- People should not be sleeping on sidewalks.

People should not be doing drugs in front of the Mathewson Street Church.

Well, I don't blame the city as much as I blame the state.

RIPTA controls Kennedy Plaza.

The buses don't belong in Kennedy Plaza.

- The amount of things that have happened here in the last 50 years in Downtown give me incredible amount of excitement and energy about what we can make happen in the next 10, 15, 25, 50 years.

- Welcome to "One on One."

I'm Ian Donnis.

The fortunes of Downtown Providence have risen and fallen over the years.

A river relocation project helped drive the city's so-called renaissance in the '90s and WaterFire attracted big crowds, but the pandemic changed Downtown with far fewer people on the street and slumping values for office buildings.

So can the city center make a comeback?

Joining me to talk about that, Former Providence Mayor and head of Paolino Properties, Joe Paolino, and a little later, head of Marsella Development, Chris Marsella.

(lively music) Former Providence Mayor and head of Paolino Properties, Joe Paolino, welcome to "One on One."

- Ian, nice to be here.

Thank you for inviting me.

- Joe, your company owns a lot of Providence real estate.

We see how many fewer people work Downtown since the pandemic and partially because of that, the value of Downtown office buildings has fallen.

What do you think should be done to bring more activity to Downtown Providence?

- Well, I think they gotta do a number of things.

Number one, I think Kennedy Plaza, moving the bus hub is gonna be very important, but they've gotta do more than that.

We have a mental illness problem in society today, and I think it's important that you just don't move a problem, but you have to also treat a problem.

And I would like to see social workers involved wherever that bus hub goes to try to help these people, transport them, give them the help that they need.

Then take Kennedy Plaza, make that a family-oriented place where people can have celebrations.

Now, we just saw the soccer tournaments take place.

That would be a great venue to have that.

Having concerts in the Howard Downtown, the Philharmonic, the Pops, having it in Kennedy Plaza would be good.

What we have done, I've recognized that Providence has never had a strong office market.

There's not a lot of expansion.

There aren't any companies moving into Providence.

So what I have done is taken three historic buildings that were empty office buildings, and we converted two of them into apartments, one of them into a hotel.

I recently bought the Amica building, and that's right across the street from The Beatrice hotel.

That was two reasons why we bought that.

One was to get the office, some of the office users in there, some of the tenants to move into our headquartered building, 100 Westminster Street.

- Let me stop you there if I could 'cause we've got a lot of ground to cover and we'll come back to the housing issue, but I wanna follow up on what you said about Kennedy Plaza.

Right now it seems like Kennedy Plaza is a vacuum.

There are many people who have concerns about safety there even though crime has generally gone down in Providence.

Why has the city failed to activate Kennedy Plaza as a welcoming place on an ongoing basis for the people of Providence and beyond?

- Well, I don't blame the city as much as I blame the state.

RIPTA controls Kennedy Plaza and they don't give it the security or the social service help that that community needs.

The whole mental illness problem is real and if you break an arm, you put a cast on it, and then it gets fixed.

You can't do that with somebody with mental illness.

And people should not be sleeping on sidewalks.

People should not be doing drugs in front of the Mathewson Street Church.

And how that area, it looks like it's from a third world country.

- Well, what would it take the state and RIPTA to go in a different direction and do something different to make Kennedy Plaza safer and more active?

- Well, the buses don't belong in Kennedy Plaza.

It's very dangerous over there.

Somebody got killed a few years ago over there where they got run over by a bus.

So my feeling is move it, put social service agencies with a new hub, and then have a program, maybe the Providence Foundation would be the right venue to try to come up with ideas and programs for Kennedy Plaza.

- Joe, I'd like to follow up on what you said about converting office buildings to housing.

That's part of a way to revitalize Downtown, and it has kind of slowly evolved as a more residential area, but the cost of residential conversion is high.

What can be done to accelerate the conversion of office space to housing in and around Downtown?

- Well, unfortunately the state legislature just did away with Historic Tax Credits.

And that was a big incentive for people with historic buildings to rehab them and to put residential there.

So you need to get some programs like that back.

With the Amica building, I'm looking at interest rates right now.

And so I have put a pause on what I wanted to do there.

