The Fane Tower – six years and hundreds of millions of dollars in lost investment later – is dead. Instead of a somber service, wild parties were thrown. Delays caused by a hostile development environment compounded by high interest rates and the developer’s unwillingness to compromise his extravagantly overbuilt design eventually made the project unbuildable. While the Fane Organization (headed by developer Jason Fane) had the personal resources to build the structure, he still wanted a bank or fund to provide financing – no one would. A $300 million investment gone.
Many are happy to argue the demerits of the building’s design, height, and other features, and others argue that it should have served a biomedical or lab-oriented function to support the burgeoning bio/pharma business being pushed by Brown and the state, but regardless, it would have been a major boon to the economy with thousands of construction and support jobs and would have expanded the Providence tax base on a major scale.
Doesn’t matter – Mr. Fane closed his checkbook, took his losses, and left town.
Meanwhile, the I-195 Commission was created from the relocation of the highway when RIDOT floated a $38 million bond to purchase the land from the federal government. The sale of the parcels was supposed to generate $43 million by 2022 to cover the bond, interest, and administrative costs.
What we’ve seen so far is one heavily subsidized commercial/lab space that paid $1.00 for the land, a commercial/residential building that is relocating a major headquarters 10 blocks from its downtown location, a state laboratory/morgue that should be in the suburbs (not in a high-profile area of the city), a mixed-use shopping area and apartments, and a lot more apartments. The true long-term winners will be the developers.
The city needs jobs and tax revenue and this is the right place for them. Let the residential projects that are proposed for the east side of the river stay, but reserve the west side for commercial projects.
Don’t get us wrong – we love our Trader Joe’s and while traffic problems have been mostly tolerable, we hope that Mayor Smiley will make South Water Street two lanes again and remove the unused bike lane. As an appeasement, the road could be treated like Memorial Drive in Cambridge and closed to vehicular traffic one Sunday a month if you want to expand the “bridge experience.”
This brings us to a stickier situation that may require a major reality check for many people: the Industrial National Bank Building. We support the preservationists and all the proponents who want to see the building saved and made into apartments.
However, even with close to $100 million in state subsidies, historic tax credits, and a stabilization, it is still highly unlikely that with interest rates at these levels and banks in crisis that there is a lender willing to take an enormous risk (Pawtucket’s seemingly well-funded soccer stadium is in a similar situation). The developer of the Superman building pegs the cost at $215 million but most of the major builders in the area – many of whom have already declined to bid on the project – believe costs will well exceed $300 million. And that’s before the added unknowns and overruns, which will appear when they start to deconstruct the building.
While it might be nice to live in one of the 57 “affordable” apartments that could cost upwards of $1 million to build, it will still cost you between $1,384 and $2,076 per month in rent. Market rate rents could hit $5,000 if you believe the projections. And, by the way, there’s no parking.
Soon, there will be a day of reckoning and a decision will have to be made. The building’s owner, David Sweetser, and his company High Rock Development don’t have the capacity to write a check to cover the building’s cost. There are no traditional scenarios right now that appear to work on paper, and while some people would have the city and state underwrite the entire costs through bonds, even that is highly problematic because of interest rates and rent/occupancy assumptions.
If Mr. Fane couldn’t make a brand new luxury building economically viable, it is not a good harbinger. Here’s hoping we find someone like the Metropolis City Bank in the fictional town of Metropolis to ensure our “Superman” building gets off the ground.
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