STATE OF RHODE ISLAND & PROVIDENCE PLANTATIONS PROVIDENCE, Sc. DISTRICT COURT

SIXTH DIVISION Providence Place Group Limited : Partnership, and Rouse Providence, LLC : : v. : A.A. No. 2007-173 : State of Rhode Island, acting by and : through Division of Taxation :

JUDGMENT This cause came before Gorman J. (Ret.) on Administrative Appeal, and upon review of the record and memoranda of counsel, and a decision having been rendered, it is

ORDERED AND ADJUDGED The motion for summary judgment is granted. Dated at Providence, Rhode Island, this 14th day of May, 2019. Enter: By Order:

___/s/______________ _____/s/______________

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STATE OF RHODE ISLAND & PROVIDENCE PLANTATIONS

PROVIDENCE, Sc. DISTRICT COURT

SIXTH DIVISION

PROVIDENCE PLACE GROUP LIMITED :

PARTNERSHIP, AND ROUSE :

PROVIDENCE, LLC :

:

v. : A.A. No 2007 - 173

:

STATE OF RHODE ISLAND, acting by and :

through DIVISION OF TAXATION :

DECISION AND ORDER

This case was filed under Rhode Island General Laws §8-8-24, et seq.,

seeking a refund of $2,029,000 paid to the state pursuant to a conveyance tax

statute.1 The transaction in question is the transfer of interest in a 99 year ground

lease entered into in September, 1996 with plaintiff, Providence Place Group

Limited Partnership (PPG) as the lessee, and the Rhode Island Economic

Development Corporation (EDC) as lessor. The interest was sold to Rouse

Providence LLC (Rouse), the other plaintiff in this case.

1 Under Chapter 8 of Title 8 of the Rhode Island General Laws, a taxpayer must

prepay any assessment in order to file a complaint challenging the Tax

Administrator’s decision, §8-8-26, and then seek a refund, §8-8-27.

2

An understanding of the circumstances leading to the creation of the

Providence Place Mall (Mall) is necessary when addressing the issues raised by

plaintiffs’ current motion for summary judgment and the Tax Administrator’s

response to it. The facts incorporated in this opinion are largely undisputed, and

are based on the documents submitted by the parties. 2

In 1995, the State of Rhode Island, through the EDC,3 entered into an

agreement with the Providence Place Group Limited Partnership to construct and

operate a mall within the City of Providence. In carrying out its responsibilities,

the developers paid $11,000,000 to purchase various tracts of real property, and

then sold them to the EDC for $1. Next, the Corporation and PPG entered into a

99 year ground lease covering the same property, with PPG as the lessee. The

lease includes a provision allowing the lease to be renewed for four additional 99

year periods, at the option of the lessee. Thus, if the options are exercised, the

ground lease would give PPG the right to occupy the land for 495 years.

The Mall, which includes a parking garage that is also covered by the

ground lease, was built and an occupancy certificate was issued in 2001. In 2004,

2 Most of the relevant facts in this case are documented in legislative enactments

and resolutions of a public corporation created by special legislation.

3 The Economic Development Corporation was “created and established as the

state’s lead agency for economic development” and given a broad mandate.

§42-64-5.

3

PPG sold its interest in the mall and the ground lease to Rouse. This transaction

was taxed under § 44-25-1(a) of the General Laws of Rhode Island which states:

There is imposed, on each deed, instrument, or writing by which any

lands, tenements, or other realty sold is granted, assigned, transferred,

or conveyed to . . . the purchaser or purchasers, or any other person or

persons, . . . when the consideration paid exceeds one hundred dollars

($100), a tax . . . [shall be] paid for the purchase of the property.

The state government, though the General Assembly and the EDC, was

intricately involved in the planning and development of the Providence Place Mall.

In fact, a separate chapter of the general laws is devoted exclusively to the

development, construction, and operation of the Mall. Title 42, Chapter 63.5.

