PROVIDENCE, R.I. (WPRI) — The Washington-based developer who proposed building a microloft hotel with a rooftop bar in downtown Providence says the project is currently off, after a council committee declined to approve a tax treaty for the hotel Tuesday night.
Jim Abdo, the developer who purchased the vacant former Providence Journal building on Westminster Street and the adjacent former Kresge department store, said Wednesday it would be impossible to finance the $39 million project without the $2.7 million tax break.
“Unfortunately it’s not possible to build this hotel without a tax stabilization agreement,” Abdo said in a telephone interview from Washington. “It simply does not underwrite.”
The Council Finance Committee voted to indefinitely postpone consideration of the tax treaty Tuesday night, in a close vote of 3-to-2.
The proposal would have reduced Abdo’s property taxes on the Hotel Hive by $2.7 million over 20 years. He would still have paid a total of $5.7 million in taxes to the city over the two decades.
Abdo said he has no plans to sell the buildings, even if he doesn’t develop them anytime soon.
“We like the city, we like the asset,” Abdo said. “We’re patient, and if it means we have to wait ten years, we have to wait 20 years, so be it.”
He said aside from the property taxes to the city, the loss of the project would mean missed opportunity for millions in sales taxes, hotel taxes and food and beverage taxes for the state, plus personal income taxes from the employees he would hire.
“This was a $27 million loss that took place last night,” Abdo said, referring to the estimated city and state tax revenues over 20 years.
Abdo’s request for a tax stabilization agreement, or TSA, was met with opposition from labor unions and progressive groups. Members of the groups applauded when the plan was tabled Tuesday night.
“I know Mr. Abdo is going to make out tremendously from his investment, with or without the TSA,” Nancy Iadeluca, the Rhode Island director for UniteHERE Local 26, said at a hearing about the TSA earlier this month. “What are we getting back?”
Councilwoman Jo-Ann Ryan also said she was “not convinced” Abdo needed 20 years worth of tax breaks for his hotel.
But the Providence Preservation Society supported the deal, which would revitalize the vacant buildings just a block away from City Hall.
“These two buildings are eyesores in the core of downtown,” Brent Runyon, the preservation group’s executive director, wrote in a letter. “They drive down the sense of positivity.”
Abdo said he found it “confusing” that the councilors were not on board with a TSA to develop the long-empty buildings, and made reference to the Superman building, another vacant downtown property that has failed to be redeveloped over the years.
“Gosh, what a beautiful city, and there’s the tallest building in the state of Rhode Island sitting vacant,” Abdo said. “Does anyone really think it’s possible for that to come back online without a TSA?”