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The Providence Journal

Developer asks to renew subsidy for proposed downtown apartments

By Wheeler Cowperthwaite, The Providence Journal,

2023-02-22
https://img.particlenews.com/image.php?url=3sjOi4_0kvdZ62v00
  • The project pivoted from a hotel to 124 apartments
  • The developer already has a tax treaty with Providence
  • The building would host two bars

PROVIDENCE − A developer who scrapped plans for a boutique hotel in the former Providence Journal building on Westminster Street is asking the state for a $1.5-million tax agreement because a $6-million agreement it received in 2019 has become invalid.

The Rhode Island Commerce Corporation Investment Committee unanimously voted Tuesday afternoon to send a new agreement with Westminster Partners LLC to the full corporation for a vote.

Originally called Hive Hotel, the rebranded Hive Life project, estimated to cost $53 million, would turn the former Providence Journal building and adjacent Kresge's department store, at 203 Westminster St., into 124 apartments and 29,230 square feet of retail space, including two bars. In all, the buildings include 120,000 square feet.

The agreement would be supported by the sales tax generated by the sale of food and drinks from the retail portions of the complex, including a 4,600-square-foot rooftop bar and a 13,000-square-foot lounge in the basement, according to the Commerce Corporation.

The tax increment financing agreement signed in 2019 was partially predicated on taxes generated by the hotel.

Commerce Corporation Executive Vice President of Investment Jeff Miller said the developer may come back asking for a larger tax agreement if it doesn't get $2 million in financing from RI Housing from a "blight bond" and $1.5 million from a Providence revolving fund.

Downtown development:Hotel in former Providence Journal building downtown scrapped in favor of apartments

What happened to the last tax agreement with the Rhode Island Commerce Corporation?

In 2019, the Rhode Island Commerce Corporation voted to approve a $6 million tax increment financing agreement, when the project was still a hotel, Providence Business News reported.

That deal was supposed to last for 20 years and encompass not more than 75% of the sales tax collected at the site and no more than 18% of the hotel tax collected, but it is "no longer valid," according to the Rhode Island Commerce Corporation.

What is a tax increment financing agreement?

A tax increment financing agreement allows a developer to receive a rebate for a portion of the state tax revenue it generates. Projects need to show they have a "financing gap," according to the Rhode Island Commerce Corporation website.

What happened to the Hive Hotel project?

The Hive Hotel project received a tax treaty from Providence in 2019, when it was supposed to be a 91-room microloft-style hotel with an additional 48 apartments. At that time, the project was supposed to cost $39 million.

Skip forward past pandemic shutdowns and the market has entirely changed at the same time construction costs, including labor and materials, have spiraled.

Co-Owner Gordon Buist's new plan is to turn the two buildings into 124 furnished, high-end apartments. He told the Providence City Council last year that the hotel plan was no longer financially viable. The other owner, Washington, D.C. developer Jim Abdo, purchased the two buildings in 2018 for $4.3 million.

The new anticipated cost is $53 million, a combination of inflation and extra plumbing and amenities for apartments that aren't needed in a hotel.

The ornate former Providence Journal building, built in 1906, was home to The Providence Journal for less than 30 years. The newspaper moved to 75 Fountain St. in 1934. The smaller, Art Deco-style Kresge was built in 1920.

What other subsidies is the development getting?

The Providence City Council originally agreed to a tax stabilization agreement for the project in 2019. In November 202, the City Council signed a new tax treaty, the same as the old one, except the start dates moved up three years.

According to a tax analysis, the developer would save $4 million in taxes over 20 years, as the buildings' valuation would peak at $20.9 million in 2038.

What is the proposed Hive Life project timeline?

Construction would take 18 months to two years but any start date is dependent on financing.

What kind of apartments would the project create?

In all, the plan calls for 124 apartments.

  • 2 one-bedrooms, 428 to 634 square feet.
  • 6 "one-bedroom plus," 495 to 807 square feet.
  • 38 "micro" units, 260 to 350 square feet.
  • 37 studios, 364 to 465 square feet.

What amenities would be on site for the apartments?

  • On-site security
  • A mailroom
  • A lobby
  • A fitness center
  • A central atrium dubbed "The Courtyard"
  • Storage space
  • Bike room
  • 10 parking spaces

What retail facilities would be in the apartment complex?

There is a proposed 29,230 square feet of retail space.

  • 13,056 square feet for a "Player's club," styled as a 1970s a bar with arcade games in the basement
  • 4,622-square-foot "Player's Club Rooftop" with a "skybox" connected to the basement "Player's Club"
  • 1,511 square feet for a pizza restaurant
  • 1,970 square feet for a café and co-working lounge
  • 1,360 square feet for a retail space
  • 6,706 square feet for a retail space

See all the past coverage of the Hive project

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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.

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