Both the General Assembly and the EDC, through its resolutions, made a number

of specific findings relating to the economic need for additional business activity

and the expected benefits the mall would provide to the state. These formal public

statements establish that state officials believed the mall would help alleviate

substantial unemployment problems in Rhode Island and increase the state’s tax

revenues.

The court must begin with the general assumption that that when possible,

litigants should be given an opportunity to fully develop facts through discovery,

and present documents and witnesses which are subject to cross-examination.

“Summary judgment is ‘a drastic remedy,’ and a motion for summary judgment

should be dealt with cautiously.” Estate of Giuliano v. Giuliano, 949 A.2d 386,

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390 (R.I. 2008) (internal citation omitted). When considering a request for

summary judgment, the standard the court must apply is clearly set out in Rule 56

of the District Court Civil Rules: a judge must be persuaded that “there is no

genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” Lacey v. Reitsma, 899 A.2 455, 457 (R.I. 2006).

Also, the court must view “the evidence in the light most favorable to the

nonmoving party.” Id.

Plaintiffs make three arguments to support their motion: 1) that the transfer

of PPG’s interest in the ground lease with the EDC is not the type of transaction

covered by the conveyance statute; 2) that if the court finds that it falls under the

statute, PPG was granted an exemption from this type of tax; and 3) if the first two

arguments are rejected, that the actions taken by agents of the state, which were

relied on by plaintiffs, raise equitable principles which estop the state from

imposing a tax on the transfer involved here.

The Tax Administrator filed an objection to the motion and raises four

arguments: 1) the conveyance tax statute applies to the transfer of the interest

involved in this case, and the tax exemption legislation enacted in connection with

the creation of the Providence Place Mall and garage do not protect plaintiffs from

tax liability; 2) there are material facts which are disputed, and which cannot be

decided on the record now before the court; 3) an indispensable party – the City of

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Providence, was not notified of the appeal or of the motion for summary judgment;

and 4) the affidavit attesting to the authenticity of documents submitted in support

of the plaintiffs’ motion was signed by one of the attorneys of record in the case, in

violation of the Rules of Professional Conduct (3.7).

A.

The court considers two of the arguments made by the Tax Administrator to

be without merit. First, the submission of an affidavit from an attorney of record

stating that a number of documents are accurate copies of what are, basically,

public records is neither a violation of the Rules of Professional Conduct nor, even

if it were a violation, a basis for denying the motion.

The affidavit in question does not appear necessary. The documents

submitted though this process all seem to be public records, and plaintiffs could

have asked the court to take judicial notice of them. But assuming that some

authentication were necessary, this type of affidavit does not fall within the rubric

of Rule 3.7 – a rule designed to ensure that an attorney would not be called to

testify concerning a disputed fact in a case he, or she, was litigating. Under the

Tax Administrator’s interpretation of the rule, it would apply if a lawyer submitted

an affidavit showing the completion of alternative service, or filed a statement

advising the court that some other formal requirement had been satisfied. The

court does not believe the rule applies in this case. Moreover, if there were a

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violation of the Code of Professional Conduct, the proper judicial response should

be sanctions imposed on the attorney, or requiring his withdrawal from the suit, not

a dismissal of the motion.

The other contention which requires little discussion, is the argument based

on the failure to give the City of Providence notice of the appeal and the motion.

The Tax Administrator contends that the city is an indispensable party under Rule

19(a), but was not given notice when the complaint was filed in this court, and

when the summary judgment motion was filed.4

However, the defendant acknowledges that all the parties, including the City

of Providence, signed an agreement that “only the Division [of Taxation] would

defend the tax assessment.” Tax Administrator’s Memorandum, p. 32.5 While the

agreement apportions 55% of the conveyance tax to the city, and there is no

dispute that the decision in this case could directly, adversely affect it, there is no

suggestion that Providence officials have any desire to be drawn into this litigation

4 Although the complaint was filed in November, 2007, legal proceedings were

stayed because of a bankruptcy case involving Rouse’s parent. The motion for

summary judgment was filed in November 2017 and was eventually, placed on the

court’s December 2018 motion calendar.

