Columns, Opinions

Friedman ’19: A hollow gem in the Jewelry District

By
Staff Columnist
Wednesday, October 25, 2017

Brown featured prominently in Rhode Island real estate news this past week, as it announced the opening of South Street Landing, a new, mixed-use commercial and retail redevelopment of the derelict South Street Power Plant in Providence’s Jewelry District. The $220 million project took six years to build and has already been called “an academic and economic powerhouse” by the University, which plans to move more than 400 staff members from 11 administrative departments to their new offices down the hill starting this Friday. This news comes just three weeks after President Christina Paxson P’19 and Gov. Gina Raimondo announced the ground-breaking of the Wexford Innovation Center, a building that will eventually house Brown’s School of Professional Studies. The Wexford Innovation Center’s ground-breaking likely catalyzed yet another development two weeks later: River House, a 174-unit luxury apartment community that will abut Brown’s buildings in the Jewelry District.

Just as Amazon’s search for a second headquarters has mayors across the country salivating, Brown’s move into Providence’s real estate market has Raimondo singing praises of Brown’s vision. “A few key projects like (Wexford) will be catalytic in moving the state forward to the 21st-century economy,” she said at the ground-breaking. She also claimed that Brown’s partnership will spur the state’s economy and bring in scientific and technological innovators. Likewise many Rhode Islanders see these developments as a much-needed move to reinvigorate Providence’s economy. Though Rhode Island seems to view Brown as its beacon of economic hope, Brown’s real estate developments are not as beneficial as they seem.

First, the entire initiative stinks of gentrification. High-value tenants like Brown will be sure to increase the property values of surrounding lots. How ironic that Brown, rather than a for-profit company or private equity firm, is leading the charge. You don’t have to conduct a survey to realize that most Brown students dislike the idea of gentrification in general. But perhaps it’s not that ironic if you see this as yet another decision by the Brown administration that unapologetically diverges from the collective social viewpoint of the student body.

Second, Brown’s expansion into the Jewelry District will not yield the type of wide-reaching financial benefits that Rhode Islanders seem to expect. Brown is exempt from paying the commercial property real estate tax because of its designation as a nonprofit institution, meaning that Brown-owned properties like the South Street Landing won’t pay property taxes. It’s true that the University agreed to make annual payments of $4 million to the city for 11 years in 2012. However, if Brown actually paid the commercial property real estate tax on all of its Providence properties like other companies, it would generate about $38 million in tax revenue annually, according to the Tax Foundation. That equates to a $34 million annual discrepancy between Brown’s payments and the payments that would be received from a for-profit institution, which isn’t exactly spare change for a relatively small city like Providence. The Lincoln Center for Land Policy also claims that these types of voluntary payments, also known as payments in lieu of taxes, are “often haphazard, secretive and calculated in an ad hoc manner.” Furthermore, Brown could very well renegotiate to a much lower price point in 2033 if it desires. By that time, the University could own more buildings in the Jewelry District for which they will be paying a tax discount. If city officials  somehow think they’re getting a good deal out of this, they’re fooling themselves.

It is also worth considering that this development frenzy is occurring at an unusually favorable time for Providence and Rhode Island’s budget. Mayor Jorge Elorza announced that the city is expecting to report a year-end operating surplus of over $10 million, while Gov. Gina Raimondo reported a state budget surplus of $63.9 million this year. Rhode Island residents might be falsely attributing some of the state’s fiscal success to the University, a major part of the Providence economy — but this credit is misplaced. And besides, the state’s fiscal status isn’t as positive as headlines might indicate — the surplus conceals the massive cuts to critical agencies like the Department of Children, Youth and Families, with more unspecified cuts to come. This is worth noting, as Brown’s esteemed reputation as a Rhode Island economic engine will wear off as soon as the state and local budgets catch another unlucky break.

This isn’t to say that Brown’s development is absolutely and entirely bad: I am sure that the University’s majority stake in South Street Landing — 136,000 of the building’s 265,000 square feet will be leased by Brown — will encourage other businesses and employers to move into the mixed-use development, which will stimulate wider economic growth. But I will say that the hype around the project, and future Brown-sponsored projects, is concerning. Brown’s redevelopment initiative looks good, but I believe that the University’s contributions to the public good have been — and continue to be — overvalued.

