Outlook remains murky for vacant Shaw’s in Eagle Square

October 5, 2007 12:40:44 PM
Price Rite? Trader Joe’s? An open air market? An indoor amusement park? A home for Farm Fresh Rhode Island? Rumors and fantasies abound about what will eventually replace the hulking shell of the Shaw’s supermarket in Providence’s Eagle Square. But for now, the grocery store, which closed September 1, will remain an empty building. 
The supermarket opened in 2003, after years of controversy. Activists fought the development because it required tearing down historic mill buildings and affordable artist space. Others argued that the neighborhood desperately needed economic revitalization and a grocery store.
The fight led to a sort-of compromise. Feldco, the developers of Eagle Square, agreed to rehabilitate some of the mill buildings and turn the development into a mix of residential and commercial properties. But the new design changes made the development more expensive. What started as a $17 million strip mall turned into a $36 million project.
To pay for the historic renovation, the city granted Feldco a Tax Incremental Finance loan (TIF). According to Thom Deller, Providence’s director of Planning & Development, the city made an accounting mistake in devising the TIF, forgetting that owner-occupied units receive a 50 percent tax break. The upshot is that the residential units in Eagle Square are paying half of the taxes anticipated by the city, taking what is expected to be a 50 percent bite from the $200,000 meant for neighborhood improvements.
Providence city planners hope Shaw’s will be replaced with a comparable grocery store, but they have little say in the matter. The Eagle Square developers are also fairly powerless, Feldco partner Gene Beaudoin said at a recent public meeting, since, “When larger tenants do deals with developers, there’s very little in the lease that the developer has any control over in the space.”
The future of the space rests largely with Shaw’s parent company, Supervalu, based in Eden Prairie, Minnesota, which bought the grocery chain from Albertson’s in 2006. Supervalu holds a 25-year lease for the property, including the surrounding parking lot, and will pay rent until it finds a subletter.
The grocery store chain has a real estate agent in Malvern, Pennsylvania, devoted to replacing the Providence Shaw’s, but her timeline for finding a new tenant is unclear. Deller says Supervalu has had some success finding replacements for six underperforming stores it closed 11 months ago. Asked, however, if Supervalu could potentially leave the space vacant, Beaudoin said it does have that prerogative.
During an August meeting at the Providence public safety complex, community members tried to brainstorm a brighter future.
Clay Rockefeller asked if Supervalu could subdivide the building, to make it attractive to smaller grocery stores like Trader Joe’s. Judy Chong, Shaw’s director of communications, said that’s unlikely. “Typically we don’t subdivide space, because that space was built for a certain size and a certain function as a supermarket,” she answered, “so it has to be a very compelling reason to subdivide.”
What about buying the lease from Supervalu, to gain control over what happens with the property? Beaudoin called that a “highly unlikely, very expensive proposition.” His lenders, he says, would not approve of a solution that financially risky. 
Deller, meanwhile, is still waiting for information from Supervalu about the original market study for the Providence Shaw’s and how well it lived up to the company’s expectations. He hopes the data will help the city make a better case for a different grocery store to move in.

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POSTED BY Kickball Jesus AT 10/04/07 11:30 AM

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