PROVIDENCE — Renovation of the Providence Journal building, the largest partially-occupied building downtown, will come with the help of city property tax incentives, under a program recommended Tuesday.
City Council’s finance committee voted to recommend a 12-year tax stabilization agreement that will phase-in property taxes on the renovated structure. The building, sold last year to developers Cornish Associates and Nordblom Co., will be renovated throughout and converted to a mix of commercial space.
The owners, under the name Fountainview Owner LLC, have proposed retail uses at street level and office space for the upper floors. The 165,000-square-foot building will retain existing Providence Journal newspaper operations.
The newspaper’s staff will complete a relocation over the next two to three weeks to 30,000 square feet on the newly renovated second floor, according to Steve Durkee, senior associate development director for Providence-based Cornish Associates. The newspaper leadership has signed a 10-year lease for its space, according to Cornish.
On the remaining three upper floors, the space will be redeveloped on speculation, or without a particular tenant or tenants in mind. The initial phase of the redevelopment, to include rehabbing of the first floor of the development, will be $9 million, Durkee told City Council members. The final phase, including renovation of upper floors, will be about $8.3 million. The first phase is expected to begin this year, he said.
“We’re very excited about this project,” Durkee said. “It’s going to be a great addition to downtown.”
Under the TSA recommended for City Council approval, the property owners will pay $220,500 in taxes for the first three years of the agreement, which is the current commercial tax rate as applied to the existing $6 million value of the building. The improved value, based on the renovations, would then be taxed in increments that increase by 11 percent a year.
Over the 12-year span of the TSA, the developers would save $1.2 million in property tax. By the full taxation year, the property is expected to generate $534,000 a year in property tax.
Cornish and Nordblom purchased the building for $3.3 million last year, but the city had set the valuation of the structure at $10 million, according to Nicholas J. Hemond, an attorney representing the property owner.
In the negotiation that followed the filing of an assessment appeal, city and property owners arrived at the $6 million figure, he said. That value will stand until property assessments are revised in three more years.
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