My initial intention was to expand The Beatrice, and have additional rooms of The Beatrice, and then put residential.

- And The Beatrice is a restaurant and a hotel that you operate.

- That's correct.

But with the Amica building, what I'm concerned about now is what's gonna happen in the election.

If rent control comes into Providence, you're gonna see all residential apartment development come to a halt.

Banks aren't gonna give mortgages.

You're not going to get our developers wanting to take the chance knowing that rent control is gonna control them.

And I think that I wanna see what's gonna happen with who the next mayor's gonna be, and who the next city council's gonna be before I take any more steps.

- Let me ask you about how you are part of a group of investors who bought Providence Place.

What is the vision for the future of the mall, which is very close to Downtown?

- Having local ownership I think is critical, and I think that is very good.

Having the original developer, Pyramid, come in I think is gonna be very helpful.

Getting better retail there, and more retail I think is gonna be important, and having security over there.

Now, I have a long-shot dream.

I'd love to see Costco go there.

I don't know if that can happen because Costco normally doesn't go to malls.

They want open air, they want suburban areas.

But I wanna wait and see the next few months once we take control of it if we can do a special urban concept of a Costco there.

If it can happen, great.

If it can't, I understand the realities of it.

But there are other major retailers that we are talking, and having good security there is good.

If you go to Providence Place, you wanna feel safe.

If you don't feel safe, you're not gonna go there.

So I have a very good understanding of what I think needs to happen over there, and we'll be going down that road shortly.

- You talked about recent acquisitions made by your company, and you own a number of Downtown parking lots.

Why continue to operate those as parking lots rather than developing them for housing or some other purpose?

- Well, there's two reasons.

Number one, we need parking for our tenants, for our residential tenants, and for our office tenants.

And having it accessible and near is important.

Two, you have high interest rates right now.

Not a lot of development has taken place.

I would even sell some of our lots if somebody wants to come along and do some development there.

But for me to do it right now with interest rates at 8%, it just doesn't make sense.

And you have the threat of rent control coming over.

That's a serious situation.

I told the city council, "I think you have the wrong medicine for the wrong disease."

And just by putting rent control in isn't going to do it.

In fact, their proposal will allow any developer to raise rent every year for 4% every year.

I mean, if the government officials wanna do something, lower the taxes.

- What do you say to people on the other side of the issue that we know we have a housing crisis in Rhode Island, and the cost of housing in Providence used to be relatively inexpensive, now it's very high.

What do you say to those advocates of rent control that that is a necessary measure to relieve pressure on the escalating price of housing?

- Well, it has nothing to do with the rents right now.

People raise their rents.

A lot of landlords raise their rents if somebody moves out in that interim period or if taxes go up or utility rates go up or other expenses like that.

The problem is supply, and how are you going to build more supply?

And right now you have people that have mortgages of 3 and 4%.

Once you sell your house with a 3 or 4% mortgage, and you wanna buy another house, you're gonna have a 7 or 8% mortgage.

So that's why there's not a lot of housing for sale.

Now, the state has a $125 million bond issue.

Where is that money being spent?

To me, you don't spend $1 for a dollar.

You take that $125 million and you try to parlay it so you can get a half a billion dollars to a billion dollars of help to be able to create more housing, maybe to reduce interest rates for people and maybe for a two or three-year period, and try to help subsidize that.

But politicians aren't the right people to come up with those ideas.

Home builders are, the people that are on the field out there.

I had Jerry Zarrella on my TV show the other day, and he was talking about impact fees that take place, and the bureaucracy that takes place.

And he says, "All those fees, they go on to the buyer."

- But the market has resulted in this housing crisis where the number of housing starts plummeted in the 1980s, and that led to the sharp escalation of housing prices that has locked out many people of home ownership now.

- Well, 1980s, I thought you had some pretty good housing.

In fact, in Providence, we helped reduce interest rates for people in Providence through some federal monies that we worked out in arrangement with Rhode Island Housing and Mortgage.

But right now, interest rates are a problem.

The pandemic caused more economic harm to this country, really to the world economy than anybody really knows because the supply of getting materials, and the war in Iran going on, the price of gasoline.

- Let me stop you there, Joe 'cause we're getting short on time, and I wanna ask you a few other questions.

