The Rhode Island Supreme Court has denied a bid by state tax collectors to wriggle out of a tax break awarded 27 years ago to the owners of the Providence Place mall.

The court ruled that in order to get the mall built, the General Assembly exempted the original mall owners from paying taxes on the property, including a real-estate conveyance tax if they sold it.

After the mall was built and Providence Place Group Limited looked to sell the property, the state Division of Taxation told the company that it would have to pay the tax to get any transaction done.

As the years rolled by, the property changed hands and the dispute was never resolved until a Superior Court in 2019 ruled that the state owed the original owners more than $2 million plus interest.

The state appealed the decision, but the Rhode Island Supreme Court on Tuesday said it had to pay up.

More: 'Coming soon': Amazon plans to open 4-star store at Providence Place

More: Providence Place mall owner seeks mortgage relief after COVID struggle

"It is undisputed that the [state Economic Development Corporation] and its projects are tax-exempt," the court said in a 15-page decision. "The mall is an EDC project and, therefore, [Providence Place Group] was not subject to the conveyance tax when it transferred its interest in the ground lease to Rouse [Providence LLC]."

Under the mall development plan approved by lawmakers in 1995, Providence Place Group bought the development site for the mall for $11 million, transferred it to the state Economic Development Corporation for $1 and then leased it back from the state. It was not allowed to transfer any rights under the lease until after the mall was built.

The state had argued that, under the terms of the lease, the mall stopped being a state project and lost its tax exemption once the building was finished.

Providence Place Group agreed to pay the conveyance tax when it sold the mall to Rouse in 2004, but filed a series of appeals for a refund.

The ruling attributes the delay in resolving the appeal "to a bankruptcy filing by Rouse’s parent company."

The mall is now owned by Brookfield Properties.

panderson@providencejournal.com

(401) 277-7384

On Twitter: @PatrickAnderso_

This article originally appeared on The Providence Journal: RI loses tax dispute with former Providence Place mall owners