Converting industrial buildings into housing threatens to eliminate a surprisingly robust source of jobs and small businesses
by Robin Amer
Providence Phoenix | Issue November 5–11, 2004
THREE TEENAGE GIRLS in jeans, T-shirts, and protective goggles bustle around an open furnace. One grabs a steel pan with a set of tongs, whacks the pan with a mallet, and sticks it back in the fire. Her supervisor looks on as heat sears out of the furnace and metal clangs on metal from the tools in the girl’s hands. This could be a scene out of Providence’s industrial past, but it’s actually an advanced blacksmithing course at the Steel Yard, a nonprofit industrial arts space located next to Monohasset Mill in the Valley neighborhood.
The Steel Yard welcomed visitors and the public with an open house last Thursday, October 28. In the year or so since it first opened, the Steel Yard has established a public foundry, ceramics studio, and blacksmithing shop, as well as space for jewelry making, bronze casting, welding, and woodworking. The blacksmithing students are here from the Met School, as part of the Steel Yard’s Youth Enrichment Partnership, which makes free classes available to youth from local high schools and arts groups. These facilities are accessible to the public through tuition-based courses, residencies, and other approaches. The Steel Yard runs a number of community-based programs, such as “Made in Providence,” in which participants fashion functional items like tree guards and bike racks from recycled steel, and then install them locally. There’s also an “urban agriculture unit,” a colorful shipping-trailer-turned-greenhouse, where growers nurture hydroponic basil — grown entirely in water without soil — to prove that agriculture can exist in urban areas under the right conditions.
By providing community space for the industrial arts, the Steel Yard (www.thesteelyard.org is unique in the local area. But perhaps more significantly, in the ongoing conversation about preserving the city’s historic industrial space, the Steel Yard is the only redevelopment project in Providence that preserves not only a historic site, but its historic uses as well.
Four years ago, a New York developer’s plans to raze a cluster of historic mills in Eagle Square, and replace them with a generic strip mall, galvanized an outpouring of community opposition that ultimately helped save four of the 14 threatened buildings. The fierce reaction served as a wakeup call for city officials (see “Dig the new breed,” News, December 14, 2000) about the importance of preserving Providence’s industrial landscape — which, by siring the art collective Fort Thunder and other underground hotbeds, has significantly contributed to the city’s cultural cache. To their credit, city officials responded by establishing a mill preservation program meant to diminish the threat to old mill buildings.
In the time since then, a number of mills have been converted, as part of high-profile redevelopment projects, into market-rate or upscale housing. For a cash-poor city like Providence, these developments represent investment and more tax revenue. At the same time, however, some observers fear that with so many old mills being remade as residences there won’t be much industrial space left for, well, industry. The unintended consequences of preserving and redeveloping mill buildings, in fact, may include driving away the small businesses, craftspeople, and artisans that quietly occupy mills, contributing – representing almost 16,000 jobs by one estimate — in no small way to the city’s economy.
THE LATEST CASE in point is the Procaccianti Building, a complex of old mills on the Eagle Street side of Eagle Square (commonly misidentified as Eastern Butcher Block because of the prominent signage displayed by its neighbor) that were owned until recently by the Procaccianti Group, a Cranston-based hospitality-management company. In September, Artiste Lofts LLC of Los Angeles bought the 190,868-square-foot, three-acre complex for $1.7 million, according to Neil Amper of Rodman Real Estate, the broker for the sale. According to a press release from Artiste Lofts’ Michael Gazdacko, the company, which has done adaptive-reuse projects in cities including Portland, Oregon, and Bloomfield, New Jersey, has preliminary plans to redevelop the Procaccianti Building into 145 “New York SoHo style” live/work loft condominiums, ranging from 700 to 2500 square feet, with an average unit size of 1150 square feet.
Ron Wierks, who represents Artiste Lofts from New Brunswick, New Jersey, says the company was attracted to the location in part because of other recent developments in the area, including the one at Eagle Square. “We feel like that area there is in a transitional period,” he says. “You now have the conveniences of the [Shaw’s] grocery store and the retail that’s been built all around it.” Wierks adds that the company will prioritize historic preservation of the buildings. “We want to do it in a historic manner so we keep the mill-style look and the atmosphere of being old. We’re not going to do like next door where they knocked the buildings down and created their own village.”
The serious decline in manufacturing in New England over the last 75 years makes most people take for granted the notion that local industry is dying, if not dead. The visual cues of buildings in disrepair suggest they are empty, with none of the jobs that once enabled blue-collar workers to make a solid living.
