Advisors add more detail to proposed Chevron TIF modification plan

Tax revenues, projected jobs created are included in most recent discussion

By Mike Rego
Posted 11/21/18

EAST PROVIDENCE — Advisors representing the interests of Chevron Corporation were once again present at a meeting of the council, speaking to the body about a proposed modification to an existing …

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Advisors add more detail to proposed Chevron TIF modification plan

Tax revenues, projected jobs created are included in most recent discussion

Posted

EAST PROVIDENCE — Advisors representing the interests of Chevron Corporation were once again present at a meeting of the council, speaking to the body about a proposed modification to an existing Tax Incremental Financing (TIF) agreement between the energy behemoth and the city at the body’s November 20 gathering.

Chevron advisors first approached the council at its October 16 meeting in an effort to explain the rationale behind the request, which would increase the amount of bonds sold for the proposed redevelopment of the 26-acre former Gulf Oil Refinery off Veterans Memorial Parkway.

The initial TIF agreement for the land called for the sale of some $19 million in notes. The amended agreement would see that figure raised to $32 million and an accelerated schedule of accessing the monies for potential developers.

East Providence Waterfront Commission Chairman William Fazioli accompanied the advisors to the October 16 forum, telling the council then his group backed the modified TIF arrangement as did Acting City Planner Diane Feather.

Monte McKillip, owner of the Lincoln, Nebraska-based McKillip and Associates consulting company, which among other things assists entities on government policy and environmental services, told the council last week the “modification will help this idea and vision happen.”

As originally conceived, the Chevron property was to be repurposed as “Village on the Waterfront” with a heavy emphasis on residential units. In 2017, however, the company expressed a desire to alter its concept to one centered more on commercial and entertainment venues.

This calendar year, the parameters of the project began to come into greater focus with a particular emphasis on extending the existing Waterfront Drive south from the Tockwotton development.

Mr. McKillop said among the matching goals for the project between Chevron and the city are making greater use of former industrial sites, creating a safer pedestrian environment and attracting new businesses while supporting existing ones.

“Keep in mind,” Mr. McKillop continued, “this is going to help our development and help the city of East Providence.”

The added expense sought to be paid for by the modified TIF includes the 1.2 mile extension of Waterfront Drive. As well, some 45 acres of public access space will be included in the redevelopment. Greater integration with the East Bay Bike Path and the construction of a observation/fishing pier are also part of the plan.

Another note of significance, one element of the overall plan for that portion of the waterfront district highlighted last week is Chevron’s coordination with the city in attempting to build along with the Rhode Island Department of Transportation a new exit to the location off Interstate 195.

“The TIF modification is part of a larger piece of the puzzle and all of the pieces are coming together at this point,” Mr. McKillop said. “All of the things coming together, the TIF is really the first piece to get things going.”

Keenan Rice, president of MuniCap, Inc., a financial advisory firm with offices in Maryland and other locations around the country, returned in front of the council to again accentuate the necessities of the amended TIF.

Noting all of the elements of the 2010 agreement remain in place, Mr. Rice, as he did at the October meeting, said under the existing terms it is not feasible for small to medium size developers to finance the public infrastructure (water, sewers, electric, etc.) requirements at the site. Mr. Rice added Chevron has no interest in pursuing redevelopment itself, though it continues to remediate the land. The company has already spent upwards of $30 million regenerating about half of the parcel.

He said the reason why the bonds must be increased from $19.3 million to $32.5 million are mostly due to the added costs of extending Waterfront Drive and removing an old pier. He added engineering plans recently composed for the project were “much more detailed” than previous specifications done.

“There’s a great deal of interest in developing this property. It just needs to be something they can finance,” Mr. Rice said.

He further stated regional developers ready to take on the project do not have the on-hand capital to get it started. And under the immediate terms, the bond monies can’t be released until only after 50 percent of project is complete. Mr. Rice said the “uncertainty” of completion timeline precludes banks from financing the needed infrastructure aspects.

The TIF-related bonds, Mr. Rice stressed, were “non-recourse,” meaning the city has no exposure. The conditions of repayment are expressly referred to in the agreement and the property and buildings are used as collateral.

“This legislation will change the terms and allow for redevelopment to move forward,” Mr. Rice said.

Introducing more detail than he did earlier, Mr. Rice claimed the city should see some $2.8 million annually in tax revenues once the TIF agreement expires after 10 years, roughly $2.5 million more than is currently paid by Chevron.

Also of note, the anticipated 976 jobs created during the course of expected construction will lead to some $51 million in earned wages. And once complete, a projected 682 permanent jobs could be realized with annual wages totally approximately $43 million.

The council took no action last week. A public hearing and vote is set for Tuesday, Dec. 4, meeting of the body.

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