You wear a lot of different hats.

You've been involved in politics for a long time.

You're the Democratic Party's National Committee man, and you're a supporter of Helena Foulkes.

- [Joe] Yes.

- Why do you think she's a better choice for governor than Governor McKee?

- I think the state, it'd be good to have somebody new to come in to make some changes.

If the governor gets reelected, he would be governor for 10 years.

You know, no person's ever been governor for 10 years.

There's only been four governors that have served eight years.

There was Denny Roberts, there was Joe Garrahy, that was Don Carcieri and Lincoln Almond.

So 10 years is kind of a long time.

I think it's time that the governor take a step back, get off the stage.

Unfortunately, he doesn't wanna do it voluntarily, so it's up to the voters.

And I think Helena's business experience, and fresh outlook on how government should be developed is something that Rhode Island needs.

- You mentioned your concern about rent control.

How do you see what is at stake in the Providence mayoral race between Brett Smiley and David Morales?

- Morales is a very smart young man.

But Providence, and any city, ideology should not really get in the middle of practicality.

You gotta plow snow, you gotta clean the streets, you gotta protect your citizens.

You can't come out and say, "Defund the police."

You can't make the police the enemy.

The police are there to protect the people.

- Morales has walked back his statement from a couple of years ago about defunding the police.

- Why did he say it in the first place?

And if that's your instincts, that's a very concern to me if it is.

So you're gonna be very basic over there.

Rent control, you're gonna see development stop.

You're gonna see an expansion of the tax base erode.

It's not gonna continue 'cause developers are gonna look at Providence and say, "We don't wanna go there."

Developers in the real estate community is not the enemy of the city.

The city's gotta make the real estate community their ally, their friend 'cause they are the ones that can help grow the tax base so you have more monies to fix some of the problems that we have.

Now, Smiley, I think he came in as a change agent, somebody who wanted to bring reform, and he's continuing to do that.

They're gonna have a very spirited election.

We'll see who wins.

- We've gotta leave it there.

Former Providence Mayor and head of Paolino Properties, Joe Paolino, thank you very much for joining us.

- Thank you, Ian.

(lively music) - Chris Marsella, head of Marsella Development, welcome to "One on One."

- Thank you, Ian.

Pleasure to be here.

- You and your firm have been involved in development in and around Providence for many years.

You've seen the ups and downs.

How do you see the next phase in the evolution of Downtown Providence?

- Well, it's funny, I have certainly been a part of it for about 25 years but you'd have to go to my dad, who is still around and still engaging with us almost on a daily basis.

But, you know, his history going back to 1970s, and all of the changes that took place in the city, anytime we talk about struggles, and things that we think need to take place, all he says is like, "Look how good you have it.

You should have seen what it was like in the '70s and 80s."

So the amount of things that have happened here in the last 50 years in Downtown give me incredible amount of excitement and energy about what we can make happen in the next 10, 15, 25, 50 years.

I mean, the base work has been incredible.

- And one of the big challenges facing not just Providence, but a lot of American cities is bouncing back from the pandemic.

There's a lot less foot traffic.

There's a slumping value of office towers.

What needs to be done to bounce back from that more effectively?

- Yeah, absolutely.

I mean, I think this is not an issue that's just affecting us here in Providence or in Rhode Island, it's really across the region, across the country, and across the world.

What is a real unique opportunity that we have here, especially I think when we look at Downtown, is our stock of buildings that we have and the period in which they were built in in the late 1800s and throughout the early 1900s.

I mean, they really built them to last.

And even though they were built as office buildings primarily or mills or different structures that we have around the city, they retrofit really well into residential.

So we have a very unique opportunity with our really Downtown core, as well as the neighborhoods around it to take advantage of some of these buildings that are being underutilized as office as people work differently and reimagine as residential and/or other public spaces that could take place.

- The cost of that conversion can be high.

Are new tools necessary to help do more of that?

- Yeah, absolutely.

I mean, I think, first of all, we need a toolbox and we need tools in that toolbox.

And different administrations over the course of 20 plus years have implemented those incentive programs.

Commerce RI or Economic Development Corporation of Rhode Island, whatever, you know, that entity over the years has been called, has created a slew of opportunities for redevelopment of those buildings.