Actually, though, many of these old mills teem with a surprising amount of industry — perhaps not an unusual situation in a state where small businesses provide the largest source of jobs. Based on the findings of a recent survey, the Partnership for Creative Industrial Space (PCIS) — a new advocacy group spearheading attempts to get Providence to rethink its mill preservation program — estimates there are 1261 businesses, and 15,672 jobs in the 250 buildings listed on the city’s Industrial and Commercial Buildings District. The Procaccianti Building at 25 Eagle St. is itself home to 24 small businesses and 142 employees — all of which will likely have to relocate due to Artiste Lofts’ redevelopment plans.
Thomas E. Deller, director of Providence’s Department of Planning & Development, was surprised to learn of the extent of employment in the city’s industrial spaces.
“You drive by these mills and they look empty, and to actually find out how many people are in there, and to find out all those jobs were in there, was actually quite stunning,” he says. “I didn’t know they were there. And there are actually some very good jobs in there.”
With Providence facing an unprecedented degree of development pressure (see “Boiling Point,” News, October 8), the question now becomes whether the squeeze will continue to get worse, or whether the city’s well-intentioned mill preservation effort can be tweaked to help maintain an important part of local culture and the Rhode Island economy.
IN THE DECADES after industrial decline, mill buildings in Providence were seen as blighted and decrepit. Redeveloping them was out of the question in most peoples’ minds. Many city officials thought it made more sense and would be more cost-effective to tear down mills in favor of new construction. The debate over Eagle Square, although unable to prevent the displacement of the square’s artists and other small businesses, stimulated a broad discussion about the future of all the city’s mills.
There had been little reason not to tear down mill buildings before Eagle Square, and nothing to encourage their upkeep or renovation. So the City of Providence responded by creating a new landmark designation – the Industrial and Commercial Buildings District (ICBD) — for historic industrial buildings built before 1960. It was the first such thematic historic district in the country, and afforded the mills a new set of protections.
Buildings listed on the ICBD receive an automatic live-work zoning variance, meaning developers could build housing in mills without having to appeal to the city’s zoning board. The industrial/commercial-listed properties became eligible for a new tax abatement program, by which the city would stabilize property taxes for 10 years after the redevelopment of mill property. ICBD buildings were also eligible for state and federal historic tax credits, which returned to developers a combined 50 percent of renovation costs, as long as their projects preserved the historic integrity of the buildings.
With these new financial incentives in place, mills gained newfound recognition as valuable and desirable property, and many redevelopment projects happened as a result. After Eagle Square, renovation projects at Monohasset Mill, Rising Sun Mills, the Foundry, and the Rau Fastener complex on Dexter Street are combining to produce nearly one million square feet of newly renovated, formerly industrial space.
Ted Sanderson heads the Rhode Island Historic Preservation and Heritage Commission (RIHPHC), the state preservation agency that oversees the allocation of state historic tax credits. According to Sanderson, recent mill redevelopment projects represent a significant increase in such activity statewide. In the decades before 2001, RIHPHC had been involved with the rehabilitation of 24 mills, with an overall value of $63.2 million. Since 2001, Sanderson says, his agency has been involved with 14 projects, but “those 14 projects are [valued at] $260 million.”
“I think what’s changed,” says Sanderson, “is that the really big mills were not economic to redevelop in the past. When I look at which mills were redeveloped [prior to 2001], they tended to be much smaller than some of the mills like Rising Sun or Ashton Mill in Cumberland or Royal Mills in Warwick, or Brown & Sharpe. These larger mills sat vacant for several decades.” Added to the new tax incentives are historically low interest rates on borrowed money, high statewide housing demand, and what Sanderson calls a fourth, qualitative factor: “The idea of living in an old mill is more popular than it was 10 or 15 years ago.”
All of this has led to a phenomenon that the architects of the industrial/commercial preservation program might not have predicted. Most of the mill preservation projects in the last few years have been for housing, adding hundreds of new residential units to the market.
Many developers who do adaptive-reuse projects claim residential developments are a matter of necessity. The overhead of updating these buildings is costly to the point of being prohibitive, they say. Taking into account the specifics of the new fire code, the common need for environmental remediation, and the physical neglect suffered by most mills over time, the quickest, easiest, and most profitable way to deal with the cost is to develop mills into residential units than can be sold. Mark Van Noppen, a partner in the Armory Revival Company, which is developing Rising Sun and several other mills on Valley Street, says it’s also much harder to find commercial tenants than residential tenants, and that banks tend not to want to finance commercial development, because job growth has been virtually non-existent in the city.
The Steel Yard’s unique status may be due to how the project’s organizers combine their sensibilities as artists who also happen to be developers.
