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Reviving the Rhode Island Economy: It’s Not That Complicated
Two decades ago, Rhode Island was in the grip of a harsh and unrelenting recession. Soon after taking office, Governor Sundlun was forced to close failing credit unions across the state in order to prevent the loss of more than one billion dollars in personal savings. By 1992, the unemployment rate had risen to nearly 9%. Rhode Island was worse off than most of the rest of the country, and the mood in the state was grim. As Yogi Berra would say, “It’s deja vu all over again.”
One night in 1992, while I was in my office at the R.I. Department of Economic Development about 6:30 p.m., I received a call from Jim Skeffington, the prominent Providence attorney, and from Terry Murray, chairman of Fleet Financial. They told me that Fleet had a big decision to make: Expand in Rhode Island or in other, more business-friendly states. Would I, as economic development director, recommend legislation similar to Delaware’s that would make Rhode Island attractive to Fleet? Several thousand new and existing jobs were at stake.
I called Governor Sundlun, who was still in his office at 7 p.m. (of course he was), and told him about my conversation with Skeffington and Murray. Sundlun asked my opinion, and I said we should go for it. Within an hour, the four of us were sitting in the Governor’s office, and Governor Sundlun made a decision that evening to support the needed legislation. Upon approval by the General Assembly, Fleet began a major build-up in Rhode Island and our state became an important player in the financial-services sector. Several years later, Governor Lincoln Almond, with the help of legislative leaders, won passage for even more sweeping legislation, and Fidelity Investments came to Rhode Island.
In 2013, under similar circumstances, Governor Chafee, Speaker Fox and Senate President Paiva-Weed are well-positioned to turn a crisis into an opportunity for the people of Rhode Island. As far back as the 1950s, when the renewal of College Hill began, and as recently as 2000, when Providence Place opened its doors, state and local governments have provided political leadership, financial muscle and legal authority that promoted new investment and created new jobs. Electric Boat, high-tech businesses on Aquidneck Island, Fleet, GTECH, Fidelity, Amgen, Providence Place -- all benefited from strong partnerships with government. The 38 Studios fiasco, wherein a prior governor placed a very high bet on a new and unproven company, should not dissuade government from resuming its essential leadership function -- or from employing the R.I. Economic Development Corporation to this end. The 38 Studios loan-guarantee was not a decision by the Economic Development Corporation, but a political decision by the previous governor -- and a bad one at that. Now we must put that experience behind us. Too much is at stake for our workers and their families.
However, there are a number of steps that we must take if Rhode Island is to reach its economic potential. Rhode Island is a wonderful state to live in. The problem is that it’s not a great state to do business in. Government needs to help make capital more available to small business, provide more job-training and career education, fight at the PUC for lower energy costs, contain health care costs, and ease regulatory burdens related to the building code, fire code, occupancy permits, and environmental permits issued by the DEM. These are the fundamentals of job creation and job retention that often are overlooked.
Government also needs to adopt a working strategic plan for the state economy. Twenty years ago, it was obvious to Governor Sundlun and to me that financial services was a rapidly growing sector in the Northeast. Today, it is “eds and meds” -- the major research universities and teaching hospitals that have emerged as important foundations of the Northeast economy, including the Rhode Island and metropolitan Boston economies.
There is plenty of opportunity for Rhode Island to grow this vital sector. Back in 1992, as director of the Department of Economic Development, I contracted with planner William D. Warner to come up with a master plan for the corridor in downtown Providence that would be freed up by the demolition of Route 195. Warner’s plan made the Providence corridor attractive for biotech and medically-related companies in what we now call the Knowledge District. Certainly the presence of R.I. Hospital, Women & Infants, Johnson & Wales, and now Brown University’s medical school makes the district particularly attractive. Excellent highway access and proximity to medical assets in the Boston area are big pluses as well.
Now that dozens of acres of prime land are cleared, there is tremendous potential to attract new investment and create new jobs. Yet there is very little evidence of activity. I am sorry, but this is not complicated. At a time of ten-percent unemployment, we need to be proactive. Our leaders need to call in all of the stakeholders and say, “Let’s take your ten-year plan of development and do it in three years.” With all of that land just waiting to be developed, and thousands of Rhode Islanders desperate for jobs, we should be moving full speed ahead. If we can begin development on an accelerated basis, then the battered construction industry and its workers will be among the beneficiaries as well.
Rhode Island can also look to other states for models of development that we can employ. Just as we made Rhode Island attractive for financial-service companies in the 1990s, we can follow the example of Texas, North Carolina and other states in making Rhode Island attractive to medical companies today. We can also learn from the success of Massachusetts, working with MIT and Harvard, in making Cambridge an international leader in biomedical research and development. Private companies are spending two billion dollars in the Bay State because they want to be close to the research mecca of Cambridge. Rhode Island can showcase its own medical and educational institutions and also pull in new investment. Providing financial incentives is always important. Here we might look to New York in search of solutions. After the terrorist attacks on lower Manhattan, New York State created “Empire Bonds” to help finance the revitalization of the Ground Zero area. This is the kind of bold thinking we need here.
In addition, I agree with Senator Paiva-Weed that Rhode Island should waive sales taxes for the sale of art works. There is real potential for Providence to become a true creative capital if we exploit our long history of art and design and the presence of Rhode Island School of Design, America’s premier school of art. Working with RISD, we have the potential to create an annual festival of art in the revitalized downtown, following the example of Art Basel in Miami Beach. Every year, thousands of art dealers and buyers from around the world come to Miami Beach to display and buy art works during a festival week. Could Rhode Island pull off something similar in its capital city? With the right governmental leadership, yes it could.
