PROVIDENCE, R.I. (WPRI) — Promising to breathe life into two historic buildings, a Washington, D.C., developer urged city councilors Thursday night to approve a 20-year tax treaty for him to build a downtown hotel.
Jim Abdo, who has already purchased the two empty adjacent Westminster Street buildings that years ago housed The Providence Journal and Kresge Department Store, is aiming to build a microloft-style hotel called the Hotel Hive. (The Journal later moved to its current home at 75 Fountain St.)
The hotel would be a destination for locals as well as travelers, with a pizza joint, co-working space and two bars — one on the main level and one on the roof, Abdo told the City Council Finance Committee.
But Abdo’s request for a long-term tax stabilization agreement, or TSA, was met with opposition from unions and skepticism from some members of the committee.
The TSA, which has already been negotiated with the city, would mean Abdo’s firm, Westminster Partners LLC, would not pay taxes on the full value of his properties until the year 2040. Instead, he would pay property taxes on a fraction of the valuation, which would increase each year for the 20-year length of the deal.
The savings to Abdo would be more than $2.7 million over 20 years, according to the city’s calculations. The hotel would pay $5.5 million in property taxes over the 20 year deal, according to the tax assessor’s estimate, compared to nearly $8.3 million if it doesn’t get a TSA.
It would still represent a major influx of tax revenue to the city, which currently receives $143,955 property taxes for the vacant building.
Abdo, who already owns a Hotel Hive in D.C., said the microloft-style hotel rooms would rent for about $160 a night. The hotel may also include extended stay or long-term furnished micro-apartments, with rents ranging from $1,100 to $1,400 a month. The hotel rooms would be about 280 square feet, with the apartments at about 345 square feet.
The $39 million project has already secured $6 million in tax increment financing from the state, a tax break it would only receive if the hotel generates expected tax revenue. Abdo said he is also seeking about $4 million to $6 million in federal historic tax credits to finance the project, plus bank loans. He says he spent his own money to buy the attached buildings, which have been combined at 203 Westminster, for more than $4 million last year.
Councilwoman Jo-Ann Ryan said she is “not convinced” that Abdo needs the TSA to finance his project, particularly a deal lasting two decades.
“A 20-year TSA is a big deal,” Ryan said. She referred to the TSA requirements as “vanilla,” and said past recipients of the phased-in tax treaties have not been compliant. The requirements typically include using local construction materials and hiring local employees.
Representatives from multiple unions testified against the proposal, arguing the TSA should be tied to higher wage requirements for workers.
“I know Mr. Abdo is going to make out tremendously from his investment, with or without the TSA,” said Nancy Iadeluca, the Rhode Island director for UniteHERE Local 26. “What are we getting back?”
“Are we getting playground space, are we getting help with education?” Iadeluca continued. “Are we getting anything to help with the affordable housing crisis in our community?”
She referred to Abdo’s financing plan as a “triple-dip” of state, city and federal tax dollars.
Abdo pledged to hire local employees, but stopped short of promising to hire union workers to construct the building. He also took umbrage at being characterized as a rich out-of-town developer looking to make money off of Providence.
“If you want to be critical of me without knowing me, do your research first,” he shot back at Iadeluca. “I come from nothing … I worked hard to get where I am.”
“I am creating tax revenues,” Abdo went on to argue. “There are people vandalizing these buildings, there are people spray painting these buildings. These buildings are sitting right next to your City Hall.”
The committee voted to continue the matter to the next meeting, rather than vote on the proposal Thursday night.
Abdo said he was disappointed the committee didn’t approve the deal, which would further delay the project.
“This is one piece of a very complex puzzle,” Abdo told WPRI 12. “We have exhausted ourselves with underwriting to see how we can economically justify this project.”
Council President Sabina Matos said she is supportive of the project, as long as the Hotel Hive is compliant with TSA requirements.
“I want the building developed,” Matos told WPRI 12. “It’s falling apart.”
Matos is one of the sponsors of an ordinance introduced last week that would reform the TSA policy, including by requiring competitive wages for projects that receive the deals.
The committee did approve a different 12-year TSA at its meeting Thursday for a 21-unit apartment building to be constructed at 473 Washington St. The units would rent at about $1,200 to $1,500 per month, according to Nick Hemond, the attorney who represented developer Batwishwash LLC.
That proposal now moves on to the full City Council.