3 Major Economic Projects in Providence Still Stalled
Tuesday, November 22, 2016
Three major construction projects that were announced as early as January 2015 have still yet to get shovels in the ground -- but sources say that movement should be coming by the middle of next year.
After presenting a proposal to the 195 Commission in 2015, Wexford Science + Technology signed a purchase and sales agreement in January 2016; Richard Baccari II purchased a .30 acre parcel of 195 in 2015 (and recently saw state tax credits approved in the fall of 2016); and The Procaccianti Group had a tax deal approved in December 2015 by the Providence City Council to build a hotel - and tear down the Fogarty Building across from the Convention Center.
For 2016, Forbes recently ranked Rhode Island #42 for "Best States to Do Business", placing it #32 for labor supply -- and #49 for regulatory environment.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"It is not unusual for a construction project to take two to four years to complete from design to tenant occupancy," said URI Distinguished Professor of Business Edward Mazze. "Even with fast-tracking, building contractors get held up by the shortage of skilled labor in certain construction trades, union rules, materials on back-order, changes in work-orders from design to last minute additions, cash flow and lending problems and city and state regulations regarding building codes, inspections and safety matters. This time-frame is not unique to Rhode Island - it is part of doing business in the construction industry."
"Before and after election, state and local government leaders want cranes in the sky and tenants in buildings immediately after a project is approved," Mazze continued. "It is government that slows down projects for political and other purposes including but not limited to out-dated rules, regulations and permitting. A delay costs the construction company money and interest payments on loans. From an optic point of view, delays are terrible in Rhode Island since many people believe that happy days will return once a project is approved and receives tax-credits. This will result in full employment, more economic development and job creation."
195 on the Horizon
195 Commission spokesperson Dyana Koelsch provided the following update on the status of the two aforementioned projects on the former interstate highway land.
"[Wexford] is in design review and conceptual plans and overall siteplan are in the final stages. If all goes to plan, we anticipate ground breaking sometime in the 2nd Q of '17," said Koelsch. "[Royal Oaks] is in the final stages of permitting and the developer is working toward obtaining a building permit. If all goes to plan, we anticipate it breaking ground in 2nd Q ’17."
Gary Sasse, former Director of Administration for the state and founding director of the Hassenfeld Institute for Leadership at Bryant University, weighed in on the projects -- and timeframes -- on Monday.
"One size does not fit all in determining the optimal time between finalizing a P&S agreement and getting shovels into the ground," said Sasse. "It is reasonable to expect that project construction should commence about fifteen months after entering into a P&S agreement."
"In the case of Wexford the developer holds all the trump cards," said Sasse. "The agreement gives Wexford effective control over the development of five key acres for very little cost. The State seems to have placed a great of faith in in one developer without retaining much leverage. This suggests on cost, scheduling and project development matters CommerceRI should be required to operate in a more transparent fashion."
Downtown Providence Development
The Providence City Council announced its tax agreement with the Procaccianti Group in December 2015 for the Fogarty Building; the state announced its incentive package earlier this year.
"Last I heard -- and I think heard over the summer -- it's 'almost there' with the permits," said City Council President Luis Aponte of the Fogarty tear-down. "[Procaccianti] wanted to knock it down without permits, we said no. We did what we were supposed to do, and we were blamed for holding up -- now it's on them."
"In regard to Royal Oaks and Fogarty Building developments market conditions and politics may be creating unintended delays," said Sasse. "Again there is a need for greater accountability and oversight in the way the state enters into and manages development deals."
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