By JOHN HOWELL

A once neighborhood of about a dozen single-family homes known as Hillsgrove South that transitioned into airport parking could become a residential anchor to the long envisioned City Centre between the airport and Jefferson Boulevard to the west. 

On June 8, the Planning Board voted to recommend council approval of Skydra Development LLC’s application to rezone the 6.5 acre site alongside the onramp to the Airport Connector from Post Road from its current Gateway to Intermodal zone. The board also favored Skydra’s plan to build two four-story 100-unit apartment buildings on the property. Skydra is a subsidiary of Schiavo Enterprises of Dedham, MA.

The zone change plays a role in the viability of the development, especially in these inflationary times, Robert Schiavo, company owner, said in a recent interview. The Intermodal Zone allows for the developer to apply for a delayed schedule in setting the appraised value of the property for city taxes for 15 years provided the project is valued at $5 million or more. 

Asked about the challenges of projecting the cost of the development with material and labor prices rising almost daily, Schiavo cited the tax stabilization provision of the intermodal zone as providing a financial safety net. If granted, the property would be appraised at its undeveloped value for five years. On the six year 90 percent of the assessed value would be exempted for the basis of taxes. That percentage would drop by 10 percent each year until the 15th year when taxes would be based on the full assessed valuation.

“Anytime you can get that assistance it’s going to help, any thing is going to help,” he said.

Schiavo put the projected cost of the development at $40 million. Planned are 63-Studio units, 71 one-bedroom units and 66 two-bedroom units. The two L-shaped buildings would have a center courtyard in addition to a tenant clubhouse with meeting and exercise facilities and a pool. Schiavo described the units as energy efficient with granite countertops, stainless appliances and high ceilings.

He said from discussions he’s had with city planners and the mayor apart from his own observances, he is keenly aware of the demand for housing. He imagines the units being occupied by young professionals looking to take advantage of the proximity of the airport, MBTA service and easy access to Interstate Routes 95 and 295. He also thinks the units would appeal to empty nesters looking to downsize and sell their homes. He was unable to pinpoint rental rates at this time but estimated they could be in the range of $1,350 for a single bedroom to $2,000 a month for a two bedroom.

While the intermodal zone would allow for a development 75 feet high, enough for six story buildings, Schiavo said the company purposely elected not to maximize the development that could have required exemptions to setback and parking requirements.

The company also took its time with environmental assessments and an analysis of the site before submitting an offer to buy the land from the RI Airport Corporation that acquired it from LAZ Parking ostensibly to eliminate them as a competitor to airport parking. A condition of the sale to Schiavo is that the site not be used for airport parking.

The Rhode Island Airport Corporation bought the LAZ lot for $3 million in 2016 and sold it to Skydra Development for $3.3 million.

 Regardless of whether Schiavo gains a zone change and is granted a tax stabilization provision, the purchase returns the land to the tax rolls.

Residential development in City Centre, in fact development generally, has been slow in coming since being envisioned as the “downtown” to Warwick with a mixed use of residential, offices and retail. 

Soon after zoning was enacted the city administration gave Bullfinch Companies, a Massachusetts firm, the exclusive authority to assemble large tracts by buying small parcels which they would market to developers.  Small business owners rejected what they considered ridiculously low offers and -- with no promises of development -- the city wasn't prepared to seek condemnation to make it happen. Development happened with Joseph Piscopio leading the way with demolition of the Malleable Iron Manufacturing operation on the corner of Kilvert Street and Jefferson Boulevard as the site for the Hilton Garden Inn that opened in 2005. The office of the former manufacturing operation was saved and is the Iron Works Tavern today. With construction of the Interlink and tax incentives it was thought development would soar.

Michael D'Ambra of D'Ambra Construction gained city approval to convert the site of his construction company and asphalt plant on Jefferson Boulevard into a stretch of buildings that included office buildings, a hotel, retail and parking.  It was years before a hotel -- the Hyatt with a connection to the interlink -- was built. Across Jefferson Boulevard was the former Elizabeth Mill and the complex occupied by Leviton Manufacturing until it moved most of its operations to Mexico. 

Developer Michael Integlia acquired the property spinning off the warehouse to Dean Warehouse with the prospect of transitioning the mill building into offices and possibly residential. With no takers and after several years when the city urged for the preservation of the mill building, Integlia came up with plans to replace the mill with a steel and glass office building that looked to be the crown jewel to City Centre. The mill came down, but there wasn't the demand for the office tower. The site remains vacant.

Integlia sold off a portion of the property to Centerville Builders that is in the process of 19 building single-family homes on Graystone Street off Kilvert Street to be followed by the development of 56 townhouse condos on Kilvert Street. Meanwhile, in response to the hot housing market, Integlