Paolino seeks tax credits for $17.9M Studley Building apartment project

PROVIDENCE – Paolino Properties LP is seeking an award under the Rebuild Rhode Island Tax Credit Program to offset costs as it works to turn the long vacant, six-story Studley Building at 86 Weybosset St. in downtown Providence into apartments as part of a $17.9 million renovation.

The R.I. Commerce Corp. Investment Committee voted unanimously Wednesday to recommend approval of $390,000 in tax credits for Studley Building Enterprise LLC, the limited liability company established by Paolino Properties to hold ownership of the property. The request will now go before the R.I. Commerce Corp. Board of Directors during its meeting set for 5 p.m. on March 28 for final approval.

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Committee member Michael F. McNally, former CEO of construction company Skanska USA, said it was a worth project, but questioned whether it met a “but for” requirement for the tax credit, based on whether the tax credit was truly needed by the Paolino company to make ends meet for the apartment project.

“It’s an important place in Providence,” McNally said. “It’s kind of hard to believe it’s going to take the $400,000 to make this happen. But personally, I don’t want to take the risk. … I wouldn’t want to call a bluff here. It’s not a lot of money, and if it’s what it takes to get this important project done, I guess I’m in support.”

Paolino Properties said it was originally asking for $700,000 or $800,000 in tax credits.

Joseph R. Paolino Jr., the former Providence mayor and managing partner of the real estate investment company, said the project will create 65 furnished residential units in the 45,000-square-foot building. There will be 4,000 square feet of retail space on the first floor, he said.

Paolino said the office building has not had office tenants since 2010. Paolino said the property was acquired by his family in the 1950s, and was once the home of “a lot of law firms,” including the office of Jack Cicilline, the father of U.S. Rep. David Cicilline. The Studley Building was constructed in 1891.

“Buildings like that are not conducive to office space anymore,” Paolino said. “Residential is the best alternative to try to save these historic buildings.”

Paolino said the property is already under renovation, but the pandemic has caused starts and stops in construction. Paolino said he hopes to get the project done and the building occupied by residential tenants by the end of the year.

“The pandemic has hurt us a lot in trying to get supply – washers and dryers and elevators,” Paolino said. “Prices have just been skyrocketing on all of that. We’re getting hurt with inflation like everyone else. This little bit of help through the tax credit that commerce is offering to all developers, I think, will help us somewhat. They didn’t give me all that we asked for, but something is better than nothing.”

Randy Nigrelli, a consultant for the R.I. Commerce Corp., told the Investment Committee that the project is also receiving $4 million in federal, state and historic tax credits, along with $1.1 million from the Rhode Island Workforce Housing Program.

“The only construction work that has started in the building is currently some interior demolition that is being performed and they’re doing some pointing work on the outside to stabilize the exterior,” Nigrelli said.

Paolino said 20% of the units will be “affordable housing” and the rest will be market rate.

The R.I. Commerce Corp. board member Vanessa Toledo-Vickers said the affordable housing component led her to vote in favor of recommending the project for the $400,000 reward through the Rebuild Rhode Island Tax Credit Program.

“That’s tremendous,” Toledo-Vickers said. “Downtown Providence does not have a lot of affordable housing. It’s not a lot of money.”

Toledo-Vickers said her only concern is that the project ends up costing more than Paolino expects, due to unforeseen costs related to the advanced age of the building, and the company trying to come back for additional financial support that may not be available.

“Do we have money left in the coffers for something like this,” she said. “What would happen if he needs more money and we don’t have it.”

McNally said that’s a risk that the developer would have to take.

“That’s a real risk going into an old building,” McNally said. “It’s not likely we could help out if that happens.”

The Studley Building is next to the Case Mead Lofts building at 76 Dorrance St. that Paolino Properties renovated about three years ago, Paolino said. That building contains 44 residential units, he said.

“We’re actively bullish on trying to make things happen in Providence,” Paolino said. “Every time I’ve done a project I’ve tried to do something better than it was in the past. I think the Studley Building will be something special in our downtown.”

(UPDATES: story updated for committee recommending approval, meeting details)

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