Clay Rockefeller, a Monohasset Mill partner and a principle in 27 Sims, the limited-liability corporation that owns the Steel Yard, conceived the project as a nonprofit that would oversee its programming. “[But] we had no collateral, we had no history, we had done a couple classes, but we had no organizational history,” he says, so they had to move forward as a for-profit to finance the project. “We bought [the site] with individual lines of credit that weren’t necessarily loaned to the for-profit,” Rockefeller says. “But the for-profit was essentially using the lines of credit.” The operation is now owned by the for-profit, 27 Sims, and is managed and programmed by a nonprofit anchor tenant, Woonasquatucket Valley Community Build.
This unconventional type of for-profit/nonprofit management split secured the Steel Yard, but the financial drive — some would say necessity — to create housing in old industrial property as part of renovations is so strong, that even the Steel Yard faces the possibility of needing to do new development at its site. Rockefeller says that with recent property tax increases, operating costs, and the expense of renovating the Steel Yard buildings, residential construction might be necessary to maintain the project’s viability. ”We have to entertain the potential of a new building that would be, in all likelihood, residential,” he says. ”Basically, we’d have to create something to help us subsidize the continuation of what we’re already doing.”
Peter Eiremann is the executive director of Woonasquatucket Valley Community Build, the nonprofit that runs the Steel Yard programs. He says they’ve been given mixed advice on how to proceed with the project, but at least some of what they’re hearing is to go the residential route. “Talking to banks and developers and people who know what we’re trying to do, some people say, ‘Condos. That’s all you can do and then just get out,’” Eiremann says. “And they don’t really want to think creatively about options. We’re exploring a lot of different options, and some are a lot quicker. Residential is a lot quicker than trying to gain the support and the track record to show our proof of product, and get real community support. That takes longer.”
WHILE SOME PEOPLE see the mill conversions as a good sign – bringing investment to economically depressed areas — the number of developments and the pace of residential conversion is of great concern to others. With each new development that turns mills into housing, it becomes increasingly harder for artists, craftspeople, and small businesses to stay in these spaces.
Chris Freed, for example, has run his custom woodworking business out of the fourth floor of the Procaccianti Building at 25 Eagle St. for 16 years, and rents 3200 square feet for about $550 a month. He says the new building owners approached him and mentioned the idea of helping tenants to buy another building, but he doesn’t think such a plan would work because “most of these guys are pretty independent.” Freed says he depends on below-market rent to keep his business in the city, and if he can’t find comparable prices, he probably won’t stay in town.
In a statement, Artiste Lofts says it is “inviting the current industrial tenants, many of whom are woodworkers, to approach the developer with a group cooperative proposal to locate an alternative mill site for their businesses, which the developer would consider improving for their use.”
For woodworkers like Colgate Searle, who has a shop in the Leach Building, across from the Procaccianti, the threat of displacement and the difficulty in finding affordable space are just the first of many challenges facing small manufacturers in the US, who have to compete with foreign businesses and cheap foreign labor.
“Everything is stacked against you,” says Searle. “If people are successful, it’s because they’ve found a niche or have gotten lucky.”
Although the City of Providence can do little to address international trade issues or concerns about foreign labor, concern about the displacement of small businesses has spurred some people to advocate for changes in city’s the Industrial and Commercial Buildings District.
Laura Mullen, the artists’ sustainable housing coordinator for the Rhode Island State Council for the Arts, was involved in the planning that ultimately led to the ICDB. She says the thinking of many people has gone through an evolution over the last two years. “The goal of the legislation was really to protect the buildings,” Mullen says. “The people that worked to get the legislation passed felt that that was a victory enough, and if the uses evolved over time, the uses evolved over time.” Now, though, she says, the legislation is seen as having created financial incentives that encourage the displacement of artists and small businesses. “I think we all look at architectural preservation and we’re all very happy with it,” Mullen says. “But I don’t think anyone really anticipated that gentrification would follow hand in hand, as swiftly and clearly as it did.”
Mullen says it’s sometimes hard to see the communities that still exist within Providence’s mill buildings, if observers don’t know what to look for. “Those people that are supportive of the developments don’t necessarily identify the value that’s already in the neighborhood,” she says. “They might look at the neighborhood and see crumbling buildings, but they don’t realize that there’s a community fabric that is dependent on the physical structures. It’s kind of invisible to people unless they’re in that neighborhood every day.”