5 A copy of the agreement accompanied defendant’s memorandum.

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as a party. They have made an informed, formal decision to remain on the

sidelines.6

B.

As stated earlier, the parties do not contest most of the facts plaintiffs rely on

in support of their motion. The Tax Administrator does, however, contend that

there is an insufficient basis for determining that the doctrine of equitable estoppel

prevents the state from taxing the transfer of interest in the ground lease for the

Providence Place Mall. Traditionally, estoppel will not be applied to government

agencies when they are acting in a public capacity. More recently, courts have

recognized that under some circumstances this theory should be available to an

aggrieved party, and now it is widely accepted that equitable estoppel can be

invoked against agents of the state for action taken by a public agency. However,

the availability of this doctrine “depends upon a consideration of all the

circumstances in the case. Before it should be applied, it should appear that there

was some positive action on the part of the agents which had induced the action of

the adverse party. Mere non-action is insufficient to justify an application of the

doctrine.” Ferrelli v Department of Employment Security, 261 A.2d 906, 909 (R.I.

1070). The state, which represents the public and its interest, should not be

6 If the plaintiffs had named the city as a defendant in this suit, it could be argued

that they acted improperly by violating the agreement.

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penalized for the conduct of its officers unless it is clearly necessary to prevent an

injustice.

Plaintiffs, relying on legislation enacted by the General Assembly and

resolutions passed by the EDC, argue that the “State used tax exempt status to

entice and induce the development of the Mall.” Plaintiffs’ Memorandum at 21.

This point is again raised through similar language in Plaintiffs’ Reply

Memorandum, at 20. In a separate argument, plaintiffs assert that the lessee of the

ground lease, PPG, actually obtained a tax exemption through the same legislation

and resolutions.

Obviously, if an exemption from a conveyance tax was granted to the Mall

developer, the estoppel argument is inapposite. On the other hand, if language in

the various documents created by agents of the state did not result in a tax

exemption for the sale to Rouse, plaintiffs must presents evidence to show the

other representations were made or that other action was taken, to induce the

developer to construct the Mall. At this point in the litigation, the record is limited

to legislation passed by the General Assembly and resolutions of the EDC.

Additional testimony or documents may support a renewal of this contention, but

the court is not persuaded that summary judgment is proper on the equitable

estoppel theory based on the current record.

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C.

In their complaint, plaintiffs challenge the Tax Administrator’s interpretation

of §44-25-1(a), the conveyance tax law, and claim that the statute has not been

applied to this type of transaction in the past. A logical approach to deciding the

motion before the court, would be to first determine whether the transfer of an

interest in a ground lease falls within the statute. If it does not, then further inquiry

becomes unnecessary. However, as far as the court is aware, this particular section

of the General Laws of Rhode Island has never been examined and interpreted in a

judicial proceeding. Therefore, a decision on this issue would likely result in a

significant reconfiguration of the Tax Division’s enforcement activities. Also, the

ruling could affect the rights of parties to a large number of existing long-term

ground leases, and lead to wide-spread changes in how ground leases are used in

the future.

The court advised the parties of its concern about potential, and possibly

unwelcome, consequences of any decision based on an interpretation of the

conveyance law. After discussing this matter with plaintiffs’ attorneys and counsel

for the Tax Division, and without either party waiving its right to raise this issue at

a later juncture in the litigation, the court has determined that it would defer any

analysis of the conveyance tax statute and focus the balance of this decision on the

tax exemption question.

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D.

The final basis for plaintiffs’ motion, and an issue that appears ripe for

consideration under Rule 56, is their contention that the transfer of interest in this

particular ground lease is exempt from the conveyance tax. All of the relevant

facts are available in public records, and neither party has suggested that those

documents do not fully circumscribe the scope of the exemption.

