Baltimore developer can’t find tenant for Dynamo

Barely a day goes by that Michael Ricketts hasn’t tried to convince someone to get onboard the stalled Dynamo House museum, hotel and office project.
Ricketts, an executive of a Baltimore development company that has stepped in at the former South Street power station, says he has talked to a lot of people about the Providence project in recent months in an effort to get it on track again.
That has included reaching out to potential tenants such as Brown University and Hasbro Inc., playing up the building’s prominent location in the city’s so-called Knowledge District, where state economic-development officials envision high-tech companies setting up shop and bringing high-paying jobs with them.
But so far, Ricketts has had no luck getting anyone to sign on.
“We’re talking to everybody who has a remote interest in something like this,” said Ricketts, vice president of development at Harbor East Development Group LLC. “I talk about this thing every day. I’m actively working trying to make something happen.”
The problem is a tricky one for Harbor East: The high-profile project needs financing to move forward – just how much Ricketts won’t say – but skittish lenders won’t get involved without a sizable office tenant ready to provide cash flow when the building is fully renovated.
At the same time, prospective tenants have been leery of committing to a project that has been stuck in neutral for years because of a lack of financing.
Still, Ricketts told Providence Business News that he remains optimistic the renovations at the Dynamo House will resume.
“It’s a great site to kick-start the Knowledge District,” he said. “It’s in a great location for an institutional user to come and add life back to the building.”
For now, the hulking, brick structure – which served as the power plant for the former Narragansett Electric Co. from 1912 to the 1990s – remains left open to the weather. An extensive overhaul started by Maryland-based developer Struever Bros. Eccles & Rouse came to an abrupt halt in early 2009 when Struever’s previous lender, Citibank, pulled the construction loan. Despite inactivity at the site, there has been some progress behind the scenes.
Harbor East, initially a Dynamo House investor, acquired the mortgage on the property late last year. Now the firm is working to take ownership of the property, a process that is taking longer than expected because properties in Maryland are involved in the deal.
The Dynamo House is slated to be the home of the future Heritage Harbor Museum, a Smithsonian Institute-affiliated project on the drawing board for years.
For the 55,000-square foot museum to be viable, plans also called for the development of a 170-room hotel and 145,000 square feet of offices, but that design might be changing. Harbor East has commissioned architects to rework layouts “to make this a cleaner, simpler building,” Ricketts said.
There are other problems looming.
Mechanic’s liens are pending, stemming from hundreds of thousands of dollars that several contractors claim they’re owed for work performed on the Dynamo House in 2008 and early 2009.
The now-imploded Struever Bros. also left behind a large, unpaid property tax bill. The city Tax Collector’s office said recently that it amounts to $632,120, with interest and penalties included.
In November, Thomas Deller, Providence’s director of planning, told PBN the city was holding off on a tax sale until Harbor East could get a handle on the situation. Deller didn’t immediately return a call seeking comment late last month.
Also, the listed owner of the property, Dynamo House LLC – which at one time was controlled by Struever Bros. – has been notified that it can no longer operate as a business in Rhode Island because it has failed to file an annual report since 2009. Until the future of Dynamo becomes clear, state officials continue to hold off paying out most of $5 million in bond money, approved by voters in 2002, for the museum.
Questions have been raised about some of the $35 million in potential historic-preservation tax credits already set aside for the project.
If the property does change hands, it could have an effect on the credits, according to Paul L. Dion, chief of revenue analysis at the R.I. Department of Revenue.
While some tax credits can be transferred to a new owner, Dion has said there’s a caveat involving work already completed on the site: A new developer cannot get a historic credit for qualified work already done on the property unless the owner can provide that it paid the original developer for the work.
Other aspects of the project have become unclear as the delays have continued.
Harbor East had held a franchise agreement with Starwood Hotels and Resorts Worldwide Inc. to build an Aloft Hotel in Dynamo House.
The hotel firm remains interested in the market, Ricketts said. “But the program will be defined by the ultimate users of the building,” he added.
Ricketts isn’t discouraged that the building has been left open to the weather for two years. “It is better for it to be open and breathing,” he explained. “So when it snows or rains, it dries out right away. It’s not doing any damage.”
Despite struggling to find tenants, Ricketts said his firm has overcome numerous challenges.
“If you had asked me a year ago, I’d have said there are so many issues to be resolved … that I would have given it a less than 50 percent chance” of survival, Ricketts said. “But we’ve made really good progress in resolving certain issues I don’t want to make public.” •