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Superman Building Plans Heat Up: Who Are the Players?

Friday, May 03, 2013

 

Sides are split on the prospect of turning the "Superman" building in downtown Providence into apartments. Who's saying what?

With economic studies released on Tuesday by consultants on the proposed High Rock Development plans for the now-vacant "Superman building" at 111 Westminster Street, GoLocalProv takes a closer look at the players involved who are supporting -- and questioning -- the prospective deal.

Economic Impacts Unveiled

According to reports released on Tuesday, High Rock Development is looking for $70 to $75 million in local, state, and federal funding to turn the "Superman building," which it currently owns, into 278 upscale apartments. 

The studies conducted indicate that the project would cost between $140 to $145 million, which would include a $70 million investment from High Rock, who is then is looking for $39 million in support from the state, $21 million in federal historic tax credits, and a 17 year, $10-15 million tax stabilization agreement with the City of Providence.

Who's Backing the Effort?

High Rock Development

Headed up by founder and principal David Sweetser, High Rock Development purchased the property at 111 Westminster in 2008, a year after closing a $50 million fund to "acquire, develop, re-develop, lease and/or sell real estate in the United States."  Sweetser, a Bowdoin College alum with a MBA from Suffolk University, had previously been COO for Heritage Property, Director of Leasing for Eastern Development, Inc., President of GovConnect, Inc. (Renaissance, Inc), VP of Real Estate for National Amusements, Inc., Founder and President of Trademark Development, Inc. and VP of Leasing for Equity Properties and Development Co.

Nick Hemond and Zach Darrow -- Capitol Communications Group LLC

Hemond and Darrow are the primary lobbyists for the entity known as Capitol Communications Group LLC, whose clients include High Rock, Cornish Associates, Rhode Island Autobody Association, Rhode Island Fraternal Order of Police, and Rhode Island Carpenters Local Union 94, and AAA of Southern New England, among others 

Darrow, Managing Partner at DarrowEverett LLC, represented High Rock in connection with their initial acquisition of the 111 Westminster property in 2008.  Hemond, also an attorney, helped House Speaker Gordon Fox on his re-election bid in 2012.  Prior to having a lobby roster of 8 clients in 2013, Hemond was listed as only having one -- the Fraternal Order of Police -- while at the law offices of State Representative K. Joseph Shekarchi in 2011 and 2012. 

Bill Fisher -- True North Communications

Fisher has been serving as spokesperson for High Rock Development, and said on Tuesday in a prepared statement, "It is incredibly important that we get this right and adopt a plan that ensures the highest and best use of the building." Other clients of True North's include Landmark Medical Center, Beacon Mutual Insurance Company, as well as several education and environmental groups.  Fisher served as campaign spokesperson for Speaker Fox's 2012 campaign. 

Cornish Associates

Headed by Arnold "Buff" Chase, Jr., Providence-based real-estate development company Cornish Associates counts among its properties the Westminster Lofts, which includes the Peerless Building, Smith Building, Burgess O'Gorman Building, Wilkinson Building, and Alice Building.  Cornish also lists the redevelopment of the Harkness Building, the Empire Building, and the Biltmore Garage as among its projects.

In a statement issued on their website on March 22, Cornish wrote, "We know you are interested, so just to clarify...Cornish Associates has been retained by Highrock Westminster LLC, the building owner, as a development consultant to produce a feasibility study and to coordinate the redevelopment of 111 Westminster St also known as the Superman building." Cornish prepared the proposed project summary statement that was unveiled on Tuesday. 

Darrow told GoLocalProv on Thursday that Cornish "was selected as the local feasibility and development consultant as part of a multiple candidate interview and selection process by High Rock."

Keystone Consulting Group and HR&A Advisors

Keystone Consulting Group, who lists "decades of real estate development, valuation, and consulting experience" as its expertise on its website, produced the market study unveiled earlier this week. 

New York-based HR&A Advisors prepared the financial and economic impact statement that was released on Tuesday. 

Questioning the Superman Plans

Representative Patrick O'Neill

Representative Patrick O'Neill, former house majority whip, was one of the first people to publicly oppose utilizing historic tax credits  -- and taxpayer assistance -- to fund any renovations of  the Superman building. 

In a conversation with GoLocal back in March, O'Neill said, "I've got real concerns about using tax credits here.  We're looking at putting Rhode Islanders on the hook again [after 38 studios]...I'll be honest, I've got a whole host of concerns about how this is unfolding."

