$220M renovation plan unveiled for ‘Superman’ building

PROVIDENCE – The Industrial Trust Co. Building, the tallest property in Providence which has remained empty for nine years despite numerous efforts by public officials to spur economic development, is now expected to undergo a massive historic renovation.

Gov. Daniel J. McKee, state officials and building owner High Rock Development LLC on Tuesday announced a $220 million project supported by $41 million in state and city financing that will revive the former office tower into apartments, office, retail and event space.

Affectionately known by many Rhode Islanders as the “Superman” building, due to its resemblance to the Daily Planet building from the “Adventures of Superman” TV series from the 1950s, the 26-story property was last occupied by Bank of America until it moved out in 2013. Since then, there have been a series of proposals to find potential tenants, including Citizens Financial Group Inc. in 2015, Paypal Holdings Inc. in 2016 and Samsonite Corp. in 2018.

Rhode Island Commerce Secretary Stefan Pryor said the public financing deal is a “preliminary agreement” but he is confident that it will come to fruition.

“All what’s described today needs to be executed and enacted through government panels and government actions, but we’re very encouraged that we reached this point,” Pryor said.

High Rock Development’s publicly financed renovation of the “Superman” building will turn the building into 285 apartments, with 20% of those to be considered affordable housing, Pryor said. The project will also include 8,000 square feet of commercial space, and 26,000 square feet is being dedicated to retail and event space, the commerce secretary said.

High Rock Development said they hope to start the redevelopment of the 428-foot-tall “Superman” building at 111 Westminster St. in five to six months by first conducting demolition work, while also going through the permitting process for full construction. It’s unclear how long it’ll take to get the project permitted, but the company said full construction phase of the project will take about 30 months to complete once it commences.

The renovation of the “Superman” building is expected to generate 1,500 construction jobs, according to state officials.

Pryor said the deal was the result of “tough negotiations” and that state officials “bargained hard” on behalf of Rhode Islanders. Pryor called it “a deal that protects the taxpayers.” As a result of the negotiation, Pryor said the 20% affordable housing is up from a 10% originally proposed by the developer. Of those affordable housing units, half will be for those who make up to 120% of the area median income, a quarter will be for those who make up to 100% AMI and the remainder will be for those who make up to 80% AMI.

Pryor said High Rock Capital committed to providing over $42 million toward the project, including up to $32 million in cash equity, as well as the land and building.

McKee’s office said $26 million in contributions to financing for the project is coming from the state’s existing housing and economic development programs, which is 45% less than the developer’s recent financial request to the state. On top of that, the project is getting $22 million in federal historic tax credits, the governor’s office said, along with $10 million in a loan through the city of Providence Housing Trust through the Providence Redevelopment Agency, $5 million in a direct contribution from the city of Providence and  $2 million in federal new markets tax credit proceeds. High Rock also intends to seek a tax stabilization agreement from the City of Providence, according to McKee’s office, although details on that were not made clear on Tuesday. Also, the nonprofit Rhode Island Foundation is providing bridge financing for the Rebuild Rhode Island Tax Credits in order to reduce the project’s financing cost, McKee’s office said.

“There’s no new allocation of state funding,” said House Speaker Joe Shekarchi, who also spoke highly of the affordable housing being included. “This is going to be a model for how we do state projects. … I’m excited about this. This is a good day for the state of Rhode Island.

Senate President Dominick J. Ruggerio called it an “absolutely great day” for Rhode Island.

“I look forward to having the ribbon cutting at the appropriate time and making that building the iconic structure that it always has been,” Ruggerio said. “(The project) will help reinvigorate downtown Providence, attracting businesses and investment into our capital city.”

McKee revealed earlier this year that “heavy negotiations” over the project were ongoing between the R.I. Department of Commerce and High Rock Development LLC, the Massachusetts company that bought the Art Deco skyscraper in 2008 for $33.2 million. Pryor said he was holding “daily” discussions for several months with the principal owner of High Rock Development, David C. Sweetser, a Massachusetts real-estate investor, working to negotiate a financing deal for the redevelopment project.

Sweetser said the prolonged vacancy of the “Superman” building lasted longer “than most of us have hoped” but said “this great day has finally come,” after negotiations over public financing started to satisfy both parties on April 10, before the agreement was ultimately finalized on Monday. Sweetser and his attorney, Zach Darrow, declined to disclose exactly what the sticking points were. But Darrow said “we’re at a time where all the stars do align,” when it comes to state and city contributions to financing for the project, the demand in the market for housing, and a historic tax credit program that was terminated when the company first sought to develop the building but has since become available again.

“Some of the negotiations are probably better left (unsaid),” Sweetser told the crowd gathered for the press conference held at the Statehouse. “What has never changed is our views on Providence and Rhode Island as a good place to make investments, and we certainly remain bullish today on downtown Providence.”

Sweetser, who has constructed Market Basket stores throughout the region, said the “Superman” building has “stunning architectural features” and “solid bones” and once completed the property “will be one of the best and exciting locations” to live in downtown Providence.

Sweetser shared a story about his family’s predilection for Italian food, and a promise to his mother made when he bought the property to bring her out to eat at Federal Hill once he finally got the “Superman” building repositioned for redevelopment. Sweetser said he called his 88-year-old mother on Tuesday.

