“Not Viable” Says Former Leasing VP on College Hill Towers — Receiving Millions in RI Incentives

“Not Viable” Says Former Leasing VP on College Hill Towers — Receiving Millions in RI Incentives

The former Vice President of Marketing and Leasing for the new apartment tower at the bottom of College Hill — which was approved by the state to receive millions in subsidies from Commerce RI and millions in tax breaks from the City of Providence in a tax stabilization — tells GoLocalProv that he believes the project is not economically viable, after he saw tenants leave after just one year when rents were raised. 

His comments may be a warning to the market. A string of new projects have recently come online in Providence -- and more are in development.

Joel Burton who served as former Vice President of Marketing and Leasing for the Edge College Hill owned by Vision Properties, told GoLocalProv that he believed “greed” made the owners up their original plans for 154 units at the recently completed tower in Providence to 202 — and that the second tower, which is slated to come online after the state approved a total of an additional $10 million of subsidies this past spring — will not work in the current apartment-flush environment. 

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Burton, who worked for Vision Properties for two and a half years before moving to Florida to work in leasing in Boca Raton, said he left when he saw “the writing was on the wall” after the owners tried to raise rents on first-year tenants by hundreds of dollars — and people were not renewing. 

The market is flush with product from long-time apartment projects -- and new developments coming online.

Some of the best known:

903 Residence at Providence Place is marketing studios to 2 bedrooms for $1,500 to $4,096.

The Promenade Apartments are leasing studios to 2 bedrooms for $1,500 to $2,700.

But now, projects are pouring into the market — in June, River House came into the market with studios to 2 Beds going for $1,895 - $3,750 -- at a project tied to Wexford, which received millions in state subsidies.

Opening now is Station Row at the base of the State House on Smith Street — $1,888 - $3,901 for studios to 3 Beds.

Burton shared internal draft documents with GoLocalProv that showed when the company tried to raise its total yearly rent for the company at the 202 units at the new Canal Street building from $4,155,000 to $4,552,800 —  that forced renters to flee. 

Burton pointed to the “rent roll" document which he said specifically showed how when Vision tried to increase the rent for a one-bedroom lease in a two-bedroom unit — which went from $1,575 to $1,800 per bedroom a month — that numerous renters left citing price.

“That increase is unheard of,” said Burton. “I’ve never seen it in 12 years and 55 markets [in this business].”

Latest in Controversial Development 

In February, GoLocalProv.com unveiled that the Pennsylvania-based Vision Properties owed millions of dollars to subcontractors who built the first $60 million project. 

The RI Commerce Board approved Vision’s request last fall for phase two of the development on Canal Street in Providence. “The Sponsor [Vision] estimates the total cost of the project to be $59.2 million. The Sponsor is requesting Rebuild Rhode Island tax credits totaling $6.0 million gross (approximately $5.4 million net), and an exemption from sales and use taxes on construction with an estimated value of $1.295 million."

“The [State of Rhode Island] can’t give [the next project] to him — if they give it to him, the Governor ought to be embarrassed. Tell me what the difference is with this and 38 Studios. I think Curt Schilling at least was honest, I think the other people got away with murder,” said Bruce Bookbinder, CEO of RI-based Delta Mechanical, in March. 

Since then, Bookbinder has said he is “not allowed to comment” on the situation in which he said he was owed more than $800,000. 

Former leasing agent Burton said that after two and a half years at the company, that he left when he saw “the writing on the wall.” 

“[Vision] had proposals for New Haven and Bristol, but it fizzled out at [Roger Williams University]. Basically, I had the intention of working with them for several years, but I have to cover my bases — when the writing was on the wall.  It won’t work — it’s not sustainable — the model is not sustainable when you look at the market.”

“Last I heard, the property is only 57% pre-leased for the 9/1 move-in date,” said Burton.  “You can see the 2018 rates and the 2019 rates [in the rent roll]. You will see these increases.”

A representative for Vision said they could not provide the leasing numbers on Thursday.

According to Burton, the proposed rent increases had been the following:

Type 1 STUDIO

$1,450 year 1 [to] $1,550 to $1,700 year 2 (311-385 sq.ft)

 

Type 2 STUDIO

$1,650 year 1 [to] $1,925 year 2 (440 sq.ft)

 

Type 3/Studio PLUS

$1,850 year 1 [to] $2,100 - $2,175 year 2 (520 sq.ft)

 

Type 4 STUDIO (called 1BR but does not actually have a bedroom door)

$2000 year 1 [to] $2200-$2350 year 2 (530 sq.ft)

 

Type 5 - 2 Bedroom

$1575 per bedroom year 1 [to] $1800 per bedroom year 2 (zero residents renewed at this rental rate increase of $225!)

 

Burton said he was not surprised to see that rents were currently listed as much lower on the website for the Edge.

“They’re backtracking, now that they’re not leased up,” said Burton. "This model is not sustainable."

Commerce RI responded on Thursday.

"The Edge is only authorized for Rebuild RI tax credits  -- in order to get any tax credits, they have to submit their final budget and project costs along with certificate of occupancy -- once it is reviewed and approved the tax credits would be issued over five years," said Matt Sheaff with RI Commerce. 

The property also has a Tax Stabilization Agreement with the City of Providence. 

Efforts to reach representatives of Vision were unsuccessful.