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Yahoo
a day ago
- Business
- Yahoo
Superman Building owner seeks new tax break. Will it be enough to complete its renovation?
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?
Yahoo
03-06-2025
- Business
- Yahoo
Redevelopment of Providence ‘Superman' building hinges on changing state tax credit program
The Superman building in downtown Providence has sat empty since 2013. State legislation headed to the Rhode Island Senate Wednesday would allow the owner to qualify for a sales tax waiver on construction materials. (Photo by Alexander Castro/Rhode Island Current) Compared with the $270 million-plus price tag to redevelop downtown Providence's most iconic skyscraper, a $4.6 million discount sounds inconsequential. Yet developers and city leaders championing the long-awaited rebirth of the vacant 'Superman' building as a mixed-income apartment building insist the small sales tax savings for construction materials is the 'missing piece' of the complex financing puzzle for the project. A state sales tax waiver would add to a bounty of public incentives already offered to help owner High Rock Development close financing gaps on the complex and increasingly costly project, which has risen by at least $50 million in the last three years. Proponents appear to have persuaded at least one chamber of the Rhode Island General Assembly, with the Senate Committee on Finance on Monday advancing legislation to the floor intended to support the request. The unanimous committee vote came within minutes, without discussion. The full Senate is scheduled to vote Wednesday afternoon on the legislation sponsored by Sen. Jake Bissaillon, a Providence Democrat. Senate President Valarie Lawson has already signaled support, touting its promotion of 'robust housing development across our state' in an emailed statement. Across the rotunda in the House, a companion bill by fellow Providence Democrat Raymond Hull remains held for further study following an initial April 3 hearing. But House Speaker K. Joseph Shekarchi indicated the proposed amendment to the state's Rebuild Rhode Island Tax Credit program is still on the table. 'This issue, should it be addressed, will likely be part of the budget discussions,' Shekarchi said in a statement. The legislation itself does not mention the 26-story Industrial National Bank Building by name, nor its location at 111 Westminster St. The single paragraph addition tweaks a 2016 law to specify that the $15 million per-project cap on an existing state tax credit program does not apply to exemptions on sales and use taxes. But the grand plan to revitalize the long vacant skyscraper with 285 rental units, 20% of which would be income-restricted, is the most obvious — and so far the only — example of a development project that meets the requirements set out in the legislation. Supporters for the proposal have made it clear that the Rebuild Rhode Island tax credit change is specifically meant to help Superman get off the ground. '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,' Nicholas Hemond, a lobbyist for High Rock, wrote in a letter to lawmakers. High Rock through a subsidiary known as High Rock Westminster bought the Art Deco building in 2008, according to city tax records. 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 – Nicholas Hemond, lobbyist for High Rock Development LLC, owner of the Superman building in downtown Providence His plea echoes the promises High Rock made to state and city lawmakers in 2022, securing $65 million worth of public financing, including $26 million from the state and $15 million from the city to cover an estimated $220 million redevelopment cost. But three years later, the former bank building still sits empty, though dozens of demolition, mechanical and electrical permits have been pulled, according to the city permit portal. Hemond in his letter cited inflationary pressures hiking costs for construction, which now stand at $270 million according to a fee calculation the owner submitted to the city in December 2024. High Rock has kicked in more cash, increasing its initial equity from $21 million to $52 million to cover initial construction, permit and architectural fees, and making sure the building is secured, Hemond wrote. Letting the property also apply for an exemption on sales taxes on construction materials, despite already receiving $15 million in Rebuild Rhode Island tax credits, would 'go a long way' to helping the project come to fruition, Hemond wrote. Providence Mayor Brett Smiley also backed the request, stressing the importance of reviving the vacant building for the city, and the state. And waiving the credit cap for sales tax exemptions, providing Rhode Island Commerce approves an application, doesn't require dipping into state coffers, a key concern of lawmakers amid a projected $185 million budget deficit. 'If this project were to never happen, the state wouldn't get that sales tax revenue anyway,' Smiley told lawmakers during the May 20 committee hearing on the bill. The proposal also received written support from The Providence Foundation, BuildRI, Rhode Island Commerce and the local chapter of the Laborers' International Union of North America. However, Neena Savage, state tax administrator, called for clarity in definitions of 'affordable housing' and 'workforce housing' in a letter to lawmakers. Savage also cautioned that the proposal may have 'unintended consequences, including fiscal impacts and uncertainties,' if the bill does not restrict sales and use tax exemptions to no more than 25% of total project costs, and keep tabs on total available funding in the state program. Changes unveiled just before the Senate Committee vote Monday afternoon address Savage's second concern, while also requiring that purchases for which sales taxes are waived must be made by June 30, 2028. Senate Finance Chairman Lou DiPalma in an interview said the deadline aims to protect taxpayers, noting the multiple delays that have plagued the Superman redevelopment. 'The longer this goes on, the higher the cost,' DiPalma, a Middletown Democrat said. 'We need to hold them accountable for taxpayer money.' Savage was not available to comment on the amended legislation. Bill Fischer, a spokesperson for High Rock, did not respond to inquiries for comment about the recent changes to the bill. Asked for details about the timing of the proposal, and other incentives needed to finish raising the money for the project, Fischer referred back to Hemond's written testimony to lawmakers. The lack of transparency was worrisome to Rep. David Morales, a Providence Democrat who opposed the original stack of public financing for the project in 2022. Morales was not as bothered by the sales tax exemption, noting it was not a direct taxpayer contribution. But he remained skeptical of the developer's promise to finally complete the project with this additional tax break. 'I am concerned this will not be the last time they come to us to ask for public subsidies,' Morales said in an interview. 'It still remains unclear whether this subsidy will get them off the ground.' He continued, 'For a project of this size, I'd like to think more homework would have been done ahead of time.' The Superman skyscraper got its nickname due to its resemblance to The Daily Planet newspaper building where Clark Kent worked in the 1950s TV show. The property has sat vacant since 2013, when Bank of America left. The property overlooking Kennedy Plaza was valued at $13.5 million in 2025, down $500,000 from the prior year's assessment, according to the city assessment database. A 30-year tax deal inked between the developer and the city of Providence in 2022 would save the developer $29.4 million in city property taxes over the next 30 years if the development is completed. The payment schedule assumes the regular payment of $500,000 in annual property taxes — undiscounted — through 2026, with discounts beginning in 2026 as the property value increases alongside its redevelopment. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
