NEXT BIG THING? Baltimore-based Struever Bros. Eccles & Rouse plans to create a $333 million mixed-use complex on industrial lnd off Valley Street in Providence.
Investors sought for mixed-use complex
Baltimore-based developer Struever Bros. Eccles & Rouse last week unveiled plans for a $333 million mixed-use development called “American Locomotive Works” along the Woonasquatucket River in Providence.
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Now the difficult work starts, as the firm resumes efforts to get financing for what is the largest investment in the capital city since the $450 million Providence Place Mall was completed in 1999.
Here’s the pitch: Invest in this project, and you can help turn 22.5 acres of mostly vacant industrial land in a depressed area into a sparkling new “neighborhood” with residences, offices, retail shops, restaurants, a hotel and more.
Who is listening? Struever Bros. CEO Bill Struever said that Chevron Corp. has agreed to buy the project’s $58 million in anticipated federal and state historic tax credits.
Others interested in the project, Struever said, include Earvin “Magic” Johnson’s Canyon-Johnson Urban Fund, in Beverly Hills, Calif., and Raleigh N.C.-based Cherokee Investment Partners. In addition, Struever is talking with Morgan Stanley Private Equity and Prudential Private Equity Group, among others.
Struever Bros., which is putting in $25 million of its own, has worked with most of these institutional investors on other projects in Rhode Island, the CEO said. And though the firm currently has a $2 billion project in Baltimore, he noted, American Locomotive is by far the biggest the developer has done here.
“We love Rhode Island and Providence,” said Struever. “We think that the [political] leadership in Rhode Island is aligned to make important things happen. We love that this is a college town, and it has a strong underlying economy.”
Including this new project, Struever Bros. has six developments valued at $655.2 million that it has completed or committed to in the state. All have taken advantage of the state’s historic tax credit program, which gives developers tax credits worth 30 percent of the cost to rehab buildings listed on the National Register of Historic Places (the state’s program complements a 20-percent historic tax credit that the federal government offers to developers).
But facing a $300 million budget deficit, Gov. Donald L. Carcieri last month said he wanted to amend the historic tax credit program. The governor has not recommended specific changes, yet Struever noted that any retroactive measures that impact the American Locomotive project could influence investors.
“They are watching what goes on in the Legislature,” the CEO said. “They are certainly concerned.”
“Ultimately, the level of change or modification of the program will really dictate what the overall impact is for the project and … the ability for us to finance it,” said Bernd Brandle, development director for Struever Bros., who works in the firm’s Providence office.
In fact, when Maryland restricted its historic tax credit program in 2002, Baltimore saw a marked decline in the number of rehab projects, Struever Bros. executives say.
Still, the group says that the American Locomotive project is worth the investment, and it will benefit the firm and the greater community.
To put together the American Locomotive project, Struever Bros. plans to purchase the U.S. Rubber Co. mill complex, consisting of 22.5 acres located between Hemlock and Valley streets, on the north side of the Woonasquatucket. Across the river, it wants to buy the Nicholson File Co. property on Acorn Street for later development. Both plants were shuttered decades ago.
The Licht family, which owns the properties, is expected to sell them to Struever Bros. and become a partner in the project. Other property owners are still negotiating with the developer. According to filings with the state, the firm plans to spend $21.7 million to acquire the properties.
Plans call for rehabbing 26 historic structures and erecting 1.2 million square feet of new building space. The development would have 600 apartments, condos and townhouses, two parking garages with a total of 2,000 spaces, 100,000 square feet for retail shops and restaurants, and 350,000 square feet of office space.
American Locomotive is Struever Bros.’ fourth mill redevelopment along Valley Street in Olneyville, expanding its connection east into downtown.
The other projects are the Rising Sun Mills, a $68.6 million rehab of the National and Providence Worsted mills; Calendar Mills, a $19 million project with 11 townhouses and 28,000 square feet of office space; and The Plant, which combines artists’ lofts and retail space.
Why invest so heavily in one area?
“What you’re doing, instead of having a stand-alone project, is creating a critical mass,” explained John D. Sinnott, senior development director in the Providence office of Stuever Bros. “As you are doing that you are creating economic development in the entire neighborhood. As the confidence level rises in that neighborhood, our projects automatically increase in value – so it’s just good business.”
Struever Bros. has pledged to provide up to 2 percent of construction costs to support affordable housing, small business grants, schools and local artists. It has made similar financial commitments for its other projects in the neighborhood, according to Sinnott.
The developer has petitioned the city of Providence to approve $41 million in “tax incremental financing” bonds – which would be repaid from expected tax revenue increases from the project – to help fund the two garages, river walks, greenways, and a bridge across the Woonasquatucket for pedestrians and automobiles.
With those amenities and a growing arts community in the area, Struever said, American Locomotive would attract residents and businesses from across the region. To accommodate visitors, a 180-room hotel is planned on the northeast side of the site, close to Routes 95 and 6.
“It’s all about making Providence and Rhode Island a big magnet in the greater region as a perfect place to live and work and create a business,” the CEO added.
Struever noted that the R.I. Economic Development Corporation has committed to relocating from its headquarters in the Westin Providence to American Locomotive, and he believes the quasi-state agency’s move from downtown will encourage other businesses to follow suit.
Michael McMahon, executive director of the EDC, said the agency plans to move its 46-person staff into 20,000 square feet of office space in the new development in December, when its existing lease expires.
“It was an opportunity to put our feet where our mouth is, where our being there would materially contribute to economic development,” McMahon said. “And this project, with the benefit that it’s going to provide to the whole Valley Street section, is a perfect example of what we wanted to get done.”
