2014 Government Regulations & Business Summit
Join PBN and our sponsors for our Government Regulations & Business Summit on Th ...
Recently there has been much discussion about the various means of public support for private historic rehabilitation and other construction projects. There has been criticism, some of it justified, of specific instances of the use of government tools – such as tax-stabilization acts – for promotion of economic activity. While this type of review is always healthy, there is a distinct danger that the larger picture will be missed.
In 1968, the Guerra family purchased the former Brown and Sharpe Manufacturing Co. complex in Providence. Shortly thereafter, industry began to leave the region in droves. The 13 historic buildings became functionally obsolescent. Ultimately, the vast majority of the massive complex, containing almost 1 million square feet of space, sat boarded up and vacant, with the structures deteriorating significantly during the 1970s and ’80s. The value of these types of properties, and there were many of them throughout Rhode Island, was nominal.
Beginning in the early ’90s, the Guerra family decided against demolishing the historic buildings and instead began to restore them, converting them to office and residential uses.
More than 5,000 broken windows were replaced. Several million square feet of surface and ground space, covered or containing lead paint, asbestos, PCBs and other contaminates, were cleaned and these toxins were removed from the property. Many millions of dollars were invested to return the buildings to productive uses. Almost every after-tax dollar generated was reinvested in the complex.
More than 50 entities now rent approximately 500,000 square feet of office space, employing more than 2,000 people in the complex, and more than 350 people now call the Promenade Apartments their home. These people have brought new life and vitality to Providence, and this has been done without any costly impact to city services or schools. Our residents bring new revenue with the payment of car taxes, and, along with our office workers, shop and dine in our city’s stores and restaurants.
In 1992, we were paying less than $200,000 annually in property taxes to the city for the entire complex. Today, we are paying almost $1.4 million per year.
Without property tax stabilization programs, many of these great old buildings would have never been adaptively restored, and the city would be less for it.
When our tax-stabilization agreement expires on the Promenade Apartments in 2015, that number will increase to more than $2 million annually.
Without property tax-stabilization programs, many of these great, old buildings would have never been adaptively restored, and the city would be the less for it.
In 2006, with the very strong encouragement of city and state officials, we began to restore the 13th, and last, building, which sits immediately adjacent to Interstate 95. It had been vacant for more than 30 years. The city promised assistance via a tax-stabilization agreement. The agreement, however, is still under negotiation and, in fact, is in jeopardy.
A fair and adequate agreement is vital to help make the $40 million project financially feasible. To date, without an agreement, more than $12 million has been invested to restore the building, including the correction of significant structural defects, removal of hazardous waste, and the installation of new windows. The plan was to construct an additional 196 residential units there, bringing more professional people here to live and work. Despite a 60 percent equity contribution to this project upon completion of construction, unheard of in the industry, it will not work without a tax-stabilization agreement.
In Boston, more than 5,000 apartments are currently under construction, with virtually all of them being supported by tax-stabilization agreements. While our construction costs are the same, Boston rents are more than double the rents in Providence, and property tax rates are one-third those in Providence.
In our opinion, tax-stabilization agreements are one of the best tools, and a necessary tool, for the city to grow its economy. Jobs are created, dilapidated properties are restored, and new people come to work and live here. In other words, everyone prospers together. •