Accessible Commercial Space in Providence: A Diminishing
Reality
A
Partnership for Creative Industrial Space (PCIS) Report and
Policy Recommendation Statement
www.pcisprov.org
May 2006
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A 2005 study conducted by the Rhode Island
Public Expenditure Council identified Providence as having
the fifth highest commercial property tax burden in the
nation and ranked it highest among all New England cities;
72.2% above the New England city average (RIPEC 2005). These
statistics demonstrate the high costs of owning and renting
commercial space within the city of Providence compared to
all the cities in the region and nearly all in the nation.
As a result, the ability to create affordable commercial
space in Providence is made more difficult and so is its
ability to meet the needs of a growing and diversifying
city.
To magnify the problem, a favorable real
estate market, an automatic residential zoning variance and
the availability of historic tax credits has contributed to
the recent redevelopment of historic buildings located
throughout Providence’s Industrial and Commercial
Buildings District (ICBD). This recent trend has displaced
and put a large population of commercial tenants at risk. A
survey conducted by the Partnership for Creative Industrial
Space (PCIS) estimates that the ICBD facilitates 1,261
Businesses and 15,672 Jobs (PCIS 2004). These tenants
represent the remaining commercial, industrial, and creative
sectors that have been able to operate within Providence to
date because of the affordable rents offered at these sites.
Expensive rehabilitation projects eliminate the immediate
affordability of commercial space within the buildings,
forcing tenants to search for affordable space outside of
Providence.
Since the 2004 survey, there have been five
redevelopments that have added significantly to the
displacement of small creative businesses in Providence.
Each of these displacements was due to the
historic preservation and Adaptive-Reuse of buildings within
the ICBD. Combined, the buildings in question are and have
been home to over 100 commercial and
industrial businesses and well over 500 workers. The
most dramatic and visible short-term effect that these developments
will have on the surrounding community is the displacement
of the businesses within the buildings and the loss of
affordable commercial space ranging from $2.00 - $6.00 a sq.
ft. In PCIS’ work implementing the ALCO Relocation
Program, a first of its kind program initiated by ALCO to
address this tenant issue by offering relocation and
financial assistance, we have found the following: despite
efforts to direct tenants to local commercial sites, only
50% of the affected businesses are relocating within the
Providence city limits, while the rest are moving out of
Providence as the stock for affordable commercial space has
dwindled. Providence
is no longer positioned to house these creative and
industrial businesses compared to surrounding cities that
are catering to exactly this community. In many cases, along
with offering commercial space at low rents, they are
renovating buildings to code compliance and building out to
suit the small business needs. Compare this to the renovated
commercial space in Providence’s Eagle Square being
offered at $20.00 a sq. ft. and the picture is bleak.
Through this emerging trend, we can see we
are losing small-scale industry in our city.
This is the cottage industry that not only sustains a
local economy, but also retains an attractive character in
the city and supports the lower income immigrant
constituents that surround these mill buildings.
At present, there are only a handful of Industrial
Buildings left in the community that remain affordable
havens for small businesses, artists and those community
flea market retail vendors who provide an economic engine of
discounted merchandise to the community. If we lose these
spaces before realizing the capacity to relocate them, the
community and its culture will shift in a serious way.
The mills of
the ICBD that currently provide cheap space for these
small businesses to grow and compete in a global
market, also provide accessible locations for employees
who live in a diverse working class and predominantly
immigrant neighborhood.
It is important to note that for many of the workers
in these buildings who do not own cars and are
dependent on the availability of public transportation, the
close proximity to their residential community is significant.
Also, for many immigrants of varying legal status,
family-owned businesses in the mills are a lifeline in an
increasingly corporate retail and commercial world. The
income and profits that are generated are directly reinvested in the community
and go back into the city and state economy
Big companies do not spring up overnight. They require
cheap spaces to incubate; buildings where people
can test and grow their own entrepreneurial ideas, where
they can partner with other businesses, share space,
facilities, labor, security and resources. These mills
have provided that kind of creative and nurturing climate
throughout their life and have had the ability through
their load bearing and open architecture to adapt to the
changing industrial and commercial needs of our society.
This is the kind of space we are rapidly losing and should
be a focus of the city and community that is being
affected.
