The new fight for Providence’s mills (continued)

IN THE DECADES after industrial decline, mill buildings in Providence were seen as blighted and decrepit. Redeveloping them was out of the question in most peoples’ minds. Many city officials thought it made more sense and would be more cost-effective to tear down mills in favor of new construction. The debate over Eagle Square, although unable to prevent the displacement of the square’s artists and other small businesses, stimulated a broad discussion about the future of all the city’s mills.

There had been little reason not to tear down mill buildings before Eagle Square, and nothing to encourage their upkeep or renovation. So the City of Providence responded by creating a new landmark designation – the Industrial and Commercial Buildings District (ICBD) — for historic industrial buildings built before 1960. It was the first such thematic historic district in the country, and afforded the mills a new set of protections.

Buildings listed on the ICBD receive an automatic live-work zoning variance, meaning developers could build housing in mills without having to appeal to the city’s zoning board. The industrial/commercial-listed properties became eligible for a new tax abatement program, by which the city would stabilize property taxes for 10 years after the redevelopment of mill property. ICBD buildings were also eligible for state and federal historic tax credits, which returned to developers a combined 50 percent of renovation costs, as long as their projects preserved the historic integrity of the buildings.

With these new financial incentives in place, mills gained newfound recognition as valuable and desirable property, and many redevelopment projects happened as a result. After Eagle Square, renovation projects at Monohasset Mill, Rising Sun Mills, the Foundry, and the Rau Fastener complex on Dexter Street are combining to produce nearly one million square feet of newly renovated, formerly industrial space.

Ted Sanderson heads the Rhode Island Historic Preservation and Heritage Commission (RIHPHC), the state preservation agency that oversees the allocation of state historic tax credits. According to Sanderson, recent mill redevelopment projects represent a significant increase in such activity statewide. In the decades before 2001, RIHPHC had been involved with the rehabilitation of 24 mills, with an overall value of $63.2 million. Since 2001, Sanderson says, his agency has been involved with 14 projects, but "those 14 projects are [valued at] $260 million."

"I think what’s changed," says Sanderson, "is that the really big mills were not economic to redevelop in the past. When I look at which mills were redeveloped [prior to 2001], they tended to be much smaller than some of the mills like Rising Sun or Ashton Mill in Cumberland or Royal Mills in Warwick, or Brown & Sharpe. These larger mills sat vacant for several decades." Added to the new tax incentives are historically low interest rates on borrowed money, high statewide housing demand, and what Sanderson calls a fourth, qualitative factor: "The idea of living in an old mill is more popular than it was 10 or 15 years ago."

All of this has led to a phenomenon that the architects of the industrial/commercial preservation program might not have predicted. Most of the mill preservation projects in the last few years have been for housing, adding hundreds of new residential units to the market.

Many developers who do adaptive-reuse projects claim residential developments are a matter of necessity. The overhead of updating these buildings is costly to the point of being prohibitive, they say. Taking into account the specifics of the new fire code, the common need for environmental remediation, and the physical neglect suffered by most mills over time, the quickest, easiest, and most profitable way to deal with the cost is to develop mills into residential units than can be sold. Mark Van Noppen, a partner in the Armory Revival Company, which is developing Rising Sun and several other mills on Valley Street, says it’s also much harder to find commercial tenants than residential tenants, and that banks tend not to want to finance commercial development, because job growth has been virtually non-existent in the city.

The Steel Yard’s unique status may be due to how the project’s organizers combine their sensibilities as artists who also happen to be developers.

Clay Rockefeller, a Monohasset Mill partner and a principle in 27 Sims, the limited-liability corporation that owns the Steel Yard, conceived the project as a nonprofit that would oversee its programming. "[But] we had no collateral, we had no history, we had done a couple classes, but we had no organizational history," he says, so they had to move forward as a for-profit to finance the project. "We bought [the site] with individual lines of credit that weren’t necessarily loaned to the for-profit," Rockefeller says. "But the for-profit was essentially using the lines of credit." The operation is now owned by the for-profit, 27 Sims, and is managed and programmed by a nonprofit anchor tenant, Woonasquatucket Valley Community Build.

This unconventional type of for-profit/nonprofit management split secured the Steel Yard, but the financial drive — some would say necessity — to create housing in old industrial property as part of renovations is so strong, that even the Steel Yard faces the possibility of needing to do new development at its site. Rockefeller says that with recent property tax increases, operating costs, and the expense of renovating the Steel Yard buildings, residential construction might be necessary to maintain the project’s viability. "We have to entertain the potential of a new building that would be, in all likelihood, residential," he says. "Basically, we’d have to create something to help us subsidize the continuation of what we’re already doing."

Peter Eiremann is the executive director of Woonasquatucket Valley Community Build, the nonprofit that runs the Steel Yard programs. He says they’ve been given mixed advice on how to proceed with the project, but at least some of what they’re hearing is to go the residential route. "Talking to banks and developers and people who know what we’re trying to do, some people say, ‘Condos. That’s all you can do and then just get out,’ " Eiremann says. "And they don’t really want to think creatively about options. We’re exploring a lot of different options, and some are a lot quicker. Residential is a lot quicker than trying to gain the support and the track record to show our proof of product, and get real community support. That takes longer."