Plaintiffs’ argument concerning the tax exemption is direct and

uncomplicated: they contend that in the negotiations between PPG and various

state agencies and officials, it was agreed that the transactions of the developer,

with certain exceptions that do not apply here, would not be subject to taxation.

The Division of Taxation does not deny that a tax exemption was granted to PPG,

but questions the extent of the exemption, asserting that the exemption ended with

the completion of the Mall’s construction and the issuance of an occupancy

certificate. The state further argues that an exemption which continued for the full

term of the lease would amount to an unconstitutional delegation of authority to the

EDC. Defendant refers to Article VI, Sections 1 and 2 of the Rhode Island

Constitution which have been construed to “forbid the unconditional delegation of

legislative power.” Newport Court Club v. Town of Middletown, 800 A.2d 405,

417 (R.I. 2002) (internal citation omitted).

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1.

In addition to the specific wording of the claimed exemption, plaintiffs rely

heavily on events leading up to the construction of the Providence Place Mall. As

noted previously, negotiations between PPG and state officials were influenced by

an expectation that the construction and operation of the Mall would result in

significant economic benefits to the state in terms of increasing tax revenues, and

for residents by expanding employment opportunities. In return for the

commitment to build the mall and garage, the state, among other incentives,

offered a broad tax exemption.

In what appears to be the most comprehensive statement of the tax relief that

was given to PPG, can be found by looking at the broad powers given to the EDC

and the Special Findings made in resolutions adopted by its directors. Under

Rhode Island law, the EDC has been given a general exemption from taxes. See

R.I.G.L. §42-64-20(b). In its Memorandum, the Tax Division acknowledges that

“[n]o one disputes that the EDC itself, was tax exempt nor disputes that transfers of

realty where the EDC was the grantor were tax exempt.” P. 7. The last sentence

of §42-64-20(b) states that, “[t]he Corporation shall not be required to pay any

transfer tax of any kind on account of instruments recorded by it or on its behalf.”

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The Act also gave the EDC authority to extend tax exemptions to other

entities. Subsection (c) of §42-64-20, explains the tax consequences relating to the

EDC’s activities. It states:

For the purposes of the exemption from taxes and assessments upon

or in respect of any project under subsection (a) or (b) of the section,

the corporation shall not be required to hold legal title to any real or

personal property . . . which are acquired and used in the construction

and development of the project, but the legal title may be held in the

name of a lessee (including sublessees) from the corporation. This

property, which shall not include any goods or inventory used in the

project after completion of construction, shall be exempt from taxation

to the same extent as if legal title of the property were in the name of

the corporation.

(Emphasis added.)7 This provision alone appears to insulate the sale of PPG’s

interest in the Mall from the conveyance tax. Plaintiffs note that if the EDC were

the lessee, it could assign its interest in the ground lease without taxation, and

contends that PPG enjoys the same protection under the statute and lease

agreement.

The Tax Division does not challenge the fact that broad tax relief was

bestowed on PPG by the EDC and Mall Acts, but maintains that the tax benefits

ended with the completion of construction and the issuance of certificates of

7 It is not insignificant that elsewhere in the EDC Act, Title 42, Chapter 64, the

legislature declared that “being necessary for the welfare of the state and its

inhabitants, [the Act] shall be liberally construed so as to effectuate its purposes.”

§42-64-32.

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occupancy. To support this claim, defendant refers to Section 1.35 of the Ground

Lease which states:

“Final Completion” means (i) completion of the Project including all

Mall common areas . . . in accordance with the plans . . . (ii)

commencement of operations at the Parking Garage; (iii) completion

of all Mall common areas; and (iv) the issuance of all necessary

certificates of occupancy permitting use of the Parking Garage and

such common areas; without material condition or restriction.

