February 14, 2013

Seeds planted for economic rebirth

By Chris Barrett

To listen to some people talk, the demolition of the old Interstate 195 through Providence represents the most significant economic opportunity for Rhode Island in a generation. With some 20 acres of land in downtown Providence soon available for development, officials envision the Jewelry District teaming with life science companies and cutting-edge research.

“Tear it down and they will come,” Gov. Lincoln D. Chafee said. “This is an unprecedented opportunity,” added Jim Bennett, the city’s top economic-development official. In a state with stubbornly high unemployment and a constant pall of pessimism, the aspiring rebirth of the Jewelry District to a so-called Knowledge District provides a bright spot and a potential lure for private investment.

This year, Brown University opened its new Warren Alpert Medical School in the home of a former jewelry factory. Officials and local business owners say that medical research and creative companies already dot the neighborhood and serve as a magnet for like-minded companies. That environment attracted Anne De Groot and her medical-research company, EpiVax, to the neighborhood eight years ago. Now with a growing company, EpiVax needs more space. “I’m all totally about being in the Jewelry District,” De Groot said. “Somebody build me a building, I’ll move in.”

Economic-development officials want more of her kind. The R.I. Economic Development Corporation – led by new directors appointed by Chafee – has retooled itself to focus on building a Knowledge District. Legislation enacted this year established tax breaks for life science companies that create jobs in the area. The law also set up a commission to oversee the excess highway land and combine a multistep, city-permitting process into a single state entity. Officials say that while important, the land represents a mere piece of a broader strategy to use the neighborhood to catapult development throughout the city and the state.

“The 20 acres is a bit of the tail wagging the dog,” EDC Executive Director Keith W. Stokes said. Officials repeatedly take pains to note the amorphous boundaries of the Knowledge District. They point out that toymaker Hasbro Inc. and gaming-company 38 Studios are just blocks away. They note the proximity of Johnson & Wales University and the Rhode Island School of Design. They also note attractions such as Providence Place, nine art galleries and the Providence Performing Arts Center. The governor is banking on such attractions and the city’s educational and health institutions to lure upand-coming life science companies. He also wants to boost all levels of public education, repave streets and even improve the sewer system.

“My belief is, create a good environment for business to flourish and good things will happen,” Chafee said. He reiterated his opposition to dangling financial incentives to companies looking to expand. He called deals such as loan guarantees, tax breaks and grants an unnecessarily risk of scarce taxpayer dollars. Yet, Chafee leads a state competing with other states drooling for life science investments. Massachusetts established a Life Sciences Initiative in 2007 and pledged to put $1 billion over the next decade into attracting companies in the industry. Houston has cultivated the Texas Medical Center and North Carolina fostered the Research Triangle Park.

Both parks received a boost by capitalizing on the research of local universities. Stokes said that could happen here, too. Plenty of graduates from local institutions start companies in Rhode Island. But they have found little reason to stay and grow in the Ocean State.

“We’ve been an incubator for New England,” Stokes said. “We’ve got to stop that.” Now is the time to come up with a game plan for how to keep them here and woo new companies and developers, Constance Howes said. The president of Women & Infants Hospital chairs the Innovation Providence Implementation Council assembled by the Greater Providence Chamber of Commerce. “You have to have people who are willing to take the financial risk and it’s unclear how many businesses will be ready to do that right now,” Howes said. “So right now is a good time to make the plan and find out who has the dollars to make that plan happen.”

Bennett, the city economic official, said people with dollars might spend them more freely if the state restores the Historic Preservation Investment Tax Credit. The program offers tax credits to those that rehab historic structures, which abound in the Jewelry District. For its part, the city can tap existing loan programs and streamline construction regulations, Bennett said. Officials will also need to sort out what belongs in the district if, in fact, demand explodes and land becomes limited.

Stokes said that land offers a chance to complement, not replace, local businesses. He said that one of the charms of the area is keeping an eclectic use of space. If land – of which now there is plenty – does run out, the state will encourage businesses to set up in nearby places such as Pawtucket. “We would fail if we were to dislodge an existing base of commerce and replace it with something new,” Stokes said.

Jewelry District Association President Arthur Salisbury would like to see one industry dislodged: the nightclubs in the northeast corner of the district. With some 3,700 seats for patrons, the clubs have been the scene of drunken revelry and shootings.

“This is our major problem right here,” Salisbury said, standing at the corner of Friendship and Richmond streets, with the nightclubs in the background. As with any redevelopment, battles over who will develop the land are sure to come. In the case of the Jewelry District, much debate is likely to revolve around how much land goes to nonprofit institutions exempt from city property taxes.

The law passed earlier this year requires institutions to negotiate a payment in lieu of taxes with the cashstrapped city before a purchase of the old highway land or pay the full tax bill. The requirement came at the cash-strapped city’s urging.

Chafee, who signed the bill, also expressed a desire to explore the state leasing the land to a private developer, who would then pay city taxes on any structures built. The state would provide a percentage of the lease revenue to the city.

It’s a better plan than asking the state to give the city money in return for hosting nonprofits, Chafee said. Such payments, already in use elsewhere in the state, are subject to the whims of the General Assembly and budget constraints, the governor noted.

Regardless of the buyer, developers will need to pass muster with the commission lawmakers established earlier this year. Chafee said he sees commissioners he appointed serving as “bureaucrats” handling development rules, rather than marketing the land and shaping the broad vision. Marketing the land, Chafee said, will fall squarely upon the shoulders of the state’s elected officials.

“A lot of work’s been done,” he said. “Now’s the time to reap the harvest.”