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10 years later, old 195 land is getting developed – but land sales fall far short

Providence

PROVIDENCE, R.I. (WPRI) — Ten years ago, Rhode Island lawmakers sought to purchase, sell and develop the curving swath of land in Providence that used to be part of Interstate 195, telling residents the result would be thousands of life sciences and higher ed jobs.

A decade later, progress has fallen short of expectations.

When the R.I. Department of Transportation moved I-195, the dozens of acres freed up across Fox Point, the Jewelry District and downtown Providence were deemed prime real estate worth up to $50 million, and a game-changer for the capital city.

The vision was a life-sciences mecca, with “knowledge-based” jobs created in the medical, higher education and tech fields. Legislative leaders created the I-195 Redevelopment District Commission, which would buy the land from RIDOT, market it and sell it to developers who would realize the vision.

“It’s ‘meds and eds,’ as they say,” then-Gov. Lincoln Chafee said in 2011, after signing the legislation setting up the commission.

The district has seen fits and starts over the years since — its branding has changed from the “Link” to the “Knowledge District” to the current title of “Innovation & Design District.” Big projects have been proposed and scrapped, from a riverfront PawSox stadium to a long-shot Amazon headquarters.

A decade later, development is picking up. The area is seeing lots of foot traffic thanks to a seven-acre waterfront park — which currently hosts a beer garden — and a new pedestrian bridge with skyline views. But the area has not yet realized the original vision, and land sales have been sluggish as the commission focuses on spurring economic development rather than bringing in cash.

“I’m essentially bullish,” 195 Commission Chair Bob Davis said in a recent interview with Target 12. “These things are not done quickly. You spend at least a few years getting the infrastructure right — like, the whole road network here, water, sewer, had to be done first.”

So far the commission has made five sales in its first 10 years, starting with the Wexford Innovation Center that opened in 2019. (Wexford’s purchase price was $1, and the developer received significant tax breaks as the first project to break ground in 2017.)

The 195 Commission has sold five parcels so far; three have buildings up while two are still under construction. (Graphic: Lisa Mandarini/WPRI 12)

The other buildings that have been constructed include the Chestnut Commons apartment building on Friendship Street — the largest sale at $751,838 — and the Aloft Hotel on Dorrance Street, which sits on land that sold for $250,000 and which is expected to open next month.

The most recent two land sales were $100,000 a piece: the Emblem 125 apartment building project currently under construction on Parcel 28, and an apartment, grocery and retail project being built on Parcel 6 in Fox Point. (While the grocery tenant is widely expected to be Trader Joe’s, the California-based grocery chain has only said that it’s looking to open a store in Providence, without confirming nor denying that location.)

The 195 Commission’s work does not include the two parcels sold to Johnson & Wales University before the commission was established and bought the rest of the parcels.

The remaining land was purchased from RIDOT by the commission in 2013 using $38 million worth of taxpayer-backed bonds, which were not approved by voters. At the time, budget documents reviewed by Target 12 show the Chafee administration projected the property would cover the borrowing plus interest by generating $43 million in land sales through the 2021-22 fiscal year.

That fiscal year is now in progress, but to date the commission’s land sales add up to just $1.2 million, far short of the projections. That has left Rhode Island taxpayers on the hook for the annual debt service payments for the 2013 land purchase, totaling $10 million so far in principal and interest.

Those sale prices are “ludicrous,” argues Chafee, who was governor when the commission bought the land and envisioned higher sale prices.

“We’ve only gotten a pittance of what it’s worth,” Chafee told Target 12 when reached by phone earlier this month. “Play hardball and get the market value.”

The state still owes more than $33 million on the $38 million in bonds, plus annual interest payments ranging from $1 million to $2.6 million, according to Department of Administration spokesperson Robert Dulski. While the original plan called for paying them off next year, in the absence of massive land sales, state leaders are expected to restructure the bonds to stretch out the debt payments for another decade.

