passive voice - "It is built" or "it was built"

Which is correct:

Florence is built on both sides of the Arno River.

or

Florence was built on both sides of the Arno River.

Source: The ILI English Series, Intermediate 1 Workbook, Page 56

Answer

Florence was built on both sides of the Arno River.
Florence is built on both sides of the Arno River.

Both are acceptable. Past participles with BE may be parsed in two ways: as components of the passive construction or as predicate adjectivals.

In the first example, built is understood as a component of the passive construction: the sentence asserts a past event.

In the second example, built acts as an adjectival: the sentence asserts a current state.

Note that although a simple present will usually designate a state and a simple past will usually designate an event, it is the entire discourse context, not the tense of the auxiliary, which determines which interpretation is to be applied. Passive built may be employed in the present tense:

New US suburbs are built mostly by developers.

And adjectival built may be employed in the past tense:

Ancient Rome was built mostly of brick.

ADDED:
Note, too, that these parsings are not necessarily exclusive. The name 'participle' designates an entity which 'partakes' of the nature of two different categories simultaneously, and in some circumstances both the adjectival and verbal properties of a past participle will be present. As Cardinal points out in the comments, saying that something is made of a particular substance implies an adjectival parsing; but this may occur in a context which is also clearly passive, such as that cited by nekomatic where the by phrase designates the agent of a passive construction:

Ewelme palace, in Oxfordshire, was built of brick by William Delapole, in the reign of Henry VI. (my emphasis)