PROVIDENCE – City lawmakers on Thursday gave their initial blessing to a 30-year tax discount to redevelop the iconic “Superman” building.
The City Council’s 11-1 vote, with three abstentions, is the first of two votes needed for the tax-stabilization agreement with building owner High Rock Development LLC. The proposed tax deal saves the developer $29.4 million, or just over 50% of the property taxes over the next 30 years in exchange for increasing the property’s value through redevelopment.
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The tax treaty has divided community members and some lawmakers, with impassioned debate unfolding in a nearly three-hour public hearing Oct. 17.
Proponents insist the tax savings is an integral piece of the plan to revive downtown Providence by filling the long-vacant skyscraper with 285 apartments, along with retail, office and community space. But opponents counter that the 20% of apartments designated affordable are still too costly and that the city should not offer incentives for a luxury apartment tower.
A similar back-and-forth played out briefly among city lawmakers on Thursday.
Councilman John Goncalves, who represents the area that includes the Industrial Trust Co. building, called the $223 million project “a step up for a seemingly frail downtown that hasn’t quite realized its potential.
“We must not get in our own way and squander this moment,” Goncalves said.
Councilwoman Kat Kerwin, who cast the sole vote in opposition, painted a very different picture, accusing council members who supported the deal of being “heartless” and “minimizing the concerns” of community members.
“We’re not even putting up a fight for our city,” Kerwin said.
Other lawmakers appeared torn, with council members Rachel Miller, Mary Kay Harris and Pedro Espinal all abstaining from the vote. Even some of the lawmakers who backed the deal still cited the need for more affordable housing.
The 30-year property tax discount is one of several city and state incentives baked into the redevelopment plan. The project has already been approved for $21 million in state incentives through R.I. Commerce Corp., a $10 million loan from the Providence Redevelopment Agency and a $5 million allocation in the city’s fiscal 2023 budget.
Right now, the developer pays just over $500,000 in property taxes based on the $14.2 million assessed value of the empty building. By the time the project is completed, the property will be worth $63.4 million, with a $2.2 million annual tax bill, according to the city analysis.
Also on Thursday, the council gave initial approval for a new tax agreement for the former Providence Journal building on Westminster Street and the neighboring Kresge Building, a former outlet of the national five-and-dime chain. The 13-2 vote came swiftly and without discussion, with Councilwomen Miller and Kerwin voting against the agreement.
Originally slated to become a boutique hotel called Hotel Hive, Washington, D.C. developer Jim Abdo has since ditched that plan in favor of a 124-unit apartment complex known as Hive Life. The change of plans, as well as delays in the construction timeline, require a new tax deal to replace the one approved in 2019.
Both the project cost and the tax savings to the developer have increased under the revised proposal. Originally, the $39 million project would have saved the developer $2.7 million in property taxes over 20 years. Now, the project is pegged at a $52.7 million price tag, with $4.2 million in tax savings over 20 years.
Currently, the vacant Journal Building and the Kresge Building are worth $3.9 million and generate $139,700 in city taxes a year. After redevelopment as an apartment complex, they will be worth $20.9 million in 2041, generating $739,000 in taxes a year at full taxation.
The project features 124 studio and 1-bedroom apartments, along with 29,000 square feet of retail space, including a pizza restaurant, coworking space and 1970s-style “Barcade” basement lounge, according to plans submitted to the city.
Both tax treaties require a second passage by the council at an upcoming meeting, a date for which has not been set.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
