State approves lease terms for RIC/URI nursing center project
THE R.I. DEPARTMENT OF EDUCATION has endorsed the plan to build a Nursing Education Center in conjunction with a Brown University academic office complex at the former South Street Power Station in Providence's Knowledge District, a project that many hope will jump-start development in the adjacent former Interstate 195 land.
PROVIDENCE – The R.I. Board of Education endorsed legislation Monday night that would authorize leasing terms for redevelopment of the South Street Power Station into an academic and nursing-school complex, paving the way for what Gov. Lincoln D. Chafee called a “meds and eds” project that is “a natural for us.”
“We worked hard to have a good lease that protects the taxpayers of Rhode Island but also promotes meds and eds like we’ve seen in Houston, Baltimore and Pittsburgh,” said Chafee in remarks at an embargoed media briefing Monday afternoon, when copies of the proposed legislation were provided to the press.
The proposed Commonwealth Ventures project would renovate the 1912 building at Eddy and South streets into 135,000 square feet of administrative offices for Brown University and 132,449 square feet for an advanced nursing education center to be leased by the University of Rhode Island and Rhode Island College. Brown would have its own leasing arrangement with Commonwealth Ventures.
Where a parking lot owned by Commonwealth is now located next door, a 150,000-square-foot student apartment building would be erected in that footprint with stores and incubator office space for local startups.
The Board of Education met in closed session in Cumberland to discuss the tentative leasing terms, and then unanimously endorsed the proposal.
While the lease for the state, RIC and URI is not finalized, the draft legislation calls for a 15-year lease at just more than $6 million a year, for a total of about $90 million, with an option to purchase the property during the sixth year of the lease, said Richard Licht, director the R.I. Department of Administration.
The business terms of the proposed lease are solid, but legal language and issues surrounding historic preservation tax credits from previous plans to redevelop the property have not been finalized, he said.
The proposed lease would cover the Nursing Education Center to be shared by URI and RIC, on the first, second and a portion of the third floors of the property once it is renovated and expanded, the legislation states.
The tentative lease agreement for the state, RIC and URI, if approved by R.I. Board of Education and then, the State Properties Committee, breaks down annually as follows:
Base rent of $14 a square foot, or $1,855,000
Tenant improvement rent of $18.81 a square foot, or $2,491,000
Operating and maintenance costs of $12.75 a square foot, or $1,689,000
A section of the draft legislation provides the state with the option of directly financing tenant improvements instead of paying for it through rent.
Conditions of the lease include:
A payment in lieu of taxes treaty between developer Commonwealth Ventures LLC and the state of $1.50 a square foot
Market rates to lease 200 parking spaces in a 650-car or larger garage that the developer will also use for nearby housing, Licht said.
“This is a lot of money, no question about it,” Licht acknowledged. The total cost for the project has been estimated to be $206 million.
Licht said the proposal represents major benefits to public policy, including the collaboration with all the parties involved, state-of-the-art facilities shared by two “outstanding” nursing schools and potential economic growth and job creation in the city of Providence and the Interstate 195 corridor.
“You’re taking an eyesore … and making it a jewel,” he said.
Brown’s share of the project is about 51 percent to the state’s share of 49 percent, Chafee said.
The state does not pay rent until a certificate of occupancy is issued and it has “the keys to the place,” Licht said, but would pay about $1 million up front for professional services like consulting and legal fees.
“The risk [for this project] is on the developer,” Chafee said.