Providence is a city steeped in history. For now, anyway. A budget deficit has forced Rhode Island lawmakers to find ways of getting the books in order. One target: the historic tax credit. Recently passed and signed legislation has scrapped state credits. Projects approved for 2008 will have to pay a fee and sign a contract with the state's tax division. And those still on the boards? They'll get no breaks from the Ocean State.
“The impact over the years we had [the credit] was large. There were many historic buildings that had been unused and deteriorating, and people couldn't figure out a way to finance the rehab until the state credit became available,” says Kristin DeKuiper, a partner in the Boston office of law firm Holland & Knight, where she specializes in real estate and tax credits. “The federal [historic preservation tax] credit is great, but it's only 20 percent of qualified rehabilitation expense. The state credit filled the financing gap for many projects that otherwise could not have been done. Without it, many future projects won't be able to be done.”
In a city that is nearly 100 percent built out, the new law puts developers and preservationists in a bind. “[The proposed law] creates a difficult situation to encourage new growth without either tearing something down or cleaning something up, which often rubs against our preservation principles,” said Durkee, Brown, Viveiros & Werenfels Architects principal Stephen Durkee a few weeks before the legislation was passed. The firm has worked on more than a dozen preservation/rehabilitation projects in downtown Providence over the past 10 years. “There are no easy answers,” Durkee added.
Population/Employment
Residents in 2006: 175,255 Job growth, 2000–2006: 10.7 percent
Office Market
Average asking rate for Class A inventory: $30.45/s.f. on 11 percent vacancy
Residential Market
In January–February 2008, the median home sales price fell 10.2 percent from the previous year, to $220,000.
Market Strengths
- Historic legacy
- Colleges and universities
Near Boston and New York Market Concerns
- State budget deficit
- High state and local taxes
Housing affordability Forecast
“There's a strong sustainability argument [for the] preservation and reuse of buildings,” says William Kite Architects associate Christine Malecki West. “[We've] managed to avoid much of the sprawl that plagues other urban areas. The key to maintaining compact density will be redeveloping urban historic properties sensitively.”
