The plan redefined the “grand” in the name: The Procaccianti Group, already involved in such high-profile projects as The Residences at The Westin, was to buy Newport Grand for $155 million and then spend $1.4 billion redeveloping the property and surrounding area.
Dubbed O2 Newport, the plan was welcomed this spring as a potential catalyst for the redevelopment of Newport’s North End, which local officials have made a priority. With the many planned upgrades, O2 would have also helped make Newport a stronger year-round destination.
But at least for now, the plan is dead. Last week, Procaccianti notified officials that it would no longer pursue the project because the General Assembly had not taken actions needed to support the endeavor.
Procaccianti informed Newport Grand’s owners on June 22 that it would be terminating its purchase-and-sale agreement. Then, on Monday, it withdrew its license transfer application, which was pending before the R.I. Department of Business Regulation and the R.I. Lottery Commission.
According to the Cranston-based development firm and hotel operator, contingencies within the agreement were not met. Specifically, the developer backed out of the deal because a five-year extension on the state tax rate for video-slot revenues was not granted.
A bill filed in the state House of Representatives would have fulfilled that requirement, but the Assembly recessed without voting on the bill.
As a result, Procaccianti pulled the plug on the project and reclaimed its $5 million deposit.
While calls to the company’s spokesman were not returned last week, Procaccianti issued a statement that said the firm “continues to believe in the potential” in Newport, and that there are still “exciting possibilities for high-end, mixed-use development in that area of Newport.”
“We will watch with interest as other opportunities for investment present themselves,” the statement said. “We appreciate the sincere efforts of lawmakers and officials in Newport and in state government who gave this proposal careful consideration, and we look forward to opportunities to work with them in the future.”
After Procaccianti’s announcement last week, the owners of the gaming facility said that they would continue with the expansion of video-lottery terminals at Newport Grand from 1,301 to 2,101. That project predates Procaccianti’s involvement, stemming from a requirement of the facility’s November 2005 agreement with the state. Newport Grand will also add a hotel, spending an estimated $20 million on the upgrade.
“I want to reassure the state, the City of Newport and our employees of our commitment to develop Newport Grand into a world-class gaming facility,” said Newport Grand CEO Diane Hurley in a statement. “We are prepared and ready to invest the capital to make the renovations and to bring the remaining machines online.”
Newport Grand spokeswoman Amy Kempe said in an interview that the owners would not rule out partnering with other developers who are interested in the facility.
“We will continue to seek out development partners to invest in the facility and the surrounding areas to achieve the goals that both Newport Grand and the city have,” Kempe said.
The O2 Newport plan was to be part of a national effort by Procaccianti that included developments in Santa Monica, Calif.; Palm Beach Gardens and Fort Lauderdale, both in Florida; Paradise Valley, Ariz.; and several other locations. However, when it was announced this spring, a company official said the Newport plan “is the greatest of all these opportunities.”
Procaccianti had planned to add a Ritz-Carlton hotel, a village-style facility that included commercial and residential uses, and year-round recreation facilities. Growing out of plans for the area created by the R.I. Economic Development Corporation and the City of Newport, the company estimated that the project would have created 2,800 permanent jobs and added $31 million in tax revenue to state and local coffers.
But Keith Stokes, executive director of the Newport County Chamber of Commerce, said the apparent death of the O2 plan does not mark the end of redevelopment opportunities in the city. Stokes said that if Procaccianti still has the opportunity to be involved and will likely be monitoring what happens in the city. Also, he said, firms from across the nation have contacted his office and expressed interest in the city’s redevelopment.
“There are a number of investors that have an interest in Newport,” Stokes said, “not because of casino gaming, but because of the Newport brand.”
Stokes, who he had been in conversation with Procaccianti leading up to last week’s announcement, said that the company’s decision to pull out of the plan provides an opportunity to let the “dust settle” and reassess what exactly all parties are hoping to get out of the development of the city’s North End.
“I don’t think we’ve had that opportunity, because it’s been so focused on the gambling aspect,” Stokes said.
