If PayPal Comes to RI, Superman Building Not Likely
Wednesday, September 07, 2016
PayPal's future in Rhode Island is clearly an unknown, but the Superman building may not be the location of choice for the estimated 60,000 square feet that the online finance company needs.
PayPal, founded by Tesla's Elon Musk and super Donald Trump supporter Peter Theil, is red hot and is seeing tremendous growth. In its latest financials, the company reported revenue growth of 15% to $2.650 billion for the quarter.
According to Commerce Secretary Stefan Pryor in an interview with GoLocalProv.com, “We in Commerce organize visits to some of our key properties, and in the case of this company, we've helped to facilitate visits to properties across Rhode Island. There are multiple properties in consideration.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“We've also been in touch with [High Rock] as well during this time. It's often the case that a single tenant won't have a footprint big enough (for a building). In general, we have conversations about how to advance this,” said Pryor, of talks with the developer of the Industrial National Bank Building, who refers to it as the Superman Building.
With significant vacancy in the office space market in Rhode Island, numerous other spaces are being reviewed and promoted. “I think it's good we're in the mix, to have the ability to be in the game. The question I have though is, there's plenty of other spaces in the City that could be filled by this tenant without having to go to the General Assembly (for subsidies), and the one on Fountain Street comes to mind,” said Tom Sweeney of Sweeney Real Estate and Appraisal. "You'd need 5 PayPals to do the [Superman] building."
The Fountain Street space is the former Providence Journal building, which is now being developed by local developer Buff Chace in partnership with Boston-based Nordblom Company. The announcement of Chace’s purchase of the building was made in June of 2015.
Currently, the Fountain Street building is currently in the midst of rehab -- and marketing.
Regardless of the location in Rhode Island, former Rhode Island head of RIPEC, Gary Sasse warns, ”Unfortunately, in this economy, the use of tax incentives is probably unavoidable. Public incentives, however, should only be granted after a public due diligence process is completed and the cost per job is known and the deal passes a 'prudent man' test as to taxpayer subsidies. Certainly a clawback provision should be included if PayPal fails to create the agreed upon number of jobs."
PayPal in Play
As a result of North Carolina’s passage of the “Public Facilities Privacy & Security Act," PayPal announced in April it would not locate its 400 person operations center there.
"Becoming an employer in North Carolina, where members of our teams will not have equal rights under the law, is simply untenable," PayPal CEO Dan Schulman said in a statement. "The new law perpetuates discrimination and it violates the values and principles that are at the core of PayPal's mission and culture."
The jobs that PayPal potentially could locate to Rhode Island are not $100,00 per year tech jobs, but are slated to be $50,000 or less financial service support positions. WPRI was first to report that PayPal was eyeing the Superman Building.
Bill Fischer, spokesperson for High Rock Development and owner David Sweetser, did not respond to request for comment on Tuesday.
Superman Build-out Would Take Years
A significant challenge for High Rock, the owners of Superman Building, is that it would be almost impossible to build-out the building in phases as the entire structure -- nearly 400,000 square feet -- needs a complete rehab. As one example, the entire building is heated by two circa 1928 “tubular boilers supplying heat in a two (2) zone system” via a 7,000 gallon underground tank.
“The reality is that any level of occupancy requires the entire building to be fully heated and air conditioned, consequently, the 15 year projected lease-up will result in a significantly negative cash flow over a long period,” wrote Peter Scotti of Scotti and Associates in an appraisal on the building conducted for the developer’s attorney in 2013.
“We estimate value as of December 31, 2012 to be Zero ($0.00) Dollars,” said Scotti in his report.
Critical of Subsidies
The effort to bring PayPal to Rhode Island will certainly require some form of taxpayer support, gaining approval from some groups will be difficult. Already the Rhode Island Libertarians have protested outside the Superman building in opposition to any form of public investment.
Equally, the Rhode Islans Center for Freedom and Prosperity has raised concerns.
"While the Governor may be looking for a headline, we're looking for value for taxpayer dollars and real benefits to real Rhode Island families. The center has maintained that bringing companies to come to our state is not only a poor strategy for economic development, a few hundred jobs doesn't solve our tens of thousands of jobs need. And Rhode Island simply can't afford to compete with our wealthier and bigger neighbors -- we can't continue to do this. We call for an end to this corporate welfare," said Mike Stenhouse, Executive Director of the Center.
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