“I think they were way too optimistic,” Davis said of the Chafee-era land sale projections. “We want to incentivize developers to develop. Are we more focused about getting building done, or are we more focused on selling land? I think our mission is to get building done.”

“I’m not sure the legislators or the public realize we have to pay for that land,” said Senate President Dominick Ruggerio, who was one of the driving forces behind the creation of the 195 Commission. “And we were going to use the money from the sales of the properties down there to pay that back. Obviously we have a bill that’s due, so we’re going to have to pay from the general fund.”

The North Providence Democrat told Target 12 he’s “disappointed” by the slow pace of development on the land, as well as an apparent shift in the types of projects being considered.

“It’s been going slower than I expected,” Ruggerio said. “I anticipated that we’d have more interest at this point in time by educational institutions and medical institutions. It seems things have changed to residential.”

Along with the two apartment buildings currently under construction, another sale is pending for Parcel 9, envisioned by developer Pennrose as the home of a mixed-use apartment building with a child care center and retail space.

The land for the controversial Fane tower apartment skyscraper, slated to be built on Parcel 42 across from the Wexford building, is also still a pending sale.

And on Parcel 2 on South Water Street, known for its annual sunflower blooms, the commission is considering three different residential building proposals from developers.

“I’m hoping we can get back on track and attract the wet labs and the meds and eds that we initially wanted to attract,” Ruggerio said.

Davis noted there is still plenty of land left for life sciences, with the latest possibility being a new state health lab on a parcel of land behind the Wexford building.

“Eighty percent of the development potential is still out there,” Davis said. “There is nothing that would prevent a robust development of life-science space now, or even three or four years from now.”

What’s next for the Fane Tower

Perhaps nothing has been more divisive when it comes to the 195 land than the Fane tower, a proposed luxury apartment building that has faced years of pushback from neighbors and has divided elected leaders.

The current design of the tower includes retail space topped by 46 stories of high-rise apartments, which would make the tower the tallest in Providence.

New York developer Jason Fane has asked for repeated extensions in his quest to build the tower, most recently citing the pandemic and a pending lawsuit from neighbors over the tower’s height that has made its way to the R.I. Supreme Court. (Fane prevailed in the lower court.)

The current closing date on the $3 million sale to Fane is June 30, 2022, according to Davis. But this month the commission approved an amendment to the purchase-and-sale agreement to push the interim “exercise date” — when the deal could fall through if Fane doesn’t give a final commitment — as late as May 1, 2022.

“We were somewhat troubled by his reaction to the pandemic, when you contrast it to the other developers with whom we’re dealing,” Davis said. “They never wavered.”

Fane spokesperson Jim Malachowski says the project is “full steam ahead,” with test borings done on the land earlier this spring to test the soil. Fane is also advertising for a local project manager, Malachowski said. He cited the fact that Rhode Island was requiring New Yorkers to quarantine if they traveled here as part of the pandemic-related delay.

“He’s focused on working very hard on this project,” Malachowski said. He stopped short of committing to the closing date next summer, citing the ongoing Supreme Court case. And he did not say what would happen if the case is not decided by spring. (Oral arguments have not yet been scheduled.)

“Mr. Fane doesn’t want to think about not getting a decision by May,” Malachowski said.

The court case revolves around the tower’s height, which is in conflict with the city’s comprehensive plan. But the Providence City Council in 2018 approved a zoning change to allow the soaring height, overriding a veto by Mayor Jorge Elorza. (Fane’s advice for those who dislike his tower’s appearance is to “look in the other direction.”)

On a visit to Providence months before the pandemic, Fane told Target 12: “If the world stays pretty much the way it is, then it’ll get built.”

“It is also not reasonable to expect anyone to close and pay $3 million for a parcel of land when the core issue is still tied up in court,” Malachowski added.

Fane has also scrapped a previous title of “Hope Point Tower,” which never caught on with the locals.

