PROVIDENCE, R.I. (WPRI) – The owner of Providence's iconic "Superman building" is asking state lawmakers to provide nearly $40 million in taxpayer money and the city to grant a tax break to subsidize the transformation of the city's tallest structure into apartments, WPRI.com has learned.
High Rock Development - the owner of the 428-foot building at 111 Westminster Street - wants $39 million in state funding, $21 million in federal tax credits and a tax stabilization deal that would need to be approved by the Providence City Council to help create the residential space, according to a plan unveiled Tuesday.
- PDF: Summary of Superman building study
- PDF: Read the complete Superman study
- PDF: Market study on Superman project
- PDF: Separate Providence study of the project
"Decisions made this year about the future of 111 Westminster will have an impact on the future of Providence for the next 25 years," Bill Fischer, a spokesman for High Rock, said in a prepared statement. "It is incredibly important that we get this right and adopt a plan that ensures the highest and best use of the building."
The proposal was met with immediate opposition from House Speaker Gordon Fox, who has expressed support for restoring the state's historic-preservation tax credit program, but capping it at $5 million per project. Fox said he was "deeply concerned" about the amount of taxpayer funds being sought for the project.
"As was announced last week as part of our economic development package, the House is introducing historic tax credit legislation with a $5 million cap on credits for any single project," Fox said. "If this tax credit program is reinstated this year, the developers could apply for those capped credits. Beyond that, I believe the state is not in any position to provide the level of financial assistance that the developer is seeking."
Gov. Lincoln Chafee's spokeswoman, Christine Hunsinger, reacted coolly to High Rock's request for taxpayer assistance. "The governor has said publicly before that he is open to listening but that this seems like a lot of eggs in one basket, and he's hesitant to do that," she told WPRI.com.
Providence Mayor Angel Taveras, a potential candidate for governor next year, also expressed skepticism.
"I am concerned this proposal would not be the wisest public investment - especially if there is a less costly alternative to maintaining the Superman Building as a contributor to our state's economy," he said in a statement. "More work needs to be done to explore the option of maintaining the building as office space."
Under the plan, High Rock founder David Sweetser will invest $55 million more of his own money to help rehabilitate the building, opened in 1928 to house the Industrial Trust Co. bank, which later became Fleet Financial Group and FleetBoston. Bank of America bought Fleet in 2004, but vacated the building earlier this month. The total cost of the project will be $102.7 million.
The study said the project will ultimately create 230 permanent full-time jobs in Rhode Island's capital city. The 30-month construction period is expected to generate $44 million in employee compensation and will result in 278 new apartments - including one-bedroom, two-bedroom, three-bedroom, studio and micro-studio units - at rents that would range from $1,125 to $2,750 per month.
The study – conducted by HR&A Advisors Inc., a consulting firm with offices in New York, Washington, D.C., and Los Angeles - said the project would generate $4.6 million in tax revenue for the state during the construction period and approximately $680,000 in sales and income taxes annually by adding about 450 new residents to downtown.
"These reports confirm that converting the Superman building into rental apartments is in fact the highest and best use of the building," Fischer said. "This project will create hundreds of jobs, millions of dollars in tax revenue, and help meet the current and anticipated housing demand in downtown Providence. We hope it will be judged on its merits."
Sweetser purchased the 350,000-square-foot Art Deco skyscraper for $33.2 million in 2008 and has invested another $6 million in the building over the last five years, the company said. He has committed to writing down the majority of that investment and will seek financing for the rest of the project if the state funding, federal tax credits and city tax stabilization are secured.
The study ends months of speculation regarding the future of the building. In January, Taveras formally asked the General Assembly to allocate tax credits to the project in a legislative wish list his administration gave House Speaker Gordon Fox and other members of the city's State House delegation.
That same month High Rock hired Cornish Associates – whose CEO is well-known downtown developer Arnold "Buff" Chase - to develop a plan for turning the building into a residential space. The group also hired downtown lawyer Zach Darrow and Fox's former campaign manager Nicholas Hemond to lobby the General Assembly on its behalf.
The Taveras administration on Tuesday also released a separate 95-page study about the future of the Superman building produced by 4ward Planning, a New York consulting firm, suggesting that there was "little justification" for High Rock to upgrade the building as office space based on current vacancy rates and the weak outlook for the market.
By contrast, the study said, "office and multi-family residential brokers interviewed agree that residential conversion makes the most sense for the Bank of America building," and suggested an investment of $60 million in state historic tax credits could yield a significant return on investment.
4ward Planning said the study was ordered by SMG Corp., the private company that manages the Rhode Island Convention Center. Taveras spokesman David Ortiz said James Bennett - Providence's director of economic development, who is also chairman of the quasi-public agency that oversees the convention center - asked SMG to help fund the study because of its interest in downtown's economic health.
The city government added $5,000 to the $16,000 paid by SMG in order to increase the scope from a feasibility study to a broader economic-impact study, Ortiz told WPRI.com.
The study was released less than a week after Fox unveiled a wide-ranging slate of bills designed to overhaul of state economic policy, which included a plan to restore the historic tax credit program. Fox spokesman Larry Berrman said Tuesday that lawmakers have not seen any legislation on the proposal for the Superman building.
Ted Nesi contributed to this report.
Copyright WPRI 12
The CEO of Rhode Island's top insurer called local Obamacare enrollment "disappointing" so far.
BREAKING: Battle-fatigued and suddenly bipartisan, the House voted Thursday night to ease across-the-board federal spending cuts and prevent future government shutdowns.
The EPA and DEP take the initial steps toward cleaning up a sprawling mill complex that was threatened by a fire nearly two years ago.
The House seat formerly occupied by Lisa Baldelli-Hunt is officially empty and up for grabs, as election officials began accepting declarations for candidacy on Thursday.
The Rhode Island Foundation is hunting for innovators. The deadline is Friday to apply to receive a 2014 Innovation Fellowship, a program that awards $300,000 over a period of three years to two projects meant to address the state's …