Superman Building owner seeks new tax break. Will it be enough to complete its renovation?

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The owner of Providence's long-vacant "Superman Building" says a tax break being considered by lawmakers is "the last piece of the puzzle" needed to restart construction and turn the defunct office tower into snazzy new apartments.
The tax break sought by Providence Mayor Brett Smiley and building owner David Sweetser's High Rock Development would exempt construction materials on the Superman Building redevelopment while allowing the owner to claim the maximum $15 million tax credit under the Rebuild Rhode Island program, the state's primary development incentive.
Current law doesn't allow property owners to get a sales tax exemption while claiming the full $15 million Rebuild credit.
The Senate Finance Committee was slated to vote on the legislation, S1002, on May 27 but rescheduled the vote until Thursday so that it could be amended. It was not immediately clear what specific changes were in the works.
An identical House version of the bill, H5741, received a hearing in early April and has not moved since.
Although the legislation doesn't mention the Industrial Trust Tower, or Superman Building, by name, there's little doubt that the state's art deco skyline landmark and tallest building was the inspiration.
The only projects that qualify for the new break have to include housing units with at least 20% of them reserved for residents making no more than 80% to 120% of the area median income.
The deal struck by Sweetser and state leaders back in the spring of 2022 specified that at least 20% of units would be deed-restricted for people making between 80% and 120% of the average median income.
The original 2022 deal between Sweetser, Gov. Dan McKee, then-Mayor Jorge Elorza and House and Senate leaders included a roughly $65 million public financing package, of which $26 million would come from the state, $15 million from Providence and $24 million from the federal government. (This does not not include the 30-year city property tax treaty.)
Rhode Island Commerce estimates that the sales tax exemption would give High Rock an additional $4.6 million in savings.
In exchange for those state and local incentives, High Rock promised to transform the former bank headquarters into a mixed-use residential tower with 285 rental apartments.
Over the following three years, High Rock has pulled construction permits, displayed model units and began demolition work on the art deco landmark, but work eventually stalled with little idea of what it would take to complete the conversion.
"Since 2022, construction inflation has only increased the costs of financing this worthy project," Nicholas Hemond, lobbyist for High Rock, wrote in a May letter to the Senate Finance Committee. "This legislation, together with existing programs at the local, state, and federal level, is the last piece of the puzzle towards getting this project back on the track to completion as was contemplated in 2022."
High Rock in 2022 said the redevelopment of the Superman Building would cost $285 million and has not publicly updated that estimate to reflect inflation and other cost increases since then.
Outside the Senate Finance hearing room, Smiley told The Journal that the last update he had received from High Rock suggested there was still at least a $10 million financing gap for the conversion project.
"That's not to say that if this passes the hammers start swinging tomorrow, but we've been told by them that this is a piece of the puzzle," Smiley said. "This is sales tax on construction materials that will never be received if the project never moves forward, so I think it is a financially responsible way to provide a little assistance."
The bill is also supported by state construction unions and the business-backed Providence Foundation.
Before seeking the sales tax exemption, High Rock was pursuing federal grants for transit-oriented developments. It is unclear if those are still in the funding mix.
"There are many complicated layers to financing this project, but this piece would go a long way towards developing this meaningful project for the City of Providence and the State of Rhode Island," Hemond wrote in support of the legislation. "We hope to see you all at the ribbon cutting when the project is done and life returns to the City's center piece forever."
This article originally appeared on The Providence Journal: Superman Building owner seeks new tax break. Will it be enough?