The same kind of concerns led Erik Bright, a partner in the Monohasset Mill project, which converted a mill building across from Eagle Square into live-work condominiums for artists, to help establish the Partnership for Creative Industrial Space (PCIS). The group’s mission is to “preserve and provide affordable and sustainable commercial space” in the Industrial and Commercial Buildings District. Bright says the recent survey by Lisa Carnevale, PCIS’ executive director, which revealed a large number of jobs in local mills, should give the city “an idea of the kind of displacement that can happen if they don’t start actively pursuing a zoning policy for commercial and industrial space.”
Using its survey results as ammunition, PCIS is initiating a series of policy recommendations intended to make it easier to preserve industrial space for artists, craftspeople, and small businesses. These suggestions include extending the Downcity tax-free zone to the ICBD, providing a 50 percent tax break on sales and use tax to businesses located in ICBD buildings redeveloped for commercial use, linking tax abatement to the extent of commercial development, and repealing the automatic live-work variance on a select number of ICBD buildings. “When we originally passed the live-work variance it was exactly that,” Bright adds. “It wasn’t a variance for residential, it was a variance for live-work, and that’s what that means — live-work, a combination of residential and commercial space. We haven’t really seen any of that kind of development.“ Bright contends that by picking between five and 10 buildings to remain commercial in select neighborhoods, the city can ensure that industrial practices will continue in some mills.
WHETHER OR NOT PCIS’s recommendations will turn into actual policy remains to be seen. Clark Schoettle is the director of the Revolving Fund of the Providence Preservation Society, PCIS’s fiscal agent on a Rhode Island Foundation grant that funded the initial survey. Schoettle has reservations about some of PCIS’s policy proposals. Rather than selectively repealing the automatic live-work variance, which he says could unfairly penalize individual property owners, Schoettle argues it might be better to re-examine the definition of live-work, so that “to occupy a live-work space you have to pass some qualifications that you’re actually working in that space as well as living there. So you can’t just have residential spaces.”
Schoettle also questions whether changes in the mill preservation legislation and tax incentive structure are warranted at all. ”There may be four or five high-profile projects that are converting mills into housing, maybe 10,” he says. ”So that’s 10 complexes out of 250 that are being converted to housing. Is that a crisis? I don’t know. I don’t know if that’s a crisis or just a blip in the scheme of things.” Schoettle adds that he is looking forward to reading the completed PCIS survey to better inform his opinions.
Still, it’s noteworthy that city planning director Deller, noting how about 16 percent of Providence is zoned for industrial use, supports the PCIS concept of earmarking some mill buildings for industrial use. “As you start converting that industrial land into housing,” Deller says, “if it’s not live-work housing, if it’s not job space, then you start losing. So we’ve got to keep some of that land area, so we can have a place to have jobs.”
As part of his department’s revamping of zoning policy, and the city’s possible overhaul of its tax structure, Deller is also advocating for the restructuring of the tax abatement program for the Industrial and Commercial Buildings District. It would be better, he says, to set up the tax abatement as a tiered system linked to the historic importance of individual buildings. Under this concept, all “Tier 1” buildings would automatically receive tax abatement; “Tier 2” buildings would be eligible, but would still have to apply; and “Tier 3” buildings would not be eligible to receive tax abatement.
This dialogue comes as the city council and General Assembly are rethinking tax incentives for mill redevelopment. The Providence Journal reported in June that state legislators tried to impose a moratorium on state historic tax credits, but withdrew the proposal after protest from developers, preservationists, and officials from different cities. In Providence, City Councilman David Segal has been part of efforts to draft amendments to the tax stabilization ordinance, which would impose provisions for affordable housing, responsible contracting, and women and minority contracting (these issues became of particular concern last year around the Rising Sun development). Segal says “development isn’t just bricks and mortar,” and that issues of community development need to be taken into account more seriously.
Deller agrees with this assertion, in that he believes, “There are certain policies we want to put out there. You preserve the building, you get a tax stabilization. You do environmental cleanup, you get a tax stabilization. You create affordable housing, you get a tax stabilization. You get jobs, you get a tax stabilization. I think we want to use tax stabilization to encourage certain policies. So it’s immaterial to us who does it. What’s important is the policy issues we’re addressing.”
Where things go from here remains far from certain. If anything, the ongoing squeeze on mill buildings and their occupants suggests that without vigilance and government intervention, the marketplace will continue to rule. Whether this is in the best interests of the city — and whether small woodworking shops can receive as much de facto protection as generic businesses – is another question. As Laura Mullen puts it, “It’s uncharted territory whether we can make a set of policies that preserves community and people.”
Republished from its source at https://providencephoenix.com/features/top/multi/documents/04246900.asp. As historical artifacts, we are fascinated when looking back on this reportage. Since the Phoenix site mysteriously disappeared, and then reappeared, we are grabbing these articles while we can to archive them.