Developer Who Received $9M in State Subsidies Flips Property to Brown at $22M Profit in 2 Years
Friday, July 23, 2021
With great fanfare, former Rhode Island Gina Raimondo opened the "River House" apartments in June of 2019. It was sold as an example of how public subsidies could spark for-profit investment in Providence, but now just two years later Brown University has purchased the property.
The River House property next to the Point Street Bridge received a total of $9.2 million in state subsidies.
According to Commerce Corporation records, the cost of the project was $62 million and coupled with the "$8,354,910 in Rebuild Rhode Island Tax Credits and use tax reimbursement of $700,000 for eligible construction and build out costs," the actual investment by the developer was just $52,945,090.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTHow much did Brown pay? -- a reported $75 million.
Thus, the developer realized a windfall of more than $22 million in just two years.
The developer? Wexford Science & Technology, LLC -- the same group that developed the Innovation Center, also known as the District. That building cost $88 million and as much of it as $40 million was taxpayer-funded.
Wexford also owns, according to their portfolio in Providence -- "SOUTH STREET LANDING, POINT 225, 2/3 DAVOL, PARKING GARAGE, AND RIVER HOUSE (IN PARTNERSHIP WITH GMH)." These projects have received more than $100 million in public subsidies and tax breaks.
River House Developers realized $9.2 million in state subsidies and millions in tax benefits from Providence
Two years after the opening of the Innovation Center, one-third of it is unoccupied. The largest tenant is Brown University and Wexford's CEO repeatedly refused to disclose the financial relationship between Wexford and Brown. In 2016, GoLocal asked Wexford's CEO about the deal between his Baltimore-based company and Brown.
Wexford founder and CEO Jim Berens told GoLocal at the time that while he knew the rents that Wexford will be getting from tenants Brown and CIC at their 195 Innovation Center, that he was not going to share them.
“They’re not public information,” Berens told GoLocal News Editor Kate Nagle at a RI Commerce meeting, when asked. He and his company received upwards of $40 million in public dollars to subsidize his project.
Brown's Deal
The Ivy League university said it will continue to pay taxes and continue to take advantage of the tax stabilization plan that saved the developer tens of millions of dollars.
According to Brown University, "Through a subsidiary named River House Holdings, LLC, Brown University has purchased River House, a 174-unit residential building completed by commercial developers in 2019 and located at 1 Point Street in Providence, and will transition the complex into housing for Brown graduate and medical students."
"The University acquired the housing development through a subsidiary to ensure no disruption to the continuity of River House’s tax revenue to the City of Providence, while also supporting Brown’s academic goals of advancing the campus-centered educational experience of students in graduate and medical programs," Brown said in a statement to GoLocal.
With the capacity to house 270 students in a mix of 174 studio, one-bedroom and two-bedroom apartments, the building will address a need expressed directly for years by Brown graduate students seeking "affordable, high-quality housing options in proximity to the University’s campus," according to Provost Richard M. Locke. Brown plans to adapt River House’s current rental fee structure, which was developed for a commercial rental market, to align closer to the needs of graduate and medical students. To develop an affordable, equitable rental rate structure for student housing in River House, Brown has launched a working group to complete a full review of rental rates and amenities across Brown-owned graduate student housing.
“The addition of River House to our campus housing portfolio responds directly to the need among graduate students for high-quality, safe, affordable housing with easy access to classroom and laboratory buildings both on College Hill and in the Jewelry District,” Locke said. “This space will meet the unique living needs of master’s, incoming Ph.D. and medical students in particular, offering a residential option close to campus that will enrich their connections to the broader Brown community.”
Another Purchase in January
As GoLocal first reported, Brown University has purchased another major office building in Providence and plans to transform it from commercial office space into use by the school.
The Packet Building located at 155 South Main Street will be utilized for the Brown School of Public Health.
Brown’s spokesman Brian Clark tells GoLocal, “We acquired this building to support the long-term expansion of the School of Public Health. The property currently has multiple commercial tenants. All existing leases will be honored and for now, the property will remain a commercial building with no change in payments to the city. We do not yet have a timeline for when the School of Public Health will begin occupancy.”
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