evidence of such approval.