So let’s not dwell on our high unemployment rate and lack of investment. Let’s concentrate on all of our strengths, and all of our assets just waiting to be exploited. With strong governmental leadership, we can become one of America’s more prosperous states once again. I don’t think it’s that complicated if we work together and do what Governor Sundlun used to say: “Just get it done. Now!”
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Joseph R. Paolino, Jr. was Mayor of Providence from 1984 to 1991 and director of the R.I. Department of Economic Development from 1991 to 1995. He is a commercial real estate owner in Providence.
In honor of one of their own
Mayor Joseph A. Doorley Municipal Building
On Thursday, February 2nd, the Providence City Council passed a resolution officially naming the City’s new municipal building after former Mayor Joseph A. Doorley, Jr. “A consummate public servant who helped modernize and revitalize our City, I can think of no one more deserving of this honor than Mayor Doorley,” said Council President Michael A. Solomon (Ward Five). (details)
Looking at options for 111 Westminster
JOSEPH R. PAOLINO Jr.
Finding new uses for 111 Westminster St., in downtown Providence, long known to many as the Superman Building, should be a priority of Governor Chafee, Mayor Angel Taveras and the Providence business community.
I do not own and do not wish to own this downtown property. But as a lifelong resident of Providence, as a real-estate investor, a former mayor and former head of economic development for Rhode Island, I know how important it is to find new uses for 111 Westminster, and how difficult it will be.
At 428 feet, this landmark skyscraper is Rhode Island’s tallest building. It is also a distinguished example of Art Deco architecture, one of the city’s largest taxpayers, and a real-estate anchor in the Financial District. But Bank of America plans to vacate the property, leaving Providence with a very large empty building on its hands.
This is why the best option for this building and our city is to keep Bank of America in this location. All other options are going to be difficult at best. It has been more than 25 years since the last new office building, Fleet Center, opened in the financial district. And even Fleet Center became reality only because the city secured a multimillion-dollar federal grant to help finance that Fleet Financial Group project.
In recent years, GTECH relocated to Capital Center from West Greenwich, but only because the state gave GTECH a no-bid, 20-year contract to handle its lottery business. Blue Cross also moved to a new office building in Capital Center, but that was after vacating three buildings elsewhere downtown and getting a $25 million tax incentive from the city. Today’s downtown real-estate market is dominated by tax-exempt colleges and hospitals, which are frequently buying commercial properties, not by any surge in the office market.
What many people don’t realize is that downtown Providence has long had difficulty attracting and keeping office tenants. Private investors are reluctant to construct office buildings without some kind of governmental help — such as grants, loans, tax abatements or property-tax stabilization plans. That is why the universities, with their strong cash flows, have become so important to the city. Their expansion should be allowed to continue, as long as they are willing to make tax payments on their downtown properties.
The current owners of 111 Westminster face tough decisions. They have about $20 million in debt on the property, and the 85-year-old building needs an additional $33 million in renovations. It costs the current owners about $5 million a year to operate the building. If vacant, 111 Westminster probably has a market value of less than $5 million.
When the old Hospital Trust Building faced similar circumstances a few years ago, the Rhode Island School of Design stepped in, reconfiguring it for RISD’s library (on the first floor) and upper-floor dorm space. Hundreds of youthful, creative people now live downtown because of RISD.
We need to consider new, financially viable options for111Westminster as well. Here are several options — with two important provisos: First, the building must remain on the tax rolls and, second, that parking must be provided nearby for the new occupants.
• Move Roger Williams University Law School from Bristol to 111 Westminster. This would place the law school close to state and federal courtrooms and major law firms, and would free up space on the Bristol campus for other uses.
• Move the Superior and Supreme courts from South Main Street to 111 Westminster, and sell the courthouse building to Brown University. Brown would pay full taxes on the courthouse property. The courts would benefit from a modern configuration in the converted office building.
• Move Brown’s School of Engineering from its current location on the East Side. This school has 550 undergraduate and graduate students, 40 faculty members and a $13 million research budget. A major focus of the school is biomedical engineering, which is also a key part of the new Knowledge District, a few blocks from 111 West-minster. Brown recently moved its medical school to the Knowledge District.
• Convert 111 Westminster into a dormitory for Brown, RISD or Johnson & Wales University.
• Relocate state functions from the Pastore Center, in Cranston. Governor Chafee has talked of making Providence more of a true capital city by consolidating more state office functions here. My experience strongly suggests to me that this must be done.
• One last option for the Superman building: Recruit a developer to convert it into an entertainment complex, with a casino on the first floor and a grand hotel on the upper floors.
All of these options have potential, but only if parking is adequately addressed. One possibility is to provide garage parking on the long-vacant lot next to the Arcade. This would remove an eyesore and give the Superman Building the marketability it needs.
The worst option is for the state and city governments to do nothing. An empty, 26-story skyscraper in the center of the capital city would send a terrible message to the marketplace. But a fully revitalized Superman Building would continue the renaissance of downtown Providence, and send a strong signal that Rhode Island’s civic leadership is unified and decisive. Still, while there are many options for the building, the best is that the tenant remain Bank of America. After all, the structure has been a bank building since it was built.
Joseph R. Paolino Jr. was mayor of Providence from 1984 to 1991, and director of the Rhode Island Department of Economic Development from 1991 to 1994. He manages his family’s commercial-real-estate business in downtown Providence. (Providence Journal eEdition link)
