Superman Building tax deal would save owner $29 million, Providence analysis says
The owner of Downtown Providence's "Superman Building" would save more than $29 million in property taxes over 30 years under a proposed tax treaty, according to the city's analysis of the deal.
The treaty, which is now before the Providence City Council, would freeze the tax bill for the 26-story Industrial Trust tower starting this winter while owner High Rock Westminster converts the office building into apartments.
The property tax arrangement is part of a larger public incentive package for the redevelopment of the building announced by city and state leaders last spring.
The public dollars involved in the plan
Although a property tax break was always part of the plan, the city had not released an estimate of its cost until now, even as it sought and received General Assembly approval over the summer to offer a 30-year tax deal.
If the property tax treaty is added to the $15 million in already announced city aid, the $26 million pledged by the state and $22 million in expected federal assistance, the estimated public contribution to the Superman Building redevelopment exceeds $90 million.
The fiscal analysis provided to the City Council by city Chief Financial Officer Lawrence Mancini projects that building owner High Rock would pay $26.8 million in taxes over 30 years through the deal.
If the building is redeveloped without a tax treaty, the owner would pay $56.2 million over that period, according to the analysis.
"Without an incentive package, this historic landmark building would remain unoccupied and unable to contribute to the downtown economy," Mancini wrote in a letter accompanying the fiscal analysis.
High Rock currently pays $498,910 per year in taxes on the Superman Building, the assessed value of which has declined as it has sat empty since 2013.
The proposed deal would freeze High Rock's tax bill for the next 10 years, even as the tower becomes more valuable as it is renovated and filled with rent-paying tenants.
In 2033, the tax bill would jump to $748,910 per year and stay that way for a decade.
Then starting in 2043, High Rock would begin to pay an annually increasing share of what the full tax bill would be without the deal. By the city's estimate, the full tax bill would be around $2.2 million per year, and High Rock would begin paying it in 2052.
The $220 million residential conversion project announced in April includes building 285 rental apartments, of which 57 would have an income limit. High Rock has not finalized details of what will go in the ground floor former bank lobby space.
The tax treaty values the now-vacant Superman Building at $14.1 million and estimates that in 2051 it will be worth $63.4 million.
Industrial Trust tower: What to know about Providence's Superman Building
Opponents lambaste the tax deal
Critics of city tax deals question those numbers and how a building expected to cost $220 million to renovate could be worth a fraction of that amount.
"The assumptions behind the preposterously low figure of $29 million are so downright bonkers that I think it is safe to call this estimate what it is – a stone cold lie and an insult to the taxpayers of Providence," state Sen. Sam Bell said of the city's cost estimate.
In addition to questioning the $40 million increase in assessed value post-redevelopment, he said the assumption that property values will only rise 2% during a three-year revaluation cycle is "even more outrageous."
Other opponents think public dollars could be better spent elsewhere.
Republican candidate for governor Ashley Kalus on Friday said "instead of giving $69 million in corporate welfare to the developer of the Superman Building, why don’t we invest in [Rhode Island Public Transit Authority]" bus driver wages.
But supporters of the project in the city and state argue that without public support, including the tax treaty, no renovation will happen and the state's tallest building will continue to deteriorate and detract from economic activity, instead of adding to it.
"The building has not been an economic driver for 10 years," High Rock spokesman Bill Fischer said about the economic estimates. "This is truly a benefit to the city of Providence and is a very complex and complicated project because of the age and size of the building and requires a unique solution."
The City Council Finance Committee plans to hold a public hearing on the tax deal sometime this fall.
panderson@providencejournal.com
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On Twitter: @PatrickAnderso_
This article originally appeared on The Providence Journal: Providence Superman Building tax deal would save owner $29 million
