PROVIDENCE – The R.I. Commerce Corp. board of directors voted 7-0 on Wednesday to approve nearly $21 million in state incentives as part of a plan to redevelop the Industrial Trust Co. in downtown Providence building into 285 apartments, along with 8,000 square feet of offices, and 26,000 square feet of retail, event and community space.
High Rock Development LLC, the owner of the long vacant 111 Westminster St. skyscraper, is receiving $15 million in tax credits through the Rebuild Rhode Island Tax Credit Program and $5.7 million from a financial incentive program called the First Wave Closing Fund. These two R.I. Commerce Corp. programs account for 9.3% of the $223.1 million financing package that was announced on April 12 by city and state officials together with High Rock Development principal David C. Sweetser.
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Commerce Secretary Stefan Pryor gave a presentation during the meeting, which was chaired Gov. Daniel J. McKee, about the importance of the state financing.
Pryor also confirmed reports that the limited liability company established in Rhode Island by High Rock as the owner of the 26-story building had lapsed in 2017 after the company failed to file required annual reports. The problem was first reported earlier this week by WPRI-TV.
Sweetser and High Rock are now working to resolve its corporate standing and return with a letter of good standing from the R.I. Department of State as a condition of receiving any of the financing for the project, said Dave Chenevert, a Commerce Corp. board member and executive director of the Rhode Island Manufacturers Association.
“Nothing will be moving forward until that is secured,” Chenevert said. “That was brought up by Secretary Pryor right away. … The developer indicates they’re filing all the correct papers at this point. They let it lapse.”
Chenevert said he’s seen similar situations with companies coming before the Commerce Corp. Board of of Directors in the past, and doesn’t expect it to be an issue.
“It’s not something that hasn’t happened before,” he said.
Chenevert said “the onus is on the developer” to complete the project, or else the Commerce Corp. financing will not be issued.
“The biggest factor is that none of our money gets distributed until he gets an occupancy permit until he completes the project,” Chenevert said.
Chenevert said the board of directors meeting lasted 45 minutes to an hour. He added no representatives for High Rock spoke during the meeting, nor did he notice any in attendance.
The revival of the “Superman,” as its widely known, will be a boon for the epicenter of Providence, Chenevert said.
“It should help the downtown area,” Chenevert said. “We looked at it from that perspective. … The proposal being made could increase the vitality of the area.”
High Rock Development also has financing lined up from R.I. Housing, including $4.5 million from the R.I. Housing Workforce Housing Funds and $1 million from the R.I. Housing Acquisition and Revitalization Program.
The city of Providence and the Providence Redevelopment Authority are also involved with the public-private financing package. Although not yet approved by City Council, but signed off on by Mayor Jorge O. Elorza, Providence is expected to chip in $5 million in city funds, and the Providence Redevelopment Association is expected to provide a $10 million loan with 1% interest for 40 years.
The federal government is expected to provide $22.04 million in historic tax credits and $2.1 million through the New Market Tax Credits program, according to the financial term sheet for the project. The nonprofit Rhode Island Foundation also agreed to provide the developer a bridge loan of $15 million commencing at the issuance of a certificate of occupancy for the building, with a 1% interest rate.
Chenevert said he confirmed during the meeting that if the project failed, the $15 million offered by the Rhode Island Foundation is strictly a risk to the nonprofit, not to the state government or R.I. Commerce Corp, which is a quasi-governmental agency.
“The risk on that is strictly with the Rhode Island Foundation,” Chenevert said.
High Rock Development recently said it hopes to commence the redevelopment of the 428-foot-tall “Superman” building in five to six months, first by conducting demolition work as it continues to navigate the permitting process for full construction. It’s unclear how long it’ll take to get the project permitted, but the company said the full construction phase of the project will take about 30 months to complete once it starts.
High Rock purchased the property for $33.2 million in 2008. Last year, city assessors valued the building at $14.2 million. The “Superman” building has been empty since 2013, following the departure of its previous tenant, Bank of America.
The developer is taking on $115.7 million in construction debt, putting up $10 million in initial equity in the form of land and building, $21.1 million in initial cash equity and $11 million in additional cash equity, according to a term sheet summary for the project, agreed to by city and state officials.
“We’re hopeful that everyone seems to have a stake in the game,” Chenevert said. “The city of Providence is very much interested in it. It shouldn’t stand as an empty building.”
Marc Larocque is a PBN staff writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockPBN.
