The developers of a $1 billion retail, industrial and entertainment complex – The Centre of New England – and mainly located in Coventry — are asking the state legislature for a sales tax moratorium on the property for five years. The tax break, the developers maintain, would accelerate the project, allowing them to complete the work in three years, rather than seven at what the developer calls a “moderate pace.”
While the legislation could initially cost the state more than $18 million in lost revenue, the developers said last week that over 10 years the state would actually come out ahead by more than $11 million because the speed-up in completion of the project would mean more tax revenues, such as corporate taxes. Their projections are based, in part, on estimates by Deloitte & Touche, accountants, which is preparing a detailed analysis of expected tax revenues.
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The developer, Universal Properties of West Warwick, said the project will create more than 4,500 construction jobs over its first three years, and more than 6,500 permanent jobs over 10 years.
Legislation was introduced by Rep. Stephen J. Anderson, D-Coventry on behalf of Universal Properties, whose principal is Nicholas Cambio. The company is responsible for much of the retail development along Route 2 in Warwick.
Cambio was a figure in the 1991 credit union crisis and eventually repaid the Depositors Economic Protection Corporation $16 million. He was also found innocent in 1992 of charges of using money from a construction loan to play the stock market, and in 1995 pleaded guilty to charges of engaging in an illegal scheme of inflating the price of construction equipment.
The site where the 480-acre project is under way is a gravel pit that may be best remembered as a projected location for a Narragansett Indian casino a few years ago, when voters defeated the casino proposals.
Since then, Cambio and his partners have concentrated on development of a massive retail/commercial/entertainment complex, with the centerpiece being a 1,303,000 square foot indoor outlet mall. It is the stores in this mall that would be the main beneficiaries of the sales tax moratorium.
Anthony Traini, general counsel to Universal Properties, said the legislation is similar to bills approved in several states, under different titles, including New Jersey, Pennsylvania and Michigan – all with an aim to speed up development.
In New Jersey, Traini said the legislation helped Elizabeth’s Jersey Gardens, a retail complex that is smaller than the Universal proposal, and now employs 5,000.
Specifically, the legislation proposed here would define a Renaissance Development Zone as more than 400 contiguous acres under common ownership, which is municipally approved for not less than six million square feet of retail and commercial development. Those parameters are roughly the same as the Universal project, with no similar project in Rhode Island. However, Traini and Cambio are quick to point out that there are other parcels that have the potential to qualify, including Quonset Point.
The zone, under the proposal, would qualify for a five-year sales tax exemption (with the exception of automobiles, alcoholic beverages and cigarettes), with the sale tax phased in at 20 percent a year over the next five years.
Legislators last week raised some concerns, including the impact the legislation might have on other retailers in Rhode Island who do not benefit from the tax moratorium, and the loss of immediate revenue ($18.6 million).
The developers argue, however, that the tax break is far exceeded by the benefits of completing the project sooner.
”If we build out in three years, versus seven, the state winds up at the end of 10 years, making $11.5 million more,” Traini said. “This will have a billion dollar impact on the state of Rhode Island. We expect to be bringing a lot of Massachusetts and Connecticut people here. We expect to attract millions from out of state. We’re placing a little bit of New Hampshire in the middle of Coventry. ”
Traini and Cambio said Rhode Island now has no outlet center, and that outlet centers in nearby states, such as Wrentham Village in Wrentham, Mass. and one in Clinton, Conn. have been extremely successful.
Traini also said the project, unlike others such as Providence Place, is being built without any state financial aid. However, it has received considerable tax incentives from the town of Coventry, which Traini acknowledges. Among them, Traini said, are:
Scaled in property taxes over 10 years, from the time the Centre opened in 1997, starting at 0 percent, increasing 10 percent each year.
No tangible property tax for 10 years.
No retail or wholesale taxes.
In exchange, Traini said, the developer maintains virtually all Department of Public Works’ activities, the area is covered by fire districts not specifically the town, leaving the municipality to provide only police protection.
Additionally, the developer has leased 13 acres to Coventry at $1 a year for 250 years for the development of girls’ softball facility, and the town has leased to the developer, under the same terms, its former compost site.
Meanwhile, while the legislation is debated, development of the project continues. The 480-acre park is being built on gravel pits bounded by Hopkins Hill and Arnold Roads, the New London Turnpike and Route 95. It spans two exits off the highway, 7 and 6A. While most of the 480 acres is in Coventry (415 acres), 60 acres are in West Greenwich, and the remainder in East Greenwich. Universal is also building a 2.2 mile six-lane road that connects Hopkins Hill Road and the New London Turnpike.
Here’s the development that has taken place, is definite, or close to being finalized, according to Traini and Cambio.
On the Hopkins Hill side, already operating is Champion Window and Door, Rhode Island Mack Truck, and Airborne Express. A foundation is complete for Hertz Equipment Rental.
Neighbor Care Pharmaceuticals, also near Hopkins Hill.
Primary Color Day Care, also near Hopkins Hill.
On the New London Turnpike side is a Wendy’s, which was the first facility built two years ago, a Cracker Barrel Restaurant, and a BJ’s Wholesale Club, which opened on April 1, and is the first in the area with its own gas station.
Traini said they are near signing with Applebee’s Restaurant and County Inns and Suites, a 100-unit hotel.
He said they also expect to sign with Starbucks, Sovereign Bank (which is involved with the financing, Traini said), Denny’s Classic Diner, and Texas Roadhouse.
Along the New London Turnpike area, Traini said they eventually expect six or seven restaurants. The entire park, he said, will include parking for 8,000, various entertainment centers, including an elaborate indoor water park, more hotels, and commercial development.
While Sovereign is involved in the financing, Traini and Cambio said it would take more than one financier to fund the project, possibly including a big life insurance company.
“Once you have the retailers,” Cambio said, “there’ll be a hundred lenders standing in line.”
