‘Superman’ owner’s pitch for state aid falls flat

The $114.7 million plan released last week to turn Providence’s “Superman Building” into apartments generated sticker shock across the state, but few alternatives for the Art Deco landmark.
Tower owner High Rock Development LLC’s proposal seeks $39 million in state assistance, a taxpayer investment House Speaker Gordon D. Fox, Providence Mayor Angel Taveras and Gov. Lincoln D. Chafee all backed away from.
Two market studies of the building, including one commissioned by the city, supported High Rock’s suggestion that apartments were ultimately the best use for the property at 111 Westminster St.
Both said filling the roughly 350,000 square feet of office space in the building would be difficult and the developer-funded report claimed such a large increase in vacant space would depress surrounding property values.
Without a separate renovation plan, the building doesn’t appear attractive to smaller tenants. Roger Williams University, which is looking for about 80,000 square feet of downtown office space, isn’t even considering the Superman Building.
Last year, Chafee proposed moving state employees to the Superman Building in a supplemental budget request, a move re-endorsed by Taveras this spring.
Now Chafee is seeking proposals from downtown landlords for 70,000 to 80,000 square feet of space for R.I. Executive Office of Health and Human Services workers currently in Cranston.
But High Rock spokesman William Fischer said the firm does not intend to submit a bid for the state lease and isn’t interested in temporary solutions for the building.
“Our focus is on using it for highest and best use,” Fischer said. “We believe our thoughts have been confirmed that the best use is residential conversion and making decisions about the future incrementally is not the way to go.”
Health and Human Services appears a poor fit for the Superman Building, and possibly downtown in general, as its requirements call for 300 parking spaces and the 26-story tower doesn’t have any.
Colin Kane, principal of East Providence development firm Peregrine Group, agrees that the long-term future of the building is residential, but said the economics are daunting and don’t present any obvious solution.
“It is an awkward building,” Kane said. “I don’t know if there is a silver bullet. I give them credit for coming up with options, but whatever creative solution you think of, it just requires lots of money.” Kane noted that while $39 million may end up too much for Rhode Island taxpayers to cover, ignoring the building could also come with costs.
If the owner walked away from the building, the city might take it over for unpaid taxes, but would then be on the hook for upkeep or tearing it down, which could cost more than the value of the land.
According to High Rock, the $1.15 million in property taxes the city collected on the Superman Building with Bank of America as a tenant will drop to $410,000 annually when the tower is vacant.
High Rock estimated the $55 million in private investment it would pump into the conversion project would generate an additional $12.8 million in additional state tax revenue while maintaining the city tax base.
Still, Kane said it is difficult to justify putting $39 million in state money into one building with so many others in similar positions throughout the city and state.
Other developers say such a move shouldn’t even be considered.
Kelly Coates, senior vice president of Carpionato Properties in Johnston, compared the request for state help on the Superman Building to the ill-fated 38 Studios LLC loan guarantee.
“When Carpionato invests in a building, if things go our way, we make money and if they don’t and we lose a tenant, then we have to invest more money,” Coates said. “I do not think using state money is a wise investment.”
Former Providence Mayor Joseph R. Paolino Jr., managing partner of Paolino Properties, said the Superman Building is a significant-enough asset to warrant public investment, although he isn’t certain if the current proposal is the best way to go.
“This is our Empire State Building and I think we should support it,” Paolino said. “I can’t see the legislature doing it and I don’t think the state should bail out the owner, but there is a public purpose for this building.”
Instead of funding a private developer, Paolino said the state could buy the skyscraper and put nursing students there, similar to what happened for the University of Rhode Island in the former Shepard department store building on Washington Street. •