The Cranston City Council voted 7-1 to approve a tax incentive program for Taco, Inc., that gradually increases the taxes paid on the $20 million Innovation and Development Center addition. Taco would pay 10 percent of the taxes on the appraised value of the new property in the first year, 20 percent in the second year, and so on and so forth.
“In a terrible economic recession, Mr. [President and CEO John Hazen] White chose to infuse $20 million into his facility. Taco has been a very good friend to Cranston, a very good friend to the community,” said Councilman Paul Archetto from Ward 3, where Taco is located. He introduced the ordinance.
A condition of this incentive is that the city places a lien on the property. In the event that Taco folded, sold the facility or decided to leave Cranston, the city would still have recourse for recouping the full amount of taxes due – a precaution that Council President Tony Lupino found reassuring.
A sticking point for Ward 1 Councilman Steve Stycos, however, was that no one could put a dollar amount on this incentive. While the expansion project cost Taco roughly $20 million, an appraised value is not yet available, meaning the city is not yet sure how much is owed in taxes on the new building and therefore how much the company will be required to pay in taxes. The commercial tax rate is $34.26 per $1,000.
“We can’t even say what this is going to cost to taxpayers because any tax break that we give to Taco, those taxes have to be made up by all the other taxpayers,” said Stycos, who voted against the ordinance.
Councilman Emilio Navarro understood where Stycos was coming from. He thanked Taco for their dedication to Cranston, and said he planned to support the ordinance, but did ask that a figure be provided to the City Council as soon as it was available.
“I think it’s a good thing but I’d like to know the impact that this is having. When [taxpayers] hear tax incentive in these times, we have to justify the economic process,” he said.
Stycos wanted to know if jobs would result in the expansion and, if so, how many. Jeffrey Gladstone, counsel for Taco, could not put a specific number on the employment increase.
“The intent is to continue to grow the business and to center it in Cranston. As [Taco] increases its revenues, it will increase its workforce as needed,” he said.
Stycos also questioned why the ordinance was coming before the council after the project was already complete.
“I’ve been critical of past incentive programs, but my understanding of an incentive program is that a company needs essentially a break on taxes in order to take certain actions that are going to increase employment,” he said. “In this case, you’re asking us to retroactively give a tax break for something that’s already happened.”
Director of Economic Development Larry DiBoni spoke in support of the ordinance, and said the taxes don’t take effect until the project is completed, which is why the council was being asked to approve the program now. Taco officially opened their new facility last Thursday with a ribbon cutting ceremony. DiBoni also pointed out that the tax incentive is on the addition only – the rest of the existing Taco facility would continue to contribute the full amount of taxes.
“In this down economic time, as everyone is aware, it is refreshing to see a company as Taco take on a $20 million expansion to build an Innovation and Development Center,” DiBoni said, calling the expansion “further evidence of Taco’s commitment to the city of Cranston.”
Gladstone said that part of Taco’s reasoning for staying in Cranston was a commitment of support from the administration. That commitment, he said, is mutual.
“In the long run, this is adding to employment, it’s adding to the tax base and it’s also adding to a manufacturing infrastructure,” he said. “I have all the faith that Taco is going to continue to be successful.”
Archetto said Stycos’ hesitation was uncalled for, as Taco has not only invested in the community, but intends to grow its workforce through this new educational center.
“It is very, very sad to see certain members of the council being difficult on this legislation when Mr. White will create jobs, will expand and hires many people in the city of Cranston,” Archetto said.
Councilman Michael Favicchio reiterated that no existing taxes would be lost, and that the incentive was well within reason for a project of this scope.
“I think we should be happy that we have a company that’s committed to staying here and growing here. I don’t think we’re giving away the store,” he said.