EDITORIAL: Superman Rehab Will Cost Taxpayers Approximately $100M - But May Be Best Deal Available

EDITORIAL: Superman Rehab Will Cost Taxpayers Approximately $100M - But May Be Best Deal Available

In 2011, GoLocal reported on the “ticking time bomb” of the future of the "Superman" building in downtown Providence. 

Bank of America (BofA) had bought Fleet Bank bought for a reported $47 billion in 2004.

BofA announced in 2011 30,000 layoffs and Rhode Island’s role in the bank’s future was in limbo. 

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By 2014, BofA officials were finishing laying-off employees and moving the remaining workers out of the building. 

Superman at that time was owned by High Rock Westminster Street, which had purchased it for $33.2 million in 2008.  BofA paid High Rock tens of millions to settle a lawsuit. 

During this time city, state, and federal officials were unsuccessful in stopping the exodus.

“Senator Reed works hard to bring business to Rhode Island and he supports the City of Providence in its efforts to grow and preserve jobs,” U.S. Senator Jack Reed spokesman Chip Unruh told GoLocal in 2011. “He will continue working with Mayor Taveras and Governor Chafee on this and other important economic development issues.”

In April of 2014, BofA vacated the Superman Building - in effect, destabilizing downtown Providence for much of the next decade.

The vacancy of Rhode Island’s tallest building proved to be humiliating for the state. Media from across the country covered the story.

Promises by former Governor Gina Raimondo to develop the project proved hallow. Plan after plan fell by the wayside.

Now, Governor Dan McKee’s administration has negotiated a plan to redevelop the project into apartments. The announced cost of the project is $223 million.

With direct subsidies, tax credits, and the discount of tax payment via a tax stabilization agreement (TSA), taxpayers will subsidize approximately $100 million for the project.

Moreover, many with deep development expertise tell GoLocal that the $223 million budget is unrealistic. One developer says this is a $300 million project — at best.

The building is a critical part of Providence's skyline and a part of the state's historical legacy. 

Rents will not be cheap. While 20% of the units are promised for low-income residents, the other 80% are likely to be paying upwards of $2,500 per month, so-called "market rents."

This deal would be better if Rhode Island had equity in the project. And, the term sheet -- which is the only document released to date -- needs greater elaboration on the protection provisions for the taxpayers.

This deal needs full vetting. State negotiators forced the building's owner to put in more cash equity and significantly lowered the demands for the state's contribution, but make no mistake about it -- this deal is not cheap.

Add all the varied taxpayer provisions together including the tax stabilization and historic tax credits it pushes the total contribution to about $100 million.

Is this the worst deal? No. Many of the developer's previous demands were worse. 

Does it serve Rhode Island to have Superman languish for 70 plus years like the Masonic Temple -- now the Renaissance Hotel? Superman, empty and dark, continues to mark the demise of downtown.

Ultimately, downtown, Providence, and the state need the Superman building to be revitalized.