Friday, July 21, 2023
Providence Mayor Brett Smiley PHOTO: GoLocal
Just prior to the Providence City Council authorizing outside counsel Max Wistow to pursue recovery of potentially tens of millions of dollars from developer Arnold “Buff” Chace, Providence Mayor Brett Smiley sent a scathing letter.
Smiley claimed in his letter, “In addition to wanting to continue our joint negotiation efforts, I also wanted to share my concerns about the City Council’s recent fee agreement with Attorney Wistow.”
Smiley’s letter continued, “Opening litigation at this stage would stop all of our joint efforts to renegotiate a better deal; the agreement rewards Attorney Wistow for lengthy litigation and provides a bonus of up to half of the City’s anticipated recovery (potentially up to $1,400,000); a 50% contingency fee is highly unusual for this type of representation and does not require substantive work by this attorney.”
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Councilman Jim Taylor said the hiring of Wistow could lead to the recovery of $42 million from Chace.
Smileyr’s effort fell on deaf ears. The City Council moved forward with hiring Wistow by a vote of 10-1. Only Councilor Jo-Ann Ryan of Ward 5 was opposed. The vote was to authorize the city council to meet to hear presentations from Wistow’s firm in a public setting.
Smiley said he believes that the city needs to renegotiate the tax agreement with Chace — who is a significant contributor to Smiley’s political campaigns. Chace has donated $4,000 to Smiley’s mayoral campaigns.
Arnold “Buff” Chace PHOTO: GoLocal
And for Chace, this is just one of his legal challenges. His cousin and ten other members are suing him, alleging misuse of millions of dollars of trust funds.
Wistow, reached by phone on Thursday night, declined to comment on Smiley’s claims.
GoLocal reported back in May, that Council President Rachel Miller had negotiated a deal to engage Wistow.
The deal is rich for Wistow and his firm — they may receive 50% of the tax dollars it recovers on behalf of the City of Providence, GoLocal has learned.
Flawed Deal? Internal Auditor Finds Irregularities, Lack of Approval and Other Potential Violations
A December 2022 report from Providence’s Internal Auditor, Gina Costa, identified several legal issues regarding the settlement of a consent decree without approval before the city council. The auditor recommended hiring outside counsel to review the matter. Through a resolution in March, the city council authorized the council president to engage outside attorneys.
Specifically, she identified that “This consent order was approved and implemented without the approval of the City Council, the Committee on Claims and Pending Suits or the Board of Tax Assessment and Review. The City Solicitor claims that his authority to enter into the Consent Order rests in Code of Ordinances Sec 2-99 (b) (4). This section does allow the Solicitor to settle. However, that settlement authority requires the city Tax Assessor’s consent. My research has been unable to identify any such consent from the Tax Assessor at the time the Consent Order was signed, but a response from the Solicitor is pending.”
Max Wistow, PHOTO: GoLocal
In addition, Costa found the leases that are being used to justify restricted “low-income” units includes students with zero income level. Housing and Urban Development (HUD) does not include students as eligible for qualification in other HUD-approved properties.
Further, Costa unveiled, “These properties are mixed-use and contain both commercial and residential space. Under this Consent Order the entire property, including commercial space such as restaurants and stores, is now being taxed the same as the residential – 8% of the previous year’s gross income. The Tax Assessor is empowered to separate the commercial from the residential, however, the Consent Order does not allow for that separation.”
And, “There is retroactivity to abate taxes to July 24, 2020, even though there was no restricted covenant in place at that time, as required. Approximately $626,000 has been abated for six of the ten properties. The Assessor did ask for the HUD forms that would confirm the qualification of “affordability” after the Consent Order was entered with the Court but was instead simply provided with the leases themselves.”
There are other questions about income qualifications and proper reporting, according to Costa.
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