Similar language appears in Article I, the “DEFINITIONS” section of the Mall

Agreement executed in September, 1996. 8

However, the same documents contain other provisions which would be

unnecessary if the “Project” ended with the completion of construction and

authorization to occupy the premises. Examples include the following statements

found in the Ground Lease dated Sept 9, 1996:

– ARTICLE VI, §6.1(b) ”Tenant shall cause the Mall and Parking Garage

to be built and operated in a manner consistent with the Project

8 The Division of Taxation’s memorandum also refers to “the opinion of EDC

counsel,” but the document (APPENDIX 4), is a letter from a lawyer to a Special

Attorney General, written in 2006. The author, who is not identified as having any

particular title, writes that “Providence Place ceased being a ‘project’ of the

RIEDC upon the Final Completion, as defined in the Ground Lease . . . for the

purposes of the exemption from taxation set forth in sections (sic) 42-64-20.”

Assuming that the individual was EDC’s General Counsel in 1996, a legal opinion

given at the time the lease was being negotiated and shared with both parties to the

agreement, might have significant probative weight. However, this type of after-

the-fact explanation submitted by the Tax Division is, at best, of marginal value. .

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Description, the Plans and the Design Approval Standards.” (Emphasis

added.)

– ARICLE VII, §7.1(a) “During the Initial Term of this Lease, Tenant

shall have the exclusive right to develop and construct an office building

(the “Office Building”) at the southerly end of the Mall (subject to the

approval of the Capital Center Commission) at a location to be mutually

agreed upon by Tenant and Landlord.”

– ARTICLE IX, §9.1(a) “After Final Completion and during the Initial

Term Tenant shall be permitted to use and operate the Improvements

from time to time only as a first-class regional retail shopping facility . . .

.”9

– §9.3 “Change of Use After Initial Term,” allows the tenant to “change the

use of the Project,” but if the landlord objects, then “after such change . .

. the Project shall no longer be eligible for statutory sales and property

tax exemptions . . . .”10

9 This entire article describes what the tenant can, and cannot do in using the

improvements constructed on the leased land. All of these events necessarily must

occur after the construction is completed and the buildings are occupied.

10

If the “Project” ended with the issuance of certificates of occupancy, it is

unlikely that this important legal document would refer to it when addressing

circumstances that could only arise 99 years after the lease was signed.

15

– ARTICLE X §10.1 “Reports and Maintenance. Throughout the Term,

without cost to the Landlord, Tenant covenants and agrees to take good

care of or cause the property to be taken good care of and to keep or

cause the same to be kept in good order, repair, condition, operation and

maintenance consistent with a first class regional shopping mall (or other

comparable standards, if the use is changed pursuant to Article IX), and

shall promptly make or cause to be made all necessary repairs, interior

and exterior, structural and nonstructural, ordinary as well as

extraordinary, foreseen as well as unforeseen, to keep the Mall in a safe,

clean and sanitary condition. Tenant agrees to require each Subtenant to

also comply with such requirement.”

– ARTICLE XII §12.2 “Insurance Upon Completion.11 From and after

Substantial Completion of the Improvements and thereafter throughout

the entire term of this Lease, Tenant shall, at its sole cost and expense,

keep or cause the Improvements to be insured against loss or damage by

fire, lightning, windstorm, tornado and hail, and against loss or damage

by such other risks as are or hereafter may be embraced by the standard

extended coverage commonly known as ‘All Risk Replacement Cost

Insurance,’ including, without limitation, demolition costs, debris

11

Section 12.1 is titled “Insurance During Construction.”

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removal, explosion, collapse and underground hazards (if available), and

(if available) seepage or other intrusion of water, in each case to the full

insurable value, agreed amount basis, without any coinsurance.”12

The various provisions in the ground lease spelling out with great specificity

the actions required of the lessee “during the entire term of this lease,” and the

frequent references to “the Project” in connection with post-construction activities,

offer persuasive evidence that the state’s involvement with the Mall and the special

rights given to the developer did not end with the issuance of occupancy permits.

