January 17, 2008

Is There More to this Providence Fruit Building Thing?

Marc Comtois

As an admitted antiquarian, I've never met an old building I didn't think should be preserved and re-used. But that's just me and I recognize that--beauty being in the eye of beholder--not everyone thinks that the Providence Fruit and Produce Company Warehouse (more here) was worth preserving, restoring or reconfiguring. OK, fine. But what troubled me about the events leading up to the demolition of the building was the manifest failure of the government--state and City of Providence--to get their acts together. In particular, how the state's incompetence ended up in lost revenue:

The state bought the building from Amtrak for $14.1 million and evicted the remaining businesses. It held the property for six years while it debated what to do with it — either knock it down or sell it — and the property deteriorated, becoming a haven for the homeless and a draw for graffiti artists.

After lobbying by local preservationists, the state decided to put the building up for sale in the spring of 2004, with the condition that the original structure be incorporated into any new design.

The state’s request for proposals included a draft preservation easement that prevents the developer from knocking the building down for any reason — even in an emergency situation, only localized repairs are allowed without permission from state historic preservation officials.

But that preservation easement was never included in either the purchase agreement or the final property transfer last February....

Carpionato responded to the request with a $4.5-million bid, and on July 8, 2004, proposed a Quincy Market-style development featuring dozens of small shops. The state agreed in principle to the design, and consented to sell the building to Carpionato for $10 million less than the $14.1-million price it had paid to Amtrak seven years before. The reason, state officials said, was that half of the property had been sliced off to allow for the offramp construction. The other reason was that forcing the buyer to re-use the old building clearly reduced the value of the property....

So the state wanted to preserve the building, but did nothing to ensure compliance. Well, almost nothing:
A section of the deal requires the developer to set aside $250,000 to be paid if Carpionato breaches the agreement, Moses wrote. But that is the extent of Carpionato’s liability, he argued, and beyond that, the state does not have legal recourse; nothing prevents Carpionato from destroying the building if the situation changes for regulatory reasons — like issuance of a demolition permit.
I'm unsure if the $250,000 will be paid--but it's a small price to pay, anyway.

I'm not particularly impressed with the way that Carpianato has gone about this and my impression is that this was their gameplan (h/t) all along. But the whole way this went down has me wondering if this isn't a case of the State being incompetent....maybe someone on the State side of things had a reason to leave out the previously agreed upon guarantees and conditions in the final purchase agreement. I don't know. But the mystery of why they were left out remains.

So, to summarize, I'm not debating the aesthetics of whether to demolish or save. I am questioning the flow of events that led to the outcome. The property was sold under a certain set of pretenses that supposedly guaranteed preservation of the original structure in some form. As a result of these assumptions, the property was sold for cheaper than market value because preservation is more expensive than ripping it down. In other words, the property could have probably fetched more money if these supposed qualifications weren't in place to begin with. That would have meant more money to the State (ie; taxpayers), including no historic tax credit, incidentally. The end result is that the developer got the best of both world; a cheaper, "preservation price" for the property and then the eventual go-ahead to demolish and develop at a more "economical" price.

So, I wonder if a game was being played from the start to keep the price down based on a pretense of preservation that would ultimately prove unenforceable because the legal language guaranteeing preservation was mysteriously left out of the final deal.

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Honestly though, is anybody going to miss that eyesore? Sometimes old doesn't mean historic. Sometimes old just means old. This is one of those times.

Posted by: Greg at January 17, 2008 11:58 AM

Second that. Rip it down!

Posted by: George at January 17, 2008 12:16 PM

Guys, I'm not getting into a debate over aesthetics, but over the process. The property was bought under a certain said of circumstances (cheaply, historic tax credits, etc.) but there was nothing to keep these in place. The property could have probably fetched more money if these supposed circumstances weren't in place to begin with. So, I wonder, if a game was being played from the start to keep the price down based on false pretenses that would be unenforceable. Again, just wondering...

In fact, I'll "addend" the above to the post. Thanks for helping me clarify!

Posted by: Marc at January 17, 2008 1:17 PM

It's pretty basic that the conditions of the RFP be made part of the P&S. No question, someone messed up bad.

