Rep O’Neill Criticizes Fox & Superman Plan - Similar to 38 Studios
Thursday, March 28, 2013
"This is starting to look just like another 38 Studios," said O'Neill, former Majority Whip and member of Speaker of the House Gordon Fox's leadership team. O'Neill stepped down from his post last fall over differences with Fox on how the deal for the doomed video game company was pushed through the General Assembly.
Privately-owned, Massachusetts-based High Rock Development, who purchased the building in 2008, has indicated it is seeking $48 million in historic tax credits from Rhode Island, in order to convert the historic structure into roughly 250 to 275 apartments in the 428 foot tall office tower.
The state's historic tax credit program, which was eliminated in 2008 under Governor Donald Carcieri, would have to be approved in the Fiscal Year 2014 budget put forth by Governor Lincoln Chafee by the General Assembly.
A spokesperson for High Rock has said they are in the process of finishing an economic analysis, and will have a presentation with costs and impact shortly. However, O'Neill is already voicing serious reservations about the whole process.
Similarities to 38 Studios?
Former House Majority Whip under Speaker of the House Gordon Fox, O'Neill resigned from Fox's leadership team this past fall, citing philosophical differences with the Speaker -- and concern regarding the lack of information made available before lawmakers were asked to approve the 38 Studios deal in 2010.
"This is looking way too similar to 38 Studios with the timing of all of this," said O'Neill. "The mid-session announcement, the prospect of it getting pushed to an 11th hour vote with no idea what it looks like. We just can't afford to go down that road again."
While General Assembly members did not vote in 2010 to give 38 Studios the $75 million guarantee, they did vote in favor of expanding the state's Job Creation Guaranty Program from $50 million to $125 million.
O'Neill cited the lack of transparency in the 38 Studios approval process, in particular the last-minute unveiling of the proposal to General Assembly in before going to a vote, that has him worried that Rhode Island
is heading in a similar direction with a large-scale tax-credit deal for a single company.
"I've got real concerns about using tax credits here. We're looking at putting Rhode Islanders on the hook again, and I've seen very little information to date," said O'Neill. "I'll be honest, I've got a whole host of concerns about how this is unfolding."
Resurrecting Historic Tax Credits -- For Special Interests?
In 2008, Governor Donald Carcieri eliminated the historic tax credit program as a budget-cutting measure. This year, Governor Lincoln Chafee has proposed reinstating the program, but has himself expressed reservations about allocating anywhere from $40 to $75 million in tax credits for the "Superman" building.
Bank of America had been the tower's last tenant, occupying a quarter of the building space, but had recently let the state know it would not be renewing its lease come this April. On Tuesday, Bank of America announced it had already moved the last of its employees out of the 26 story building.
In a phone call Wednesday afternoon, O'Neill voiced concerns about High Rock Development's lack of interest in negotiations with the State of Rhode Island regarding looking into leasing space to the state to house employees in the building.
"Look, they're a privately owned out of state company, seeking Rhode Island taxpayer assistance to help develop the building. What I've heard is that they've turned down offers to transfer state employees, currently working in the crumbling Pastore complex, to several floors of the building," said O'Neill.
He continues, "What High Rock seems to have made clear is that they're interested in developing apartments, and only if they get the historic tax credits. They're saying they can bolster the economy here with taxpayer dollars, but then they dismiss a major need of the state?"
O'Neill also called into question the lobbying team hired by High Rock Development for having ties to Fox. Lobbyist Nick Hemond with Capitol Communications is currently being paid $6750 a month by High Rock Development for government relations services. Hemond, along with High Rock spokesperson Bill Fischer, also in Rhode Island, both worked on the 2012 re-election campaign for Gordon Fox.
"Why did they decide to go with [Hemond and Fisher]? I have nothing against lobbyists and advocacy work. But it's not like High Rock opened a phone book to find lobbyists in Rhode Island. It seems clear they're paying the guys with the right ties to make this happen, and having conversations the rest of the General Assembly isn't privy to," said O'Neill.
High Rock Promising Economic Development for State -- At What Cost?
High Rock is making the case that creating residential spaces in the Superman building will spur economic benefits to the City of Providence, in particular in light of the upcoming development of the 195 corridor. It has also indicated that it plans on putting $30 million of its own money into the redevelopment of the property.
High Rock spokesperson Bill Fischer said in an e-mailed statement, "111 Westminster is certainly an iconic and historic fixture in Providence, but it is more than that. Because of its scope and scale at approximately 380,000 square feet, the building is uniquely positioned to help drive the economic development that Providence and the State of Rhode Island require. Conversely, having the structure stand dormant in the heart of the capital city will not benefit anyone."
"I will be interested to see what they put forth, in terms of a projected economic impact statement," said O'Neill. "I'm just not comfortable with use of historic tax credits to do so. Apart from being footed by the taxpayer, let's be honest, the industry of tax credits is a business unto itself."
O'Neill explains, "Brokerage fees, money to be made by the transaction of buying and selling them...a lot of people have personal interest in seeing these re-instated for that purpose alone. Don't get me wrong, I'm all for economic development, but why couldn't we look at tax breaks instead? Why do we need the taxpayers to foot the bill at the outset? We've gone down this path before -- and we got burned."
A spokesperson from Fox's office did not respond to a request for comment.
- The Superman Building: Downtown’s Ticking Time Bomb
- 38 Studios Bankruptcy: Executives Say Tax Credits Could have Saved Company
- Donna Perry: Tax Credits, Loan Guarantees & RI’s Jobless
- Historic Revival for Tax Credits
- E-Mails Reveal 38 Studios’ Desperate Attempts to Secure Tax Credits
- PODCAST: 38 Insider Gets $625k Tax Credits
- NEW: Binder Blasts Fox on Additional Tax Credits
- Bills Would Increase Accountability for Tax Credits
- PODCAST: Providence Superman Building
- Bill to Prevent Lost Revenue from Tax Credits