Davis said the project will bring jobs and economic development to the area, but if Fane is not going to build there the commission will put Parcel 42 back on the market for another, perhaps less ambitious, project.

“We’ve said we will only close if he has a construction contract in place to build the building,” Davis said. “And that he must have his financing in place.”

The next decade

The General Assembly’s original legislation gave the 195 Commission 21 years to accomplish its goal, leaving nearly 11 more years before the seven-mosember commission is automatically dissolved under current law.

Davis compares Providence’s 195 District to Cambridge’s Kendall Square, which took decades to turn into what it is today.

“It took them 20 years before Kendall Square began to have the real vibrance that it has now,” Davis said.

Providence City Councilman John Goncalves, who represents the area where the 195 District is located, says the city does need more housing — especially affordable housing — but he also wants to see the life sciences vision realized.

“It is a little disappointing that this district land is being gobbled up for apartments and residential units where there are all these sectors that are growing rapidly,” Goncalves said. “Life sciences, information technology, biotech. It’s unfortunate that we aren’t seeing more parcels dedicated to that economic growth, but housing is needed as well.”

The level of affordable units in the current housing plans on the 195 land is mixed.

The Fane tower contains no affordable or “workforce” units, the latter of which is typically described as people making less than 120% of the area median income.

The Pennrose project on Parcel 9 is expected to have 66 apartments, with 32% of them market-rate units and the rest workforce or affordable. The Parcel 6 apartment building aims to have half of its units be workforce housing, with the rest market rate.

The three proposals for Parcel 2 — from competing developers Eden, Parent + Diamond/Urban Spaces and Urbanica — all propose residential units over ground-floor retail. The Eden development proposes no affordable units, while the other two projects each include 12 affordable units, according to the 195 Commission’s comparison of the projects. (The Parent + Diamond project is all condominiums, while the others are apartment rentals.)

State Sen. Tiara Mack, a Democrat who represents more than half of the 195 District including the Fane Tower site, said she wants be sure residential projects include affordable housing and access to bus lines and bike lanes.

“Especially in the midst of a global pandemic, and with the housing crisis, I think we really need to be smarter and more intentional about what we’re building, how we’re building it and who we’re building it for,” she said. (Mack opposes Fane’s proposal in part because it has no affordable units.)

The commission voted last week to try and entice a potential developer to build a new state health lab with private lab space on a a parcel of land behind the Wexford building, offering to sell the land for just $1. The R.I. Department of Health has not yet selected a location for its new health lab, and the state plans to put out a request for proposals for developers soon.

“We want a lab building bad,” Davis said. “We think that’s a way to induce them.”

So how many of those “knowledge-based” jobs are in the district so far?

The building that most closely fulfills the original goal of the 195 District is the Wexford Innovation Center on Dyer Street, which has the Cambridge Innovation Center as an anchor tenant, plus Johnson & Johnson, Brown University and District Hall. The ground floor also has a new restaurant, Bayberry Garden, and the building contains office space that is rented out to 120 client companies, according to spokesperson Thomas Osha.

But the top two floors are still vacant, Osha said. The 62,000 square feet of vacant space is being marketed as lab space and to other potential tenants in the life sciences.

While COVID has changed how many people actually go into the office, Osha said the Wexford building averages 200 employees and cardholders daily.

“We hit close to 350 one day last week,” Osha said.

After accounting for existing sales and the park land, nine acres of 195 land remain available for development. Nearly the entire western edge of the district, abutting I-95, is still vacant.

“That section of the district’s time hasn’t come yet,” Davis said. “There’s no magic wand that can be waved, there no snap of the fingers, there’s no mega-developer out there who is going to embrace all this land overnight.”

“We’ve still got 10 years,” he added.

Steph Machado (smachado@wpri.com) is a Target 12 investigative reporter covering Providence, politics and more for 12 News. Connect with her on Twitter and on Facebook.

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