Tai-O Group requests extension for middle school project

Tai-O Group requests extension for middle school project

Plans for the former Woonsocket Middle School building could be delayed after Tai-O Group representative Louis Yip requested an extension on the closing of the sale of the building that was approved by the City Council last fall. (Breeze photo by Lauren Clem)

WOONSOCKET – A project that has been under discussion in the city since 2016, the redevelopment of the former Woonsocket Middle School, could be headed for further delays as the costs associated with the work pile up, according to a representative of the development company.

Louis Yip, a principal of the Tai-O Group, came before the City Council last Thursday, April 11, to request an extension on the closing of the sale of the building located a 357 Park Place. The council voted unanimously to sell the building to the company for $470,000 last fall, close to two years after the group initially won a bid to develop the property into apartment units.

In addition to an extension, Yip asked the council to grant several other requests intended to provide the project with a financial buffer. Among other items, he asked the council to extend a tax abatement on the property by two additional years, waive building permit fees for the project, provide streetlights near the building and lower the tax assessment on the property from $8.5 million to $7.5 million.

Yip said the continued delays on the project are due in part to the high turnover of leadership in the city’s Planning Department since he first approached the city almost three years ago. Since 2016, Yip said, he has worked with several different members of the Planning Department, updating the new director every time there’s a change in personnel.

His interactions with the city, he said, began with former Planning Department employee Joel Mathews, who served as special projects director until his retirement from the post in December 2016. In 2017, Yip’s primary contact at City Hall was the late N. David Bouley, but the former city planning director stepped down from the post in December 2017, shortly before his death from pancreatic cancer the following March. In January 2018, Mathews returned to fill the post, but remained only a year before a dispute with some members of the City Council led him to abruptly resign in January. Since then, former Planning Board member Steven Lima has been appointed as acting director of the department.

Though Yip did not mention the position, the department has also seen high turnover in the position of city planner. Within the past few months, former City Planner Ian McElwee was one of several city employees to leave or be dismissed from various city departments. McElwee replaced former City Planner Rui Almeida, who left the city for a post in Westerly last May.

Yip told councilors he had also worked closely with Scott Gibbs, the Economic Development Foundation of Rhode Island president who served a brief term as interim economic development director for the city beginning last August. Yip said he learned of Gibbs’ departure from the position when he called Gibbs to update him on the project only to be told the former director was no longer working for the city.

“I don’t know what’s going on here. I’m not complaining, I’m just bringing up the reason for the delay of this project,” he said.

Yip said his requests were also due in part to the rising cost of construction materials since he began planning for the project, a development he blamed on the ongoing trade war between the U.S. and China. Estimates on materials, he said, were coming in much higher than he had originally anticipated, with costs for items such as HVAC, electrical systems and an elevator priced hundreds of thousands of dollars higher than he had budgeted. Last year, Yip had told councilors he expected to invest about $13 million to create approximately 100 apartment units in the former school building.

“The fact is, the cost of the project is now a lot higher,” he said last Thursday.

While the project is being partially funded by federal tax credits, those credits come with requirements that can also drive up cost, Yip explained. The company expects to receive 20 percent of their investment, or $2.6 million, back in federal tax credits for historic preservation, but those credits come with a mandate that any new additions to the structure must meet historic standards. After learning replacing the building’s poorly insulated windows with historically compliant ones would cost $4 million, Yip said the company now plans to skip the window replacement and hope the state grants a variance on energy efficiency requirements.

Other factors driving up the cost of the project, he said, include rising interest rates and the uncertain status of the EB-5 visa program, a federal program designed to encourage investment in U.S. businesses by foreign entities. The Tai-O Group had planned to use the program to gain additional financial support, but the program is currently up for possible changes by the federal government.

“This is going to cost more, a lot more,” said Yip. “By the time you add up every single item you have, you cannot do this project basically.”

City councilors gave no commitment of support for the requested accommodations, telling Yip they would need to see documentation on the financial costs of the project before they could consider his request. Councilor James Cournoyer asked whether the company had considered forgoing the federal historical tax credit in exchange for more leeway with construction materials and the ability to purchase cheaper parts.

“If we’re going to make some of these accommodations, I just think we need some level of support that documents that,” he said.

Members of the city administration also pointed out the company still has a long way to go toward construction even if the City Council grants the accommodations. Public Works Director Steven D’Agostino said he has yet to see the company’s plans for drainage, sewage and parking on the property, while Lima said the company has not yet submitted applications for building permits.

The Tai-O Group first began talks with the city in 2016, when the developer was one of two companies looking to rehab the vacant municipal property. The original proposal for a 165-unit complex was later scaled back to a proposal that included just over 100 units. Last spring, the group cleared its final hurdle before signing a purchase and sales agreement when the council approved a parking agreement for the property, a source of dispute between several city councilors and members of the administration.