The Power Block Towers

A three-quarters of a billion dollar investment in Downtown Providence, 2005, that was too good to be true

About this Property

#Proposal

$700 million dollars? As soon as we saw that in the headline we should have thought “no way this is going to actually happen.” Where did that number come from? Outlined in the oldest news story we could find from February 2005:

  • $95.5 for a new tower and the purchase of the Westin Hotel
  • $150 million to renovate the Holiday Inn and add a 27-story condo tower
  • $175-million to $200-million for an office and residential tower at the site of the former Gulf Station
  • $150-million to $200-million for a vague project at the former Police & Fire Station
  • $100-million to $150-million for yet another vague project

On the high end, that adds up to $795.5 million. Almost $1 billion in real estate investment. In 2005. Wow. We all were drinking the real estate development Kool-Aid back then. Procaccianti was over-promising here, but that might be part of the plan when it comes to a big vision like this. Develop one part of it, get it to be successful, and then use that leverage to do the next project.

The “power block” concept came from Procaccianti, and included the Convention Center and Dunkin’ Donuts Center, though they were never interested in owning them:

the company’s plan seeks to create a “power block” in the city — one that reaches from the Westin past the convention center and the Dunkin’ Donuts Center and up to the Holiday Inn. Procaccianti visualizes it as a connected corridor of shops, convention space, restaurants and hotel rooms that would work to entice large conventions to Providence.

If we were cynical people — which we might be — we might think that the Procaccianti group was using the promise of such a large investment as a carrot, dangling it in front of City officials, as the State tried to recoup millions in unpaid loans from the 1990s credit-union crisis from the group and its related entities. The state and Procaccianti agreed to a $6.53 million payment, but perhaps they could have gotten the entire $14 million. Why dangle millions and millions in front of the City to save $8 million? Far-fetched we suppose, but possible.

Regardless, the City allowed demolition to occur on two properties before financing and complete architectural plans were available. This was not the first time, nor the last, that demolition would move forward without the rest of the project. See our Demolition by Proposal list.

#Current Events

A few sites mentioned in the Power Block are still undeveloped in 2020:

So what happened?

It’s interesting to us because one thing didn’t happen to stop all of this construction and investment, but a lot of little things. It was 2005–2006, so the economic disaster of 2008 was far enough away, and yet the economy was showing warning signs. Hurricane Katrina had devastated the Gulf coast, sending a ripple effect through the country. Gas went up to $3.50 a gallon. The price of building materials skyrocketed. On September 1st, 2005, a user named Cotuit said on the UrbanPlanet.org forum:

…vast numbers of people in this country carry a good amount of debt to support their lifestyles, eventually people are going to have drop those lifestyles to address that debt. 1/3 of a million dollar condos in Providence might be scratched off of a lot of people’s shopping lists.

How prescient. At the same time, the local economic conditions were pretty good until 2008. Developers were playing a waiting game… who was going to be the first to take a chance and build? Local vacancy rates for office space were low, but rents were not increasing, which would signal that there was not increasing demand. At the same time, smaller companies couldn’t make inroads into Class B office space because the prices were high, due in part to a lack of Class A office space. Hotel occupancy was high, and the visitor’s board kept asking for more. And all the while, successes Downtown increased demand for residential. But very few new construction projects were breaking ground.

Developers waited too long. By 2008, when the economy really started to hit the fan, plans for new construction dried up. We haven’t seen that kind of interest in local construction until 2019–2020 — and then COVID-19 changed the way we all think about office and commercial space.

#In the News

Convention Center board OKs sale of Westin to Procaccianti group

by Jack Perry
Providence Journal | February 28, 2005 (abridged)

Despite Governor Carcieri’s strong objections, the Rhode Island Convention Center Authority board of directors voted 7-1 this morning to approve the sale of the state-owned Westin Providence hotel to The Procaccianti Group.

The only board member who voted against the sale was David Duffy, the authority’s chairman.

Carcieri had urged the board to reject Procaccianti’s offer and look for another bidder because of the Cranston-based hotel development and management firm’s links to the state’s 1991 credit union collapse.

