Did you know that the sales tax you pay at Providence Place doesn’t go to the state? It goes to the owner of the mall to defray the cost of building it. Now that the owner is in bankruptcy and trying desperately to sell its assets (about 200 malls and luxury condo buildings) I think the state has a great opportunity to take advantage of the economy and ‘nationalize’ the mall. Providence Place turns a really healthy profit, and this would help keep money in-state.
I’m sure the folks at the Rhode Island Economic Development Corporation could spawn a private company that could buy the mall at today’s super-discounted rate, operate it as-is for a few years as a private company, and then either keep it or sell it to another management company when the commercial real estate market is firmer.
Normally, I’m a very pro-business, less-government guy, but the deal we gave to the builders of the mall was an insane giveaway. If we’re going to ‘cheat’ at free-market capitalism by giving private companies sweet deals to do business here, we should cheat to win.
How this would be done, and at what cost is a question. Can the state make $100 million dollar loans right now? What if they’re charging interest? What if they get to keep the 7% of sales made at the mall again? Does anyone have information on the value of the mall, or the sales and tax data and details about the tax-break given to the developers and owners?
2 thoughts on “‘Nationalize’ Providence Place Mall?”
That’s why keeping it private is so important. I don’t actually want to make it an asset of the state, I just want to ‘close the loophole’ that got us to pay for this $460-million beast that exports money from the state.
I would imagine that a totally private entity would have to form (possibly under the tutelage of the RIEDC), then they would have to have a business plan, get a loan from the state that used the mall itself as collateral (that way the state’s credit wouldn’t be affected), and buuy the mall at discount from GGP.
How to keep it free of malfeasance and corruption? I’m not sure, we’d have to have the process be totally open, and there would have to be VERY good oversight of the management company and the finances.
I posted this more as a thought experiment.
Providence seriously undervalues the mall for tax purposes (we tax about 20% of what it’s actually worth). If the mall is profiting and the company wants to sell it, we can recoup more money by taxing it at full-value. This would have the dual-benefit of getting more money to Providence now -AND- lowering the actual value on the asset making it easier to purchase later. Think of it like denting a can to get a discount on it. 🙂
Now this is irony, MG. You know what a commie I am, but this gives me the jeeblies. Some state somewhere could do this and do it well. But this state at this time with this Assembly?
I don’t know a lot about Michael Saul, but I don’t trust The Don’s business (or rather, biz dev) acumen. Anybody who would fire Kip Bergstrom and let him go back to Stamford, CT probably doesn’t know how to put together the winning team. He always fires the wrong people!