Moderate Party Chairman Ken Block

Earlier this week, following the release of the High Rock feasibility studies, Block issued a scathing statement on the proposed project, comparing it to "another 38 Studios."

Speaking with GoLocal on Thursday afternoon, Block said, "Look, I'm open to being convinced that this is a good deal, but right now, at this juncture, it just doesn't make sense."  Questioning the timing of the release of information relative to the General Assembly calendar, Block said, "Let's look at this in the bright light of sunshine.  Acting quickly here is in the absolutely worst interest of Rhode Islanders." 

Speaker of the House Gordon Fox

While questions initially surrounded where Speaker of the House Gordon Fox stood on the deal, and the use of tax credits in a particular, his office issued the following statement this week shedding light on his stance.

“The ‘Superman’ building is a beautiful and significant landmark in downtown Providence, but I am deeply concerned about the amount of taxpayer dollars that are being sought for this project. As was announced last week as part of our economic development package, the House is introducing historic tax credit legislation with a $5 million cap on credits for any single project. If this tax credit program is reinstated this year, the developers could apply for those capped credits. Beyond that, I believe the state is not in any position to provide the level of financial assistance that the developer is seeking."

Governor Lincoln Chafee

Governor Chafee has continually expressed concerns regarding the use of tax credits -- and taxpayer dollars -- to bankroll a private renovation effort at 111 Westminster. 

"The Governor has consistently indicated his concern at the amount of taxpayer assistance being requested," Chafee spokesperson Christine Hunsinger told GoLocal on Thursday.  "He's willing to listen however." 

Jobs, Economic Development Promised

According to High Rock, over 1000 jobs would be generated during construction, with 230 permanent post-development jobs, and an economic impact of $4.6 million in tax revenues during construction plus anticipated annual state sales and income taxes of $680,000.

High Rock claimed on Tuesday, "If the building were not converted to residential use, it could the cost the city up to 25 years to absorb this amount of space." 

 

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Comments:

u MIGHT>JUST MIGHT> have omitted someone..JOSEPH R PAOLINO JR...only person to pen an op-ed supporting state assistance & state use for the building ..if you did your homework..Nick Hemond leads to Buddy Cianci who fronts for Paolino...not much happens in Downtown ie good, bad, ugly..without Joe involved

Comment #1 by frank bentley on 2013 05 03

Not using an office building, THIS OFFICE BUILDING, as an office building leads one to believe that these developers have zero confidence in the economy of Providence being rejuvenated anytime soon. Sad too that unionized city workers can always count on the sitting democrat mayor to keep their salaries flowing by raising taxes, thus keeping legitimate development down, and the unionized tradesmen, out of work.

Comment #2 by David Beagle on 2013 05 03

I hate to break it to them but nobody wants to live across the street from the bus plaza. These are not going to be market priced condos and will sit vacant, just like many of the other remodeled condos in downtown Providence. Add to that the fact that most people don't want to live downtown, especially if they are spending top dollar for their residence. It's not safe, there is minimal night life and the city essentially closes around 6pm - except for the transients and criminals. This project is a joke, let the developer take the risk on this lemon.

Comment #3 by Rob K on 2013 05 03

If turning this building into condos or apartments was really a smart move with fair chance of making any money, you would see several private developers expressing interest. If private businesses don't want to make this investment, then why should the taxpayers? Because we are suckers and easy to trick? Keep an eye on this. It has the potential to be worse "investment" than 38 Studios. What is wrong with letting the private sector work this out? Why should taxpayers now bail out private real estate investors that need a way out of their investment? Let it sit vacant for 10 years. Who cares? Someone smart will but it and do something great with it when it makes sense as an investment, not as a state welfare case.

Comment #4 by Katy Sloop on 2013 05 03

If turning this building into condos or apartments was really a smart move with fair chance of making any money, you would see several private developers expressing interest. If private businesses don't want to make this investment, then why should the taxpayers? Because we are suckers and easy to trick? Keep an eye on this. It has the potential to be worse "investment" than 38 Studios. What is wrong with letting the private sector work this out? Why should taxpayers now bail out private real estate investors that need a way out of their investment? Let it sit vacant for 10 years. Who cares? Someone smart will buy it and do something great with it when it makes sense as an investment, not as a state welfare case.