“I do not feel the authority should go forward with this transaction,” Carcieri told the board this morning, because of “the message” it sends to the citizens of Rhode Island.

[…] The pending sale was muddled by an 11-year state lawsuit against the company’s president, James Procaccianti. Last week, Procaccianti agreed to pay the state $6.53 million to settle the lawsuit, which was filed against him for defaulting on a loan left over from the credit-union crisis.

[…] Carcieri argued that the authority might attract an even better price for the Westin if it put the project back out to bid.

He also acknowledged that Procaccianti had settled the lawsuit last week, but he said millions were still unpaid.

The state has said Procaccianti had $14 million in unpaid loans left over from the 1991 credit union collapse, but Procaccianti was sued for just one loan.

From UrbanPlanet.org{target=”_blank”}, captured from http://www.projo.com/digitalbulletin/content/projo-20050228-westin.f0fdda25.html

Yes to Westin sale

by Andrea L. Stape
Providence Journal | February 27, 2005 (abridged)

The Rhode Island Convention Center Authority, scheduled to meet tomorrow, has a chance to give a big boost to both Providence and the region by approving the sale of the Westin Hotel to The Procaccianti Group.

This hotel development-and-management company is the top bidder on the state-run Westin Hotel, offering $95.5 million to buy the property, without tax breaks from the city. The company would add a 200-room tower to the hotel, which would greatly help the Convention Center and generally draw business to Rhode Island.

In addition, James Procaccianti, the company’s president, has announced plans to create a “power block” from the Westin to the Holiday Inn, already owned by the company. The company wants to spend $150 million to turn the Holiday Inn into a high-end Hilton, with a nationally known restaurant and a new 27-story tower, housing 150 condominiums. Around the Westin and the Hilton would be shops, restaurants and, of course, convention space. Such a plan would also increase the value of the Dunkin’ Donuts Center, by linking it to what would become a vibrant area of homes, hotel rooms and commerce.

Mayor Cicilline, for one, is eager to see the sale of the Westin go through and thereby start this process. “It’s a very important transaction,” he said. “It’s the anchor of a much more substantial investment — and that is obviously very, very important to the city of Providence.”

The mayor said that “[a]dding $700 million to the tax base of Providence is incredibly important to me,” apparently alluding to the value of would could become the envisioned “power block” investment.

If all of this comes to pass, it will, needless to say, pump enormous vitality into downtown — an area already enjoying the fruits of the Providence renaissance, with the thriving Providence Place mall, construction of the GTECH headquarters, transformation of the Masonic Temple into a luxury hotel, rehabilitation of beautiful Downcity buildings, and the newly announced 32-story condo tower to go up in the Financial District.

Of course, the Convention Center Authority’s primary focus must be on the sale of the Westin, both an excellent project in itself and of great importance to taxpayers for its potential to draw business to the state-run convention center.

It should be noted that the Procaccianti offer for the Westin has brought to light past decisions by state officials to write off millions of dollars in loans involved in the state’s 1990s credit-union crisis — loans unrepaid by The Procaccianti Group and related companies. But The Procaccianti Group has agreed to pay the state $6.53 million, the full amount plus interest of the one loan that the state is still suing to recover.

It is in the strong interest of the public to move forward with selling the Westin — to take advantage of what appears to be a historic opportunity to boost the local economy. Area residents would benefit richly from the new business brought to town, and from the tax dollars that would flow into both the city and the state.

From UrbanPlanet.org{target=”_blank”}, captured from http://www.projo.com/opinion/editorials/content/projo_20050227_27west.1dd3a4a.html

Procaccianti: $700-million vision hinges on Westin

The developer describes a downtown “power block” that would take shape if his bid for the state-owned hotel is approved.

by Andrea L. Stape
Providence Journal | February 24, 2005 (abridged)

The Procaccianti Group is poised to invest as much as $700 million in downtown Providence to build new hotel rooms, condos, restaurants, shops and office space.