I think the most successful and proven tool has been the Historic Tax Credit.

Unfortunately that just sunset this past legislative season.

I'm really hoping they rethink that and fund a program that matched with a federal Historic Tax Credit program creates an amazing opportunity and really is the only way developers or even, you know, public entities have an opportunity to come in and address some of these buildings, which have their own host of challenges.

But that is a program that absolutely needs to come back and it's been proven to work incredibly successfully here across the state of Rhode Island over the course of 30 years.

- Chris Marsella, your father and your company helped spearhead the redevelopment of Capital Center, including One Union Station, the former home of our radio station.

More recently, you've overseen the development of Track 15.

How does the response to that meet with your hopes and expectations for that?

- Yeah, well, just to note, none of that would've been possible in any of its phases over the course of 40 years without the Historic Tax Credit program, including Track 15.

So another way to show real product and real evolution of five building sites in the center of Downtown Providence that was once one of the busiest train stations in the country.

A lot of people don't even know Union Station that was built in the 1890s, and there were train tracks that came through there, hence our vision to give a nod to that with Track 15, the food hall in the center of it all now.

But really, yeah, my dad's involvement there going back to the late '70s has been taking what was a very unique opportunity with the relocation of the train station to what is now the Amtrak station and the redevelopment of Capital Center, and re-imagining what the train station could be into a mixed use of office, hotel, hospitality, and now a food hall, which was the part that I've been very much involved with obviously over the course of five plus years.

Feels longer, my God.

But it really-- - And how does the response to that food hall compare with what you had hoped for?

- We just passed like the million mark of visitors, which probably occurred over the World Cup.

We're not able to know exactly how many people walk through the front door, but we're able to see through number of orders, and think of, you know, the number of couples, their families that come in there.

That is just incredible that from what was in the center of Downtown after Capitol Grille moved across the street, a really quiet area, your office is down there, the radio station was down there.

I mean, it just felt pretty depressing just three years ago.

So the fact that we have created this space that people have responded to, especially young families, I mean, it is incredible anytime of day you go over there, seven days a week, people of all ages, but particularly kids and grandparents and their grandkids, or families of all types, plus visitors from all over the world, especially like we just had with the World Cup.

It has exceeded our expectations, and I think it's exceeded the public's as well.

I mean, people are constantly coming up to us and thanking us.

My dad spends a lot of time there walking around and meeting people, and I think of all the things he's been involved in, in 50 years, it's the proudest thing he's ever done.

- There's a big parking lot behind Track 15 that can be good for customers, but I wonder if you're giving any thought to redeveloping that parking lot into something else.

- Absolutely.

Its highest and best use should not be a parking lot, a service parking lot in the center of Downtown.

We are always looking at what could potentially be there, and I think that gets back into what is the use?

You're probably not building a corporate headquarters there like we probably would've thought about 10, 15 years ago.

But if like Google wants to come and open up their office in Providence, please give me a call.

We'll be happy to look at it.

But I think probably it's a mix of hospitality, hotel, and certainly residential.

And so we're always looking at what that might look like but also when the right timing would be.

And we're open to speaking with other developers and other firms from outside the region that look at Providence as a good place to invest.

So certainly it's on the top of mind always.

- Chris, your company is part of a consortium that is planning to construct a new RIPTA bus hub.

Where do things stand with that?

- That has been in the works for, I think, going back since 2014 when there was a bond referendum passed.

This feels like the longest project ever, but anytime when you're talking about big public-private partnerships, they take a long time.

We have Gilbane Building Company and Gilbane Development Company, as well as Plenary, as well as my firm and a host of others, a consortium, as you said, that have been looking at this.

Where we are today is a site has been identified.

It's the Station Park site next to the train station that went through a lengthy public engagement process to identify the right site for it.

Who would've thought?

Obviously connecting it, reconnecting it to the train station, and having a true intermodal site would make the most sense.

Right now they have just received funding from the feds for I think it was about 25 million that was just announced to continue that planning process.

So the next step along the lines would be design to see, with the public's involvement and RIPTA at the lead, to figure out what the final product should look and feel like, and how it serves best Rhode Islanders and transit riders.

So stay tuned on that.

Right now it's really in RIPTA's hands on the next step.