Comment #5 by Katy Sloop on 2013 05 03

The fact of the matter with this building is that the investment fund that bought this made a highly questionable acquisition. To be blunt, this was just a plain dumb investment, from a number of standpoints. But, when you're running a fund you need to invest the money, or give it back. Then you don't get any management fees, so you do dumb things like this. Look, when this building was purchased, the market was in a free-fall. It didn't happen after the purchase, as they'll have you believe. Now they are asking us to help bail them out of a dumb investment. I won't say I wouldn't be trying the same, were I in their shoes, but I'm not. The only way the state should have anything to do with this deal, and I'm not saying they should, is if they get a piece of the pie - that means an equity stake in the deal.
I happen to think that the best move is to do nothing and let the market value this appropriately. Let it go into foreclosure, wipe out the investors and someone will come along and buy it at a reasonable price and develop it in an economically feasible way. Right now, the costs are way too high because these investors trying to get a return on their money based on their purchase of a building that was bought at a ridiculously high price.
It's time the state got someone who knew how to play hardball. Do nothing with this crowd now. Reassess when a new group comes along and extract as much equity as possible for the state, at the expense of the investors.
As is, this deal stinks.

Comment #6 by James Hackett on 2013 05 03

instead of calling it the superman buildibg how about the tiny tim adventure

Comment #7 by Howard Miller on 2013 05 03

My idea is to fit every face window with color changing led panels and tie everything into a computer program with the capability creating a dazzling,intricate light show that would rival waterfire. You could probably get a state or better yet a federal art grant to peruse the project. This work of art,if done right, would make Providence an amazing destination for people from all over New England. A 3-D projector can also be incorporated into the light show.Holiday theme shows,charitable events,etc. etc. You could sell advertising,marriage proposals,whatever...
there is no limit. From the bottom to the top,top to the bottom this historic building would come to life! Given the state of the economy and the city's demographic makeup this maybe the only viable use of the property.

Comment #8 by LENNY BRUCE on 2013 05 03

Why not let High Rock, Capitol Communications, True North, Cornish and the other companies mentioned in the article come up with the money? After all, these people must feel they have the best ideas.

This way, when the project goes "toes up" and it will, the "movers and the shakers"in the article will be on the hook and not the forever getting screwed RI taxpayer.

Tax credits? Historic tax credits? Nothing more than a money grab to fund a bad investment. My thoghts are if you had the cash to buy the propery you have the cash to complete the project without putting the taxpayer at risk.

Comment #9 by Robert Anthony on 2013 05 03

I think the whole first level would make a fantastic slot machine room, with all that black marble and high ceilings. Now that is a business this state understands. Why doesn't the state rent the first floor to Harrah's or Trump, fill it with GTECH video poker machines, and then use all the upper floor for privately operated night clubs, hotel rooms, massage parlors and drug rehab clinics. There are thousands of customers just outside the building who would make this viable right away.

Comment #10 by Katy Sloop on 2013 05 03

Here we go again, another rich corrupt capitalist looking to get richer with taxpayers money.

Comment #11 by Mark St. Pierre on 2013 05 03

At the end of the day, these developers wouldn't be looking at Rhode Island in this manner, if Rhode Island didn't have the reputation as being an easy mark. We didn't where we are by being fiscally conservative.

Comment #12 by David Beagle on 2013 05 03

"The trouble is with socialism, which resembles a form of mental illness more than it does a philosophy. Socialists get bees in their bonnets. And because they chronically lack any critical faculty to examine and evaluate their ideas, and because they are pathologically unwilling to consider the opinions of others, and most of all, because socialism is a mindset that regards the individual — and his rights — as insignificant, compared to whatever the socialist believes the group needs, terrible, terrible things happen when socialists acquire power."

L. Neil Smith, in "Cambodian Road Trip," (15 March 2009)

Comment #13 by Katy Sloop on 2013 05 03

This is just another absurd assault on sensibilities. Another inside deal for those on the inside. This has nothing to do with improving public policy in Rhode Island. NOTE: RI population dropped in the last census, anyone wonder why?

Comment #14 by Ford Renner on 2013 05 04

I should add that at a 60 million "heist" from the state, that represents about $120 for each working RI'er! Get out your $120 SUCKAS!

Comment #15 by Ford Renner on 2013 05 04

Katy: Not to get sidetracked by your opinion, but the bourgeois society creates a world in its own image. What's your point? I've met some of these people and they are not Socialist; their opportunist but not socialist.

Comment #16 by Kati Loreen on 2013 05 07




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