PROVIDENCE, R.I. (WPRI) — A key City Council panel approved millions of dollars in tax breaks for the developer planning to turn the vacant so-called “Superman” building into apartments, sending the proposal to the full City Council.
The downtown skyscraper loomed large in the window behind the council chambers as the Council Finance Committee unanimously voted in favor of the tax stabilization agreement (TSA), which would give developer High Rock Development a significant discount on its taxes for the first 30 years after the tower is redeveloped.
In a new presentation submitted to the council Monday, High Rock for the first time revealed its own estimates for how much rent could cost in the new apartment building, which has been celebrated by state and city leaders for setting aside 20% of the 285 units for low-to-moderate income residents.
Rent for the “affordable” units will range from $1,384 to $2,076 a month, according to the presentation, but could go up if the area median income (AMI) increases. Those units will mostly be one-bedroom apartments, according to Nick Hemond, an attorney for the developer.
For the market-rate units, studio apartments would range from $2,071 to $2,289 for apartments ranging in size from 421 to 653 square feet.
The one-bedroom apartments would range from $2,616 to $3,052 for apartments between 451 and 946 square feet. The two-bedroom apartments would be priced from $3,706 to $4,142, and the three-bedroom apartments would range from $4,796 to $5,287.
There’s no dedicated parking planned as part of the development, which is also expected to have ground-floor retail. The “grand banking hall,” a fixture from the building’s past as a bank headquarters, is expected to be open to the public.
“The public use has not yet been fully defined,” Hemond said, adding that event space or a museum have been discussed. He said the public space is not going to generate money for the developer.
A large crowd of union workers, who will benefit from an estimated 1,600 construction jobs, lined up outside City Hall to testify in support of the project and cheered loudly inside the council chambers.
“This building is iconic. It’s our identity,” said Michael Sabitoni, president of the Rhode Island Building and Construction Trades Council. He said there have only been a “handful” of building projects this significant in his career, such as the Providence Civic Center and Providence Place mall.
Others showed up to testify in opposition to the deal, arguing the low-income taxpayers paying for the deal cannot afford to live in the apartments at the expected rental rates.
“So High Rock can take our money, and they can’t house us,” said Terri Wright. “We can’t live there.”
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A man in the audience was escorted out of the chamber by police after shouting: “House the homeless, not the rich.”
Brett Smiley, who is taking over as mayor of Providence in January, testified in favor of the proposal, arguing it’s “critically important” to get the building in use again.
Smiley noted that while working for former Gov. Gina Raimondo, he was involved in the state’s attempts to redevelop the building with a large business tenant.
“We could never actually land one of those corporate tenants,” Smiley said.
City Councilman John Goncalves, D-Ward 1, who represents the downtown area where the building is located, strongly supported the project.
“The plan to convert this iconic building is the absolute right thing to do and keeping it vacant is not an option,” Goncalves said. “The return on investment is enormous.”
The tax treaty is a key element of the financing for the $220 million redevelopment of the building, which was negotiated with Gov. Dan McKee’s administration and became public in April.
The property at 111 Westminster St. would owe a total of $26.8 million in property taxes over the next three decades under the tax treaty, rather than the estimated $56 million that would be owed if the building was taxed at full value, according to the city’s fiscal analysis. (Some have cast doubt on that analysis, arguing the fully constructed building is being undervalued, and the tax savings will ultimately be higher.)
Under the tax deal crafted by Mayor Jorge Elorza’s administration, High Rock would pay nearly $499,000 a year — same as its current tax bill — until 2031. The tax bill would increase to $748,910 annually for another decade before gradually increasing to full taxation — more than $2 million — over the third decade.
The General Assembly had to pass a special law allowing for a 30-year tax stabilization agreement, longer than the usual maximum of 20 years.
In addition to the tax treaty, the developer is receiving a $5 million direct contribution from Providence taxpayers, which was added to the city budget before approval in June. There was no public hearing specifically about that funding.
Another $10 million will come from the Providence Redevelopment Agency in the form of a low-interest loan, and millions more is being funded through state and federal programs.
The tax treaty must pass the City Council twice before moving to Elorza’s desk for his signature.