It's also a glaring example of disrespect of tax dollars. They paid $14m for it (a hefty price to begin with; we'd like to glance over the appraisal, please). They kick out what revenue was coming in and then proceed to further devalue it by letting it sit empty for six years, presumably not being taxed (another loss of money). Then because of steps two and three, they have to sell it for $10m less than they paid. And after all that, they fail to secure the historic/aesthetic value of the property which they paid for.

None of this would have happened if this had been private property and private dollars. But because it is tax dollars, it's funny money. It has no value.

It betrays an irresponsible, deplorable attitude on the part of people who are supposedly stewards of our money.

Posted by: Monique at January 17, 2008 2:16 PM

>>It's pretty basic that the conditions of the RFP be made part of the P&S. No question, someone messed up bad.

You're assuming that it was an unintentional omission.

This is Rhode Island, so we shouldn't assume that it was unintentional; in this State one must always consider the possibility (indeed probability) of back-room deals and money exchanged under the table.

Posted by: Ragin' Rhode Islander at January 17, 2008 2:38 PM

"None of this would have happened if this had been private property and private dollars."

This DID involve private money from a private party. If there was collusion, it involved greedy and corrupt business people, as well as greedy and corrupt government officials. If it was negligence on the part of government that lead to officials "forgetting" to get the agreement signed, I can't believe that Carpianato didn't notice.

I can't see any reason, except hating government, to say that this is just about government failings and not about business greed as well.

Posted by: Chalkdust at January 17, 2008 5:21 PM

"Someone" messed up bad?

The law requires all property transfers by the State to be reviewed by the Attorney General, and he must "sign off" on the form of the documents. RI Gen L sec 37-7-3 and 37-7-5.

Posted by: brassband at January 17, 2008 5:30 PM

i cannot beleive that this $10 million screwup has not gotten much press....i mean this is total incompetance. like the cullion deal in cranston.

the state employees that put this deal togehter dhould be reprimanded or fired.

notice how the state didnt want to appeal it,,,they want it to go away

Posted by: johnpaycheck at January 17, 2008 7:46 PM

>>This DID involve private money from a private party. If there was collusion, it involved greedy and corrupt business people ...

Just like Operation Dollar Bill ... and RISDIC ...

Posted by: Ragin' Rhode Islander at January 17, 2008 10:08 PM

"This DID involve private money from a private party."

Perhaps there is an aspect of this story I'm not aware of. How much of that $14m was private?

"If there was collusion, it involved greedy and corrupt business people, as well as greedy and corrupt government officials.

... I can't believe that Carpianato didn't notice."

You're confusing the wolf with the guard dog. (How bad has our state goverment gotten that someone could even do so?) This is how business people are expected to act. They are expected to take advantage of situations.

On the other hand, we expect our government officials to protect us from these predations. And we expect them to spend our hard earned tax dollars prudently. In this matter, they failed to take basic steps to accomplish either.

Posted by: Monique at January 18, 2008 8:13 AM

A private party paid $4M for the property, private interests were one side of this transaction. The state paid $14M to buy the property. They used 1/2 of it to build an on-ramp for I-95, then sold the rest to a private developer for $4M, with the proviso that it be preserved, but that proviso was never signed.

(I won't take up whether this was a good idea or not).

I agree that someone in state government either negligently failed to protect its (our) interests or, at worst, conspired to defraud us. We should know who and which.

The term you used for the business behavior here was "predation". I think that's perfect. If government officials fail to protect us from it, they deserves criticism and censure. If they participate in it, they deserves punishment. I'm not going to excuse businesses that engage in predatory acts on public funds as "expected" behavior. If, as has been suggested, Carpianato make a public statement agreeing to preserve the building in exchange for a low price, then somehow managed to to not sign the agreement, then deliberately let the building deteriorate until it needed an emergency demo.....well, IF that's true, I can't see any justification for laying all of the blame on government.

Posted by: Chalkdust at January 19, 2008 12:02 PM

Where's the outrage from Carcieri about this?
Stop scapegoating the economically disadvantaged, governor - here's a clear $10 million wasted. Now THIS deserves some righteous indignation from our chief executive.

Posted by: Rhody at January 21, 2008 11:35 AM
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