To date, over 3/4 of Providence's historic
mills have been demolished because of new
construction, fires and neglect.
One has only to look to the devastating fire that
recently hit the Hamlet Ave. mill complex in Woonsocket to
be reminded of this ongoing tragedy. This being said,
developers who are renovating these buildings and making
them code compliant are working towards preserving the
structures of our industrial past and should be recognized
as such. At the same time, developers and the city
should be accountable to the current uses and
businesses that are being displaced.
Without thwarting development by creating a blanket
policy, a requirement of relocation assistance should be
tied to any such project receiving a city subsidy.
In addition, the city may consider creating
a fund for affordable commercial space that the developer can
contribute to as well as consider possibilities
whereby the city might partner to renovate a
portion of the site for such uses. This being
said, the extremely high cost of environmental remediation
and preserving these industrial mills place limits as to
what can be expected of developers to contribute. Currently,
the pressure from the community is to require
developers to focus their accountability on creating an
affordable housing component for the $20K median income of
Olnyville. As long as this remains the immediate
concern, it will not be financially feasible to expect
developers to contribute to the potential solutions for
dealing with commercial displacement issue.
Outside of the City’s Planning Department,
few community voices have raised concern over the
significant loss of affordable commercial space and its
threat to the long-term economic growth of our city.
Understandably, the focus of recent community
concerns has been on the threat of gentrification that the
residential components of these developments pose to
the Olneyville neighborhood, as well as the need of
Providence and Rhode Island to supply affordable housing.
This is coupled with the concern that gentrification will
remain insular and change the rich creative character and
cultural fabric of the existing neighborhoods that
contribute to its sense of place. While these
issues merit attention, it is important to note that their
effects are going to happen in the long term. Due to rising
interest rates and a stabilizing real estate
market that has been flooded with new housing, real estate
values are no longer increasing and rents are
dropping for the time being. In the end, these mill projects
are not directly displacing housing, but are currently
affecting our neighborhoods with the sudden and real loss of
affordable commercial space and the tenants who work there.
Through our
efforts as an organization, we advocate for a mixed economic
make up and have positioned ourselves to implement
alternatives that will complement the large scale
development that is important to reversing decades of
divestment in our city and state.
By doing this, we envision a healthy mix of use in
the mills with an accessibility for all – the current
local population, the incoming population and the visiting
population. Whether it is an issue of affordable housing or affordable commercial
space, it is the civic responsibility of individuals to
voice their concerns and the role of the city, state and
federal government to adopt policies that will work to
preserve the interests of our citizens. PCIS has
developed a list of policy initiatives that aim to retain
businesses and jobs in the ICBD through affordable and
accessible space for creative and industrial uses.
As our city continues to move forward in development
and growth, we continue to advocate for these principals and
aim to offset the loss of these spaces and the cottage
industries that employ our community.
We encourage others to do so as well.
For more information, please contact us at info@pcisprov.org.
Policy Objectives:
1. Retain industrial properties and their
tenants within Providence’s ICBD and keep it viable
for existing commercial landlords to continue leasing space while
upgrading and maintaining their historic buildings.
PCIS Policy Recommendations:
- Reevaluate
the high commercial property tax assessments within the
ICBD.
- Remove
the automatic Live/Work variance on some of the
buildings in the ICBD.
- Lower
the required construction investment to qualify for the
property tax abatements when landlords renovate
commercial buildings under existing use.
- Require
a % of new development to remain commercial in order to
be eligible for city subsidy.
- Automatic
Property Tax Stabilization for commercial redevelopments
of an ICBD building into code-compliant industrial
space.
- Create
Commercial Economic Development Zone status for ICBD
redevelopments that create 100% commercial space and
those that remain in current use.
- Create
a Relocation & Affordable Commercial Space Fund
within the city budget and require developers of ICBD
properties to contribute.
- Mandatory
tenant relocation assistance from developers who receive
city subsidies.
- Mandatory
eviction notice of not less than 90 days.
CONTACT:
Partnership for Creative Industrial Space (PCIS)
27 Sims Avenue
Providence, RI 02909
www.pcisprov.org
info@pcisprov.org
401-751-4074
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