Andrew Friedman ’19 can be reached at andrew_friedman@brown.edu. Please send responses to this opinion to letters@browndailyherald.com and other op-eds to opinions@browndailyherald.com.

11 Comments

  1. brown alums are notorious for gentrifying whatever trendy neighborhoods they inhabit after graduating. whatever they say against gentrifying right now as students is a total lie. give this writer 5 years and he’ll be flipping houses and “re-tenanting” commercial properties.

    • Andrew Friedman says:

      Give me a list of five Brown alums who have directly participated in neighborhood gentrification via real estate development, and I’ll take you seriously, Blank Name.

      • for starters, please see Richard Ressler ’79 and the 3rd St Promenade in Santa Monica, CA
        i’m pretty sure the community-focused Midnight Special Bookstore wishes it had not been “re-tenanted.”

  2. Hang on a moment. I’m not sure that there is a “collective social viewpoint of the student body” regarding gentrification. Even if there were such unanimity, that in itself wouldn’t be a compelling argument to influence the University’s development activities unless that viewpoint were actually correct.

    ‘Gentrification’ is thrown around so indiscriminately by activists and bloggers that it has taken on a life of its own as a blanket term to label nearly all real estate development as some wicked force.

    People shouldn’t lose sight of distinctions between gentrification and redevelopment. Gentrification is often driven by private real estate speculation and can bring with it some undesirable socio-economic consequences, though not always and perhaps not even in the majority of cases.

    In contrast, redevelopment is typically a more strategic and long-term undertaking that often involves public-private partnerships with a variety of stakeholders, often across many levels at different phases along the redevelopment timeline.

    Brown is Rhode Island’s third largest employer, and you complain here about supposed gentrification in a part of Providence where almost no displacement of residents could possibly have occurred.

    The South Street Landing project repurposes a derelict power generating station. The Jewelry District was not a collection of charming tenements that were demolished to make way for a Whole Foods and new condominium buildings. All of the projects you mention are possible because the reconstruction of Interstate 195 freed up 19 acres of land for redevelopment that was previously unused.

    Similarly, Brown’s tax arrangements with Providence are hugely nuanced, and have become subject to increasingly complex negotiations and re-negotiation cycles to reflect the dynamics of the University’s physical growth. The topic involves not only cases where Brown’s real estate footprint has expanded, but also how Brown manages and restores its inventory of historically significant houses on College Hill.

    Only because Brown will be a stable, long-term tenant in the South Street Landing and Wexford projects, for example, does a project like the River House residential development become viable. In turn, River House adds a new property to the city’s tax roll. That is the logic behind redevelopment projects of this kind.

    It’s a mistake to over-simplify these topics in service of the gentrification bogeyman.

    • Andrew Friedman says:

      Point well taken. I agree that gentrification is an overused term. I considered many of the problems you mentioned while I was writing, but decided not to include them because of my word count limit. I agree that Brown will be a long-term tenant that will ultimately reinvigorate a district of Providence that was in desperate need. At the same time, I argue that Providence and Rhode Island might have been better off waiting for a better buyer to come along, one who might directly—rather than indirectly—bring jobs to the area. Let’s be fair, Brown is just relocating people, tomorrow, not immediately adding jobs.

      I admit that my claims are speculative. I also admit that my generalization about the sentiments of the Brown student body is speculative. But I will also say that the excited discussions surrounding the success of this project are speculative, and perhaps Brown doesn’t deserve quite the amount of praise that it’s getting.

      Don’t get me wrong, I am a believer in real estate investment and redevelopment as a method for producing positive change in a city. I just think that when Brown is involved, things are less favorable than they seem.

      Thank you for your comment.

  3. It’s nice for a sophomore who came to Brown for its assets and resources and networks to complain about its assets and resources and networks. Providence would be nothing without Brown.

  4. I applaud all these developments at Brown and Providence. Great progress.

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