PROVIDENCE – Ditching a boutique hotel for apartments within a downtown development plan is expected to make the property worth more once the project is done, which means the tax savings to the developer would be even greater.
Original plans for the former Providence Journal building in downtown Providence called for a $39 million boutique hotel with retail and loft apartments. A tax deal inked between the city and Washington, D.C., developer Jim Abdo would have shaved off $2.7 million in property taxes over a 20-year period beginning in 2019.
Federal and State Nursing Home Staffing Mandates
Staffing has always been an ongoing challenge in the long-term care industry. However, since the…
Learn More
But Abdo has since scrapped his original plan, blaming market volatility since the pandemic that decreased interest in hotels. Abdo now wants to center the project around an apartment complex with retail and coworking space – with total costs estimated at $27.1 million, according to the city. And Abdo again wants a city tax agreement to sweeten the deal.
The proposed tax stabilization agreement uses the same formula of incrementally increasing property taxes over a 20-year period. While the percentage discount remains the same, the actual tax savings to the developer would increase by more than 50% – to $4.2 million over the course of 20 years, according to a new city analysis.
That’s because the property is expected to be worth more under the apartment complex plan than the prior hotel proposal, said Andrew Grande, a spokesman for Mayor Jorge O. Elorza’s office.
“Assessment assumptions are based on several factors, such as the expected makeup of the building, current state of the property, and recent comparable real estate transactions in the city,” Grande said in an email.
Currently, the abandoned buildings are worth $3.9 million, and generate $139,700 in city taxes a year.
If the properties are redeveloped under the apartment complex proposal, the same area will be worth $20.9 million in 2041, generating $739,000 in taxes a year at full taxation. The prior hotel development would have also increased the property value, but by less, to $14.3 million by 2038, according to the city analysis.
The new tax deal still requires City Council approval. The council is slated to hold a public hearing on the proposal on Oct. 17.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
