PROVIDENCE, R.I. (WPRI) – The developer that owns the Superman building would save $29 million on property tax bills for the skyscraper over 30 years as part of a deal to turn the long-vacant historic tower into apartments, according to newly released financial information.
The property at 111 Westminster St. would owe a total of $26.8 million in property taxes over the next three decades, rather than the estimated $56 million that would be owed if the building was taxed at full value, according to a fiscal analysis of the proposed tax deal released Thursday.
The building’s owner, High Rock Development, currently pays just $499,000 in property taxes annually on its present assessed value of $14 million.
The iconic downtown structure, Rhode Island’s tallest building, has been vacant since Bank of America moved out in 2013. State leaders struck a deal with High Rock earlier this year for a $220 million redevelopment plan that would use public subsidies to help turn it into a mixed-use property with apartments. (Its nickname alludes to a resemblance to the building seen in the opening shot of the 1950s “Superman” TV show.)
The tax break for the Superman building is part of a proposed treaty called a Tax Stabilization Agreement (TSA), which is a linchpin of the public financing plan that also includes grants, loans and tax credits.
Tax treaties are normally limited to 20 years, but earlier this year the General Assembly gave authorization for the city to enter into a special 30-year TSA for the building.
The details of the tax break were negotiated between city leaders and High Rock behind closed doors over the summer. The actual ordinance creating the TSA — which requires City Council approval — was introduced as an off-docket item at a council meeting earlier this month.
The actual value of High Rock’s proposed tax break wasn’t known until Thursday, when Mayor Jorge Elorza’s administration released their fiscal analysis in response to numerous requests from Target 12.
Under the estimated schedule of tax payments, High Rock would continue paying $499,000 annually for ten years. At that point the annual tax payments would start to ramp up, though they would still be less than half of what would be owed if the building were fully taxed at the commercial rate.
By the end of the 30-year deal, in the year 2051, the building would be worth an estimated $63 million and would start paying its full tax bill the following year, unless another deal is negotiated by a future mayor.
Both city leaders and the Superman building’s owners have argued the tax break is necessary to get the building developed, and point out that even the reduced tax bills under the deal amount to more money than High Rock pays the city now.
“Without an incentive package, this historic landmark building would remain unoccupied and unable to contribute to the downtown economy,” the city’s chief financial officer Larry Mancini wrote in a memo attached to his new fiscal analysis.
The public will be able to weigh in about the proposed tax breaks at a public hearing held by the City Council Finance Committee this fall. A date for that hearing has not yet been set.
The Superman building project has already secured millions of dollars from taxpayers, including state tax credits, a $5 million direct appropriation in the city budget and a $10 million loan from the Providence Redevelopment Agency.
The developers are also working on securing federal tax credits and have a “commitment letter” from Rhode Island Housing for additional funds, according to spokesperson Bill Fischer. But the city tax treaty is a key piece of the puzzle.
“This is a critical component to this project,” Fischer said Thursday. “If the TSA doesn’t happen, the project doesn’t move forward.”
He argued that redeveloping the building will help the economy by bringing hundreds of new residential tenants downtown who will spend money at local businesses.
“It’s going to take a long-term solution to bring the building back to life,” Fischer said.
Fischer said the developers are currently doing engineering site work in preparation to demolish the interior of the building, work that he said is expected to start by the end of the year.
Council President John Igliozzi supports the project and has previously expressed confidence that it has the votes to pass under the current council. (A new City Council will take office in January.)
Brett Smiley, the projected next mayor of Providence, also supports the deal.
Opponents have argued the project should have more affordable apartments, considering how much taxpayer money is going into the deal.
One of those critics is state Sen. Sam Bell, D-Providence, who disputed the city’s assumptions in the fiscal analysis, arguing the property would be worth much more than $54 million — the city’s projected value for 2026 — after the $220 million reconstruction.
“The assumptions behind the preposterously low figure of $29 million are so downright bonkers that I think it’s safe to call this estimate what it is–a stone cold lie and an insult to the taxpayers of Providence,” Bell said. “Even with the most conservative assumptions, there’s no way you can get the cost estimate under $100 million.”
Faith Chadwick, a spokesperson for the city, said the assessment assumptions were “based several factors such as the current state of the property, which we know requires significant rehabilitation, expected makeup of the building, and recent comparable real estate transactions in the city.”
As it stands, the proposal includes 285 apartments, with 20% of them set aside for low-to-moderate-income residents. Just 5% of the units would be for those making up to 80% of the area median income (AMI), currently $54,150 for an individual, with another 5% for those making up to 100% of AMI ($68,320), and 10% of units would be for those making up to 120% of AMI, which currently $81,240 for an individual.
The rest of the units would be market rate.