“I said, ‘Mom, we’re going to Federal Hill,’” Sweetser said. “She said, ‘For crying out loud, it’s been 12 years. I’ve been wilting away.’”

McKee said the project will “breathe life” into downtown Providence, calling it a “really good deal” for everyone in Rhode Island. McKee said there were “times when it didn’t look like it was going to happen,” but the deal is coming together. McKee said the project will involve “good-paying jobs” for union construction workers, and that the developer committed to recruiting minority businesses and women-owned construction firms to do 20% of the work.

“Today we’re here to declare that Rhode Island has momentum. It has economic momentum,” McKee said. “At the end of the day it’s going to light up a building that has not been lit in almost a decade.”

Providence Mayor Jorge O. Elorza, the developer and others said the project will help activate Kennedy Plaza, as part of the city’s long standing plans to revitalize the downtown epicenter.

“We also know the ‘Superman’ building doesn’t stand on its own,” Elorza said. “Greater Kennedy Plaza moves from being the central bus hub for the entire state to being that gathering place, the true civic center of the city, and by extension the civic center of the state that creates community and provides that space for people to come together.”

Providence City Council President John Igliozzi thanked the property owner for pushing the project forward and “believing in” Providence.

“Today’s announcement is an excellent example of a public-private partnership that will truly benefit the people of Providence,” Igliozzi said. “Renovating the ‘Superman’ building immediately puts affordable housing online, something the city desperately needs.”

Elorza said that the property means a lot symbolically to Providence residents.

“I think all of us have had this experience, when we’re driving south into Providence, and let’s say we’ve been away from home for a while, and we’re  on I-195 South and we see the ‘Superman’ building,” Elorza said. “You feel that sense that alright, I’m home. I’m getting there. So the ‘Superman’ building is a building we all have a connection to. We all feel attached to it. In no small way, it’s a symbol of our entire state. And while it has laid empty for nine years, we’ve all felt concern. … That’s why today is such a big day. We know we’re going to breathe new life into that building, and this project scratches so many important itches.”

Neil D. Steinberg, president and CEO of the Rhode Island Foundation, said his nonprofit organization, which has an office across the street from the ‘Superman’ building, is happy to support the financing of the project, calling it a “prudent” investment.”

“Every day we look across and see this other anchor (of downtown) empty,” said Steinberg, who began his career as a banking executive 47 years ago working inside the “Superman” building. “All the vibrancy that used to come out of this building is now on the horizon. (Tenants will be) coming out, going to stores, going to restaurants, going to events. … It’s very exciting.”

Joseph R. Paolino Jr., the former Providence mayor and managing partner of the real estate investment company Paolino Properties LP, said he was “excited” about what he called overdue plans to renovate the “Superman” building. Paolino said it’ll be good for the local economy, but added that the introduction of more apartment dwellers to the center of the city will be good for public safety, adding more eyes on the streets to deter criminal behavior.

“It’s going to help with the restaurants, it’s going to help with hotels, it’s going to help with stores, it’s going to help with retail,” said Paolino, whose real estate business has been located next door at 100 Westminster St. since 2014. “In addition to all of that, I think it’s going to add tremendous safety to the city. They’ll just be more people walking around our downtown. It can only help.”

Paolino said the planned renovation of the “Superman” might also prevent a tragedy that could be caused by the physical deterioration of the mothballed building.

“I’ve always been concerned that if any of the concrete exterior of the building chipped off and fell and hit someone in the head, people could die or get injured,” said Paolino, whose company owns about 25 downtown properties including office buildings, parking lots, apartments and The Beatrice hotel.

The proposed renovation deal is also saving a historic property, constructed in 1927, which could have otherwise been demolished, Paolino said. That was a fear expressed by the nonprofit Providence Preservation Society, which included the Industrial Trust Co. Building on its annual Most Endangered Properties List eight times in recent years.

Last August, McKee floated the idea that the “Superman” building could be razed, when the owner temporarily faced the prospect of potential tax sale of the skyscraper due for being delinquent on $450,000 in property taxes owed to the city. The company has since paid down its bill on the “Superman” building, which is currently assessed by Providence to be worth $14.2 million, with a commercial tax rate of $36.70 per $1,000, amounting to $519,665 in property taxes each year.

“Now we don’t have to wonder if it’s going to be demolished,” Paolino said. “We don’t have to knock down our history.”

The Providence Preservation Society released a statement on Tuesday celebrating the $220 million residential redevelopment project, predicting that it will be a “nationally celebrated achievement.”

The “Superman” building was originally owned by the bank that occupied it, the Industrial Trust Co., which changed its name to Fleet Financial Group in 1982, before merging with Bank of America in 2003. In that year, the Inland Real Estate Exchange Corporation bought the Superman building from Bank of America, which held onto the lease for another six years and before ultimately leaving the property vacant ever since.

“To see a vibrant re-use of the building helps to activate the downtown in so many different ways,” said City Planning Director Bonnie Nickerson, in a recent interview. “We will have a lot of spinoffs from having that building alive, from supporting local businesses, restaurants and having more street life in and around downtown. It’s more than symbolic. It’s a real shot in the arm for downtown to have the building occupied, vibrant and busy.”

(SUBS 30th paragraph to delete incorrect reference to Neil Steinberg’s previous banking experience and corrects the length of time he worked in the building.)

Marc Larocque is a PBN staff writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockPBN.com.