- What is the timeline for that design process?

- If you had to guess, I would say probably 18 to 24 months, but again, I would defer to RIPTA on that.

That process is really just starting.

- You mentioned how it can sometimes be a challenge to get people from outside Providence to come into the city.

If they go to Track 15, they have a good experience and they enjoy it.

But what do you think needs to be done to counteract the perception and the concerns that some people have about safety in and around the area involving Kennedy Plaza?

- Yeah, you know, perception is reality.

The facts speak otherwise.

I mean, the city has really never been safer.

It has never looked more beautiful.

I think investment and the type, of particularly in Downtown, when you look at the 195 Parks and the pedestrian bridge, and, you know, what we've done at Union Station, the success of the fan zone during World Cup I think showed off really just how amazing public activation works in the center of Downtown.

I think you just gotta get Rhode Islanders to have some hometown pride and be willing to drive those 15 or 20 minutes into the city where parking is ample and available to enjoy what is such an amazing, unique environment with so much to offer.

I mean, we have big city vibe with all of the amenities and everything.

And just like when you had the Tartan Army here, and you had thousands of Scottish running around the city and the state really in kilts who had also enjoyed Boston, every single one of them I talked to could not say enough about how much they loved Providence and Rhode Island, a place that many of them had never even heard of.

- You talked about activating the space where Track 15 is now from what had been more dormant a few years earlier.

What would it take to activate Kennedy Plaza?

It seems like a vacuum right now.

Concerns about safety.

What would it take to make that a more vibrant area with more activity?

- Well, I think the reason for the entire mission and planning around the bus hub is that Kennedy Plaza does not work for that space.

It is overwhelmed by the public transit process or, you know, buses, as well as the fact that you have riders standing in the elements, whether it's a really hot, sunny day or pouring rain or snow drifts.

I mean, that is not a modern transit system or anything to be proud about in terms of the sort of crown jewel of the bus stop across the state.

So that is a reason to rethink that, find a location that works, and connect it to other modes of transportation, like the train station.

Then you have this opportunity with the city, and with the public, and all different versions of stakeholders across the city to think about who owns the space.

The City of Province owns that Kennedy Plaza where it happens to rent it.

But once we know there's a timeline for when that new transit center will be built, then I think the city can start planning on what do we want it to be?

What are best practices from around the world for public spaces like that?

And so I welcome that opportunity and I can just imagine the charrettes and engagement from the community to determine what that final space looks like.

But we're doing a little bit of it now when you see the skating rink, and how they're activating that.

And, you know, anything that brings kids and brings families is a win in my mind, and we're seeing that at Track 15.

So anything that we can help as an abutter or just seeing what works.

You know, programming, programming, programming.

And that's a wonderful opportunity and a beautiful space.

- Speaking of long-running challenges, probably the longest running development challenge in Providence is the Superman Building.

Do you have any confidence that project of making it residential is ever gonna come to fruition?

- You have to have confidence that it will come to fruition.

(Chris chuckling) Yes, I do in the fact that there was just really important movement from again, the feds.

This is how these projects happen.

They take all the pieces, all of those tools in the toolbox, and one of them being a federal program through DOT that allows for more attractive financing, and they have been working on that for a long time.

It was just announced a few months ago, maybe in the last 60, yeah, two months that it is past the credit approval process.

And so they fully vetted the financials, and plan for the project, and that has gone past that first major hurdle.

My understanding, I think it's the only project in the United States to have actually passed that point.

So that says a lot.

I know there's concerns about politics in Washington, D.C., and Rhode Island not necessarily being on the top of the list for funding, but Rhode Island has proven to do very well when it comes to USDOT grants, this being one of them.

So we have to remain hopeful and use every tool at our disposal to see that thing over the finish line.

- All right, we've gotta leave it there.

Head of Marsella Development, Chris Marsella, thank you so much for sitting down with me.

- Thanks for having me.

- Thanks for watching "One on One" with me, Ian Donnis.

You can find all of our past interviews on the YouTube channel for Ocean State Media.

And if you love Rhode Island politics, check out my TGIF column, posting by 4 PM every Friday at oceanstatemedia.org.

We'll see you next week.

(lively music) (lively music continues) (lively music ending)