For Providence Place, back to school will mean a lot more this year.
Besides the normal back to school clothes and supplies shopping, the mall itself is becoming a classroom, with its newest tenant, the Providence Place Academy. Currently scattered in three locations around the city, the academy will take up residence in the mall this September.
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The partnership comes after heated negotiations that began last summer and ended recently when the Providence City Council, School Department and mall came to an agreement.
The city council had objected strongly to a proposed 10-year lease through which the city would have been required to pay rent of $43,000 per year for the first five years, and $51,600 per year for the next five years. This agreement would also include two rent-free years use of a kiosk, selling Providence memorabilia that is expected to gross $140,000 annually.
Councilman Terrence M. Hassett called the arrangement into question. He said the proposed arrangement was insulting after the $160 million property tax break that was granted to the mall for 30 years.
Hassett said the arrangement seemed to make Providence Place business partners with the students rather than their landlords.
The new arrangement provides for a 15-year lease with any potential costs associated with Providence Place Academy to be derived from the proceeds of the mall-donated kiosk. The mall will only benefit if the kiosk raises enough money to pay for the suite, and the city will not be locked into a guaranteed lease. Under the new lease, the city will still pay no rent for the first two years.
Mike Doyle, of the Providence-based RDW Group, the advertising and public relations firm that represents the mall, said the difficulty in reaching an agreement came down to the rent.
“We have always thought this would be a terrific idea,” he said. “The problem has always been trying to satisfy lenders that we were acting responsibly, particularly when we had prospective other tenants.”
Providence Place Academy Principal Donald Pastine said the initial deal proposed for the school was a bargain, but this new arrangement is even better. He said space in the mall usually costs $65 to $70 per square foot, and the school is renting space at about $10 per square foot.
“I feel so good about it,” he said. “Much better than I did before. It’s a learning experience for me to see how the system works.”
Hassett said these negotiations have also been a learning experience for the students.
“This is a real-life business experience for them, in terms of seeing how negotiation works,” he said.
The city council president, John Lombardi agreed.
“We really want to expose children to the business community,” he said, “and what greater place than the Providence Place.”
Lombardi said the new arrangement works well for both the mall and the city.
“Having it tied in with the kiosk is exactly what we were talking about,” he said. “They have received significant tax breaks and some of us felt they could certainly absorb the cost.”
Slated to be in the mall by September last year, the 88 students involved in the program have attended classes in three separate locations downtown. However, all parties involved feel this September is an achievable goal.
“Next year by September we will be in the mall,” said Pastine. “I have no doubts.”
The initial proposal was introduced last June. Hassett said he pressed the mall to unveil the terms of agreement, and discovered the city would be paying rent for a half million dollars. The project was then left idle for seven months until negotiations reopened last month.
“It is unusual for the city council to actually get this involved in negotiation, but we felt it was a very important move for us to make,” Hassett said.
“It certainly should be a lesson with the school department that they need to keep communication open with the city council because the city council is the ultimate guardian of the city treasury,” Hassett said.
