Rhode Island Commerce approves $3.2M tax incentive deal for downtown apartments

Plans to revive a pair of iconic yet dilapidated downtown buildings will benefit from $3.2 million in state tax incentives under a deal approved by Rhode Island Commerce Corp. on Monday.

The board of directors’ unanimous vote authorizing $3.2 million in tax rebates for Westminster Partners LLC aims to close the funding gap on a $53 million apartment project in the original Providence Journal headquarters, and a neighboring building, where Westminster and Eddy streets intersect.

Westminster Partners, a subsidiary of DC-based Abdo Development, originally planned to turn the pair of historic buildings into a boutique hotel, securing city and state tax incentives for the Hotel Hive project in 2019.

After multiple delays to the construction timeline, Jim Abdo, company president and CEO, decided to ditch the hotel in favor of an apartment-centered project, citing market headwinds and the pandemic’s rippling repercussions for hospitality-based development.. 

“It’s been some rough sledding but we’re excited about where we are,” said Gordon Buist, Abdo Development’s chief operating officer, speaking at the meeting Monday.  Buist added the state tax financing was crucial to moving the revised project forward.

The $53 million Hive Life proposal includes 124 studio and 1-bedroom apartments, along with 29,000 square feet of retail space including a pizza restaurant, coworking space and 1970s-style arcade-style  basement lounge, according to plans submitted to the city of Providence. There would also be a rooftop bar and onsite parking spaces. 

The Providence City Council in November signed off on a new tax stabilization agreement which saves the company $4.2 million on city property taxes over the course of 20 years, according to a city analysis.

And in February, a Rhode Island Commerce panel considered $1.5 million in tax incentives for the project, according to an online meeting agenda. Since then, the state financing amount has more than doubled to $3.2 million, an increase which was also backed by the Rhode Island Commerce Investment Committee in a meeting last week.

“It’s a good project and an impressive building that’s been vacant for a long time,” said William Stone, a Commerce board member who sits on the Investment Committee.

Matt Touchette, a spokesperson for Rhode Island Commerce, said in an email Tuesday that the increase in tax increment financing was due to “lending and construction costs that increased the financial gap.”

Asked about the increase in state tax increment financing from a few months ago, Abdo said in an email on Monday that the amount is still less than the original $6 million package Rhode Island Commerce approved in 2019. Abdo said the state capital is not a tax break, but rather is based on new revenue expected from the project. 

The funding, made available through Commerce’s Tax Increment Financing Program , offers developers upfront capital which is paid back through a portion of the new state tax revenue the project creates — in this case, taxes on food and beverages, according to Jeff Miller, Commerce’s executive vice president of investment. 

The vacant buildings are now worth $3.9 million and generate $139,700 in city taxes a year. Redeveloping the properties into an apartment complex will increase the site’s value to $20.9 million by 2041, generating $739,000 in city property taxes by the same year, according to city analysis.

The iconic, Art Deco-style building at the corner of Westminster and Eddy streets in downtown served as the Providence Journal headquarters for about 30 years in the early 1900s, prior to the paper’s relocation to Fountain Street, according to the Providence Preservation Society. The neighboring Kresge building to the north on Westminster Street, also included in the redevelopment proposal, housed a former outlet of the national five-and-dime chain. 

The company is still finalizing agreements with private investors and for historic tax credits through the National Park Service, with plans to begin construction work once financing is in place, Buist said Monday. He declined to give an expected start date.

Board engages offshore wind consultant

Also on Monday, the board authorized an on-call contract with a Providence-based consultant to help strategically grow the state’s offshore wind sector. The agreement with OSWind Partners LLC comes as the result of a competitive solicitation to develop an offshore wind master plan, said William Cox, Rhode Island Commerce’s vice president of business development and investments. Cox stressed the value of strategic planning to secure the state’s foothold in the burgeoning offshore wind industry, including planning for infrastructure upgrades, workforce training and supply chain analysis.

The dollar amount of the agreement has not been determined, since the actual contract has not been signed, Cox said.

OSWind Partners, a Providence-based company run by former Rhode Island Commerce Vice President of Business Development Jeff Tingley, was one of three companies to respond to the Commerce bid, Cox said. Rhode Island Commerce declined to immediately share copies of all three proposals, instead requiring Rhode Island Current to submit a public records request. That request was submitted Friday.