The lease agreement should not be considered without also examining the

legislative action which led the General Assembly to give the EDC such broad

authority in connection with the Providence Place Mall. Before entering into the

lease with PPG, the legislature and the EDC made a number of statements which

support the conclusion that state officials wished to ensure that the long-term

benefits projected by the Mall development and construction were realized.

In drafting the Mall Act, the General Assembly made a number of findings,

including the following:

– “The Providence Place Project will create significant job opportunities

during construction and retail jobs thereafter and will help alleviate this

12

Other subsections of Article XII address the tenant’s compliance with insurance

requirements, governmental regulations, and environmental standards “throughout

the entire term of this lease.” §12.3.

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chronic unemployment and underemployment.” §63.5-2(2) (Emphasis

added);

– “Upon completion of construction of the Garage, the developer will

retain all obligations to maintain, repair and operate the garage for the

benefit of the public for a period of ninety-nine (99) years, and will be

required to operate the garage for that period.” §42-63.5-2(7)

(Emphasis added);

– “In order to construct the Project in accordance with the plans and on

the time schedules set forth in the Agreement Regarding Providence

Place Mall, it is expected that during the two (2) year construction phase,

the Project will create approximately one thousand, two hundred (1,200)

new full-time jobs per year in all trades.” §42-63.5-2(8)(Emphasis

added.)

– “Once completed, it is expected that operation of the Project will

require the employment of up to two thousand, eight hundred (2,800)

persons and will create a substantial number of permanent and part-time

job opportunities . . . . “ §42-63.5-2(10) (Emphasis added.);

– “During the construction phase of the Project, it is expected that in

excess of one million, five hundred thousand dollars ($1,500,000) per

year in income tax revenues, which will be new to the State of Rhode

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Island will be realized as a result of the new construction jobs in

connection with the Project.” §42-63.5-2(12)(emphasis added);

– “Once the Project has been completed, it is expected that in excess of

five hundred thousand dollars ($500,000) per year in new income tax

revenues from the new retail and other jobs expected to be created at the

Project;” §42-63.5-2(13);

– “The existence of new and unique retail shopping opportunities for

Rhode Islanders is expected to result in the recapture of a substantial

amount of retail purchases now being made by Rhode Islanders outside

of the State, which out-of-state sales are presently estimated to be

approximately three hundred million dollars ($300,000,000) per year.

This recapture will result in substantial net new sales tax revenues to the

State.” §42-63.5-2(15);

– “The Project will include, at the developer’s expense, an intermodal

transportation facility to serve as the base of a network of shuttlebuses for

circulating parkers, shoppers and other inhabitants of and visitors to the

City, thereby contributing to the vitality of the central City and the City’s

financial district.” §42-63.5-2(17).

The legislative findings establish the basis for state action to encourage the

creation of a major retail center that would provide a substantial economic benefit

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to the state. Similar findings were made by the Board of Directors of the EDC in

its December 1995 Resolution. There, in addition to incorporating the General

Assembly’s findings, the board determined that “the acquisition, construction and

operation of the project will prevent, eliminate or reduce unemployment or

underemployment in the State and will generally benefit the economic

development of the state.” Section (a)(i) (Emphasis added). The next section,

(a)(ii), finds that “adequate provision has been made or will be made for the

payment of the cost of the acquisition, operation and maintenance and upkeep of

the Project.” (Emphasis added.) The Resolution’s findings conclude with the

following Special Findings:

“(i) Pursuant to Section 42-64-20, as amended by the Mall Act, the

Corporation has determined that it will not hold title to any portion of

the Project except for the Project Site and the Project shall be held in

the name of PPG or its successors as lessee under the Ground Lease.

(Emphasis added.)