But the company will “rethink” its proposed investment in the city if its bid to buy the state-owned Westin Providence is not approved, according to James Procaccianti, president of the hotel-development and management company.

“I think we’d have no choice but to take a step back and review everything,“ Procaccianti said yesterday during an interview at his company’s Cranston headquarters.

The Procaccianti Group was chosen in December as top bidder for the Westin, based on its $95.5-million offer to buy the property, and its plans to build a 200-room hotel tower next door. (A.I.R.: Which they did in 2007)

The Rhode Island Convention Center Authority board of directors, which oversees the Westin and the convention center, had been negotiating a contract with the company when it learned that The Procaccianti Group and Procaccianti-related companies had left behind millions of dollars in delinquent loans from the state credit union crisis of the early 1990s.

James Procaccianti recently agreed to settle with the state on one of the loans, for $6.53 million, including interest. It was the only Procaccianti-related loan that had been the subject of a pending state lawsuit.

[…] As controversy over the outstanding debts raged for the past two months, The Procaccianti Group worked behind the scenes to continue developing a sweeping downtown investment plan. Unveiled in detail yesterday, the company’s plan seeks to create a “power block” in the city — one that reaches from the Westin past the convention center and the Dunkin’ Donuts Center and up to the Holiday Inn. Procaccianti visualizes it as a connected corridor of shops, convention space, restaurants and hotel rooms that would work to entice large conventions to Providence.

“We’ve had a vision of what we think the power block should look like in the city and the Westin is a vital component to that,” said Procaccianti.

The company owns the Holiday Inn and wants to turn it into a high-end Hilton. It plans to spend about $150 million to completely renovate the hotel, add a nationally known steak restaurant and a Starbucks coffee shop, and attach a 27-story tower filled with 150 condos.

The Procaccianti Group would also completely transform the side of the hotel abutting the Dunkin’ Donuts Center, with the idea that at some point the two could be connected.

“It will be much more attractive for someone to rehabilitate the Civic Center,” said Procaccianti. “It’s going to be jumping.”

On the opposite end of the block, the hotel tower next to the Westin is another $150-million to $200-million project that is part of Procaccianti’s vision. It would including parking, shops and luxury condos selling for as much as $1 million.

According to Procaccianti, high-end hotels across the country are quickly adding residential space as people clamor for all the comforts of a hotel — cleaning service, gourmet food, a concierge — in their everyday lives.

Along with the hotels, Procaccianti is proposing a residential and office tower for a small triangle of land across the street from the Holiday Inn. The land, formerly the City Gulf Station and now a parking lot, is owned by former Providence Mayor Joseph Paolino Jr. and Procaccianti. They would like to develop a 27-floor residential building, with shops on the first floor and condos above. That building is a $175-million to $200-million development, according to Procaccianti.

Also, The Procaccianti Group would like to develop a residential tower featuring lofts, which is a $100-million to $150-million project, according to the company. Yesterday, Procaccianti did not reveal the location of the tower, since the company is still working on acquiring the vacant land.

Procaccianti, 46, runs his privately held hotel-development and management company out of the third floor of an office building on Reservoir Avenue in Cranston. He values the company at close to $1 billion, and says it owns and manages 23 hotels across the country.

The Procaccianti Group was among 15 companies that submitted bids last fall for the Westin. Once it was selected as top bidder, the company started talking to investors to raise financing to make its development vision a reality. The company was successful in pooling $150 million in the Procaccianti Development Fund for Providence, said Procaccianti.

“So when we made the pitch for this whole development fund, we added the Westin,” he said.

The money, along with another hotel-development fund and traditional construction loans, will be used to finance the Providence development, said Procaccianti. He added that the company has been in talks with the City of Providence and is ready to start gutting the Holiday Inn within weeks. That is, if the Westin deal goes through.

“We believe that Monday we’ll get approved,” said Procaccianti. “I can’t imagine what concerns they would have.”

From an Archive.org capture of http://www.projo.com/news/content/projo_20050224_proc24.24ec457.html