‘Superman’ building redevelopment bid going before R.I. Senate committee

June 02--PROVIDENCE -- A proposal seeking $39 million in state help for the redevelopment of the so-called "Superman" building downtown goes before a Senate committee on Tuesday.

David Sweetser, the lead executive for Massachusetts-based High Rock Development, has been lobbying city and state officials for a year to secure financing to redevelop the office building at 111 Westminster St.

The Senate proposal restates Sweetser's stance that "this project cannot be financed without public support." Sen. Joshua Miller, D-Cranston, is the lead sponsor of the bill, S2898.

Sweetser hired Providence-based Cornish Associates, run by Arnold "Buff" Chace Jr., in 2013 to study ways to convert the building to other uses. Cornish remains a consultant on the project, working to drum up support among community, government and business groups.

Cornish's Steve Durkee told The Journal on Sunday, "This project is so much bigger and so much more complicated, it needs much more money" than what is allowed under the state's existing historic-building tax-credit program.

That newly refreshed program caps at $5 million the tax breaks given to any one redevelopment project.

Sweetser initially asked for up to $75 million in state aid. Early in February, he reshaped his pitch, suggesting the money he needs could be parceled out over four years to soften the impact on the state budget.

Splitting a state financial commitment into four annual installments of $9.75 million would allow him to move forward on the project, he said.

The Senate bill -- which goes before the Finance Committee on Tuesday -- would create the "111 Westminster historic redevelopment program and revolving fund" -- seeding it with up to $39 million. The bill suggests the new fund be overseen by the state Department of Administration.

Those proposals, along with others, are included in the Senate bill up for discussion Tuesday.

A state commitment would allow Sweetser to close a financing gap for a reconstruction budget he estimates at $115 million.

In addition to the state aid, he would continue to seek a property-tax stabilization agreement with the city.

High Rock bought the 350,000-square-foot art deco skyscraper for $33.2 million in 2008 and has invested another $6 million in it. The company wrote off $24 million of its investment as the Providence real estate market faded and the building deteriorated.

Sweetser publicized a reconstruction plan for the tower more than a year ago as the building's sole tenant -- Bank of America -- moved out the last of its employees. He wants to convert the landmark tower into 278 apartments, eyeing its grand banking room and its below-ground vault for 35,000 square feet of shops and restaurants.

When he unveiled his plan, Sweetser asked state and city leaders to provide up to $75 million in public financing, including $39 million in state assistance, along with $10 million to $15 million in city tax breaks. The project would also qualify for $21 million in federal historic tax credits.

The effort melted away with the end of the 2013 General Assembly session, as lawmakers did not include enough potential aid in the state budget for the building's redevelopment.

The state's $8.2-billion tax-and-spending plan revived the historic preservation tax-credit program by authorizing a $34-million pool. Governor Chafee has proposed $50 million for the coming year.

As part of his refashioned pitch for state help, Sweetser would secure a "completion bond," insurance that would fund the reconstruction work to its finish if High Rock quits the project.

Also, Sweetser would establish a $500,000 "endowment" -- payable in $50,000 annual installments -- for upkeep of Kennedy Plaza.

Lastly, he would add a "refundable component" to the project, returning a portion of the state investment at the time of a "capital event" for 111 Westminster St. -- described as a sale or refinancing.

Upon a capital event, after repayment of third-party debt and equity investment, the amount of the state support that exceeds 30 percent of the qualified rehabilitation expenses -- as set out in the state and federal tax credit programs -- would be returned to the state.

The reimbursements would occur at each capital event until that excess component was fully refunded to the state.

Without state help, Durkee said, the gray tower at 111 Westminster St. will be a "continued drag on the downtown economy."

"This is a reasonable way for providing economic stimulus," Durkee said. "It's the big projects -- the Superman building, the South Street project -- that are going to create the jobs."

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