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2013
Jan 9

New York Times: Historic Power Plant in Providence, R.I., May Get Another Chance at an Encore

Click here for link to NYT article.

Ryan T. Conaty for The New York Times 

A power plant Known popularly as Dynamo House — the name for the failed project begun in 2007 by Baltimore-based developer Struever Brothers Eccles & Rouse — the building is a former power plant on the National Register of Historic Places, with distinctive arched windows and thick brick walls.

Until recently, plans called for a 55,000-square-foot Rhode Island history museum that would be affiliated with the Smithsonian Institution in a portion of the old power plant. The Heritage Harbor Museum was to showcase Rhode Island’s diverse ethnic and cultural history and was the cherished dream of more than a dozen local cultural organizations.

But now that dream and the future of Dynamo House itself are in flux.

The property sits tangled in litigation. In recent weeks, the head of the nonprofit group that partnered with Struever Brothers and was overseeing the museum project said a museum in the former power plant was no longer feasible.

Museum economics have changed considerably in the last five years, said Ken Orenstein, interim executive director of the nonprofit group, Heritage Harbor Corporation. “The building plan is not viable,” Mr. Orenstein said.

At the same time, a new investment group named Dynamo House Funding L.L.C., which is affiliated with the Baltimore-based Harbor East Development Group, has taken over Struever Brothers’ position in the property by acquiring the developer’s mortgage with Citibank. It plans to secure the building and make it fit for a different type of development, Mr. Orenstein said.

According to James S. Bennett, director of economic development for Providence, “serious” possible tenants have looked at the building in recent months, though he declined to say who they were. Sources knowledgeable about the site said that Brown University might be interested since Dynamo House is in the city’s Jewelry District, where Brown has expanded in recent years.

Mr. Bennett said the city had made finding a new use for the building a priority, and would not consider the alternative: “It’s not going to be torn down,” he said.

The new group is in the process of trying to clear the property’s title, which was muddied by mechanics’ liens after Struever Brothers left Providence in 2009, leaving several subcontractors unpaid. It also must remove an easement on the property, which states that a museum must be built on the site, Mr. Bennett said.

To that end, negotiations are under way between Dynamo House Funding and Heritage Harbor over the value of the easement, and efforts are being made to reach out to the subcontractors in Rhode Island to whom Struever Brothers owes money. According to records in Providence Superior Court, a dozen or so individuals and companies contend that Struever Brothers never paid them for work they did on Dynamo House.

“It was a big mess,” said Joseph J. Reale Jr., a Providence lawyer who represents two of the subcontractors seeking payment.

Struever Brothers originally planned a $137 million conversion of the power plant, including the development of a “five star” waterfront hotel. In a 2007 agreement, Heritage Harbor gave Struever Brothers title to the property in exchange for development of the museum space.

But, walloped by a sinking economy, Struever Brothers abandoned the project. Construction had started in 2007, but didn’t last long; for the last four years, the property has been vacant and exposed to the elements.

C. William Struever, a principal partner in Struever Brothers and the company’s founder, said the Dynamo House project was “very sad for me” and a “heartache” because his company could not complete it. He said he was happy the new entity would step in to make the property usable. He said he was optimistic for the city and would do what he could in his limited capacity to see Dynamo House rehabilitated.

A prominent East Coast developer that specializes in the adaptive reuse of abandoned industrial buildings, Struever Brothers had a number of projects under way in Rhode Island in 2007, in addition to Dynamo House. These included mill renovations in the town of West Warwick and a $300 million mixed-use project in Providence.

But by 2008, when work stopped at Dynamo House and at other Struever projects here, it became apparent that the developer was experiencing financial trouble. Eventually, Struever Brothers defaulted on nearly $6 million in loans. In Providence, the company laid off workers and shut down its office in 2009.

Some people say they were mistreated by Struever Brothers, “and other people say they did some good things for the city,” said John Sinnott, who was let go from his position as Rhode Island director of operations for the company in June 2008.

Before the company’s fortunes soured, Struever Brothers had successfully rehabilitated several blighted properties in Rhode Island, including three former mill buildings in Providence. In the mid-2000s, Struever Brothers’ Web site estimated its investment in the state to be $500 million.

A 2008 change to Rhode Island’s historic tax credit program, which provides a financial benefit to developers of historic properties, created a shortfall in the project’s funding.

Mr. Struever once estimated the gap at $9 million. Struever Brothers’ lender on a $23 million construction loan, Citibank, stopped making disbursement on the Dynamo House project in 2009.

Advocates for the museum said they understand that the recession created unforeseeable problems for Struever Brothers, though they wish the developer had been more forthcoming, and sooner, about its financial difficulties.

“I don’t agree with the way they walked away from the project,” said Patrick Conley, a Providence lawyer and member of Heritage Harbor’s board.

The nonprofit has had to redefine its goals because of the aborted Dynamo House project, Mr. Conley and others said.

Now, instead of building a museum, it will create a foundation to further its mission of educating Rhode Islanders about their history.

Mr. Struever has opened a new development firm in Baltimore, called Cross Street Partners, which won a $3 million grant from the state of Maryland in 2011 to convert a former printing plant in Baltimore.

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