Developer Receiving Millions in Incentives From State Fails to Pay Bills, Says Subcontractor

The new apartment tower at the bottom of College Hill in Providence has received millions in subsidies from Commerce RI and millions in tax breaks from the City of Providence in a tax stabilization. But, according to multiple sources, the Pennsylvania-based developer, Vision Properties , owes millions of dollars to the subcontractors that built the $60 million project.

The Edge College Hill is marketed to primarily Brown University and Rhode Island School of Design Students as "Luxury Student Apartments" complete with a gym, granite countertops and fully furnished. Rents top more than $2,000 a month.

Rhode Island business owner Jose Marcano said he has not received pay for his company's work in 2018.

"I've gotten no pay since [we finished] in September," said Marcano, who said he started on the job in March 2018. "I hear they're looking at the [Vision] tax credit at Commerce, and I've been in touch with the city of Providence regarding their tax stabilization agreement."

Marcano said that in total, he is "owed $264,000" for his company -- JoMar Painting's -- work on the project.

"Greg Mancini is my lawyer," said Marcano. "I had 25 [workers] on the job. [Vision] is now renting the units, so why can't they pay us? It puts me behind now, between being able to get workers moving forward, and now the state's got the [education bond] work for the schools. This hurts my ability to get a line of credit."

The apartment complex — the Edge College Hill is nearly adjacent to RISD and the “Luxury Student Apartments” are located on Canal Street. The owners of the project are a series of limited liability corporations that are controlled by Vision Properties in Pennsylvania. The 15-story tower has approximately 200 apartments.

In May 2017, the Raimondo administration approved a total of $4 million in taxpayer-funded subsidies. “The [developer] is requesting a Rebuild Rhode Island Tax Credit of $3,000,000, along with an exemption from state sales and use taxes on construction materials and certain other eligible costs totaling $1,000,000,” said the economic analysis report conducted by Commerce RI’s consultant. The Commerce Corporation Board, chaired by Raimondo, approved the subsidies in May of 2017.

When asked about the failure of the developers to pay the subcontractors, Matt Sheaff, spokesman for Commerce RI told GoLocal that Commerce is looking at the issues.

“We were made aware of these incidents and we are actively looking into it," said Sheaff. "Tax credits are paid out over five years after a review and certification of the final project costs. The final project costs of this project have yet to be certified."

But for Marcano, he believes the RI businesses need to be paid and taxpayers' interests are paramount. "They [Commerce] need to protect the taxpayers, if an out of state company comes in and doesn't play by the rules," said Marcano.

The developer and its public relations contact did not respond to requests for comments.

"It's been over the last 2 to 3 weeks. I know [Marcano] had been trying to negotiate with [Vision] to get paid," said attorney Greg Mancini. "I've had a conversation with Commerce about this. I know they're looking at it."

"By law, if you do work on a piece of real estate property — and you’re not paid — you have a right for a lien on the work completed 200 days prior," said Mancini. "The public policy — even without 'contract privity,' whatever the contract relationship, if you improved that property, you have that right."

"We filed for $169,000," said Mancini. "And that is not as much as what they haven’t paid him what he’s owed."

The Developer Promises

Vision Properties has developed similar "luxury student apartments" in Worcester, Lowell and in other college towns on the East Coast. The company states its values are "Vision Properties is fully committed to the places where we invest, the projects we build, and the people we serve. Transforming communities is our passion."

The developer is looking to develop a phase II portion of the Rhode Island project. The RI Commerce gave approval to the second phase, but the contract between the developer and Commerce has not been signed.

The now occupied Providence project offers is residents "rooftop terrace sky lounge overlooking Downtown Providence, and the Canal...State of the art 1,500 Sq Ft Fitness Center On Location complimentary for all residents...All units come fully furnished with individual washer and dryer in unit, a 50" Smart TV, stainless steel appliances and granite countertops!"

Editor's Note: A previous version had identified Mancini's quote as "with contract privity" -- it has been edited to "without contract privity."

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