(ii) Notwithstanding the foregoing, the Corporation hereby finds,

determines and confirms that the Project shall be exempt from

taxation to the same extent as if legal title in such property were held

in the name of the Corporation.”

After carefully considering the statements and findings made through

legislation and the resolutions of the EDC Board of Directors, the court is

persuaded that, indeed, there was a “Project completion date,” but the issuance of

certificates on occupancy did not end the state’s involvement with the Mall. The

statute specifically refers to a “construction phase” which means there must be at

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least one other “phase” to the Project. It is impossible to read through the

voluminous documents exchanged by the parties without concluding that the

legislators, the EDC Board members, and the developer all envisioned the

“Project” as a substantial physical structure and a long-term vibrant retail operation

that would benefit the developer financially and the economy of the State of Rhode

Island, as well as the City of Providence, for many years after the buildings were

completed an initially occupied.

2.

Despite a record indicating that the parties contemplated the Mall Project as

leading to a long and mutually advantageous relationship, the court must scrutinize

the exemption carefully. Whenever a taxpayer asserts protection based on an

exemption, the court is required to construe the exemption narrowly and against

the taxpayer. Rice Machinery Co v. Norberg, 391 A.2d 66, 70 (R.I. 1978). The

plaintiffs here must show both that an exemption exists, and that they come within

its provisions. Cookson v. Clark, 610 A.2d. 1095, 1098 (R.I. 1992).

However, “the rule of strict construction is not to be applied to defeat a clear

legislative intent to grant a particular exemption.” Delta Airlines, Inc. v. Neary,

785 A.2d 1123, 1126 (R.I. 2001) (citing Preservation Society of Newport County v.

Assessor of Taxes of Newport, 247 A.2d 430, 434 (R.I. 1968)). The record in this

case compels a finding that the legislature intended to grant a tax exemption to

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PPG for actions relating to the Providence Place Mall. Unless the General

Assembly acted unlawfully, or erred in some manner in bestowing the exemption,

plaintiffs’ motion for summary judgment must be granted. A lease which could

last for as much as 495 years is neither “absurd” or “unreasonable” if its length is

consistent with the intent of the parties, and this circumstance alone cannot be the

basis for a decision which would defeat the clear intent of the Mall Act.

The Tax Division suggests that constitutional restrictions require a finding

that the tax exemption claimed by plaintiffs would be unlawful. In its

memorandum, the Division notes that under plaintiffs’ construction of the lease

agreement in addition to the possibility of remaining in effect for an exceptional

period of time, could be assignable to third parties who were not original

participants in the Project. The court need not address the issue of a possible third

party beneficiary because the conveyance in question involves a signatory to the

initial lease.

The constitutional argument raised by the Tax Division appears to have been

decided already by our Supreme Court. In Warwick Mall Trust v. State, 684 A.2d

252 (R.I. 1996) the very legislation which is the subject of this suit was found to be

a permissible delegation of authority to the EDC. In reaching this conclusion, the

court noted that specific findings were required before any exemption was granted,

and stressed that judicial review should consider “utilitarian” factors. At 258. The

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court reasoned that project-by-project evaluations might be better made by an

administrative agent, and remarked that the General Assembly retained the power

not to fund the account that secured the debt of any project, suggesting that the

legislators could punish, and probably correct, any perceived misuse of authority

by the agency.

The court is persuaded that the authority and responsibilities delegated to the

EDC in connection with the construction and operation of the Providence Place

Mall were a valid exercise of power by the General Assembly, and did not violate

the Rhode Island Constitution.

E.

For the reasons set forth above, the court finds that the transfer of interest in

the lease entered into by the EDC and PPG in September 1996 is not subject to the

conveyance tax under §44-25-1(a) because of a tax exemption granted through

action by the Board of Directors of the EDC. Therefore, plaintiffs’ motion for

summary judgment is granted, and the Tax Division is ordered to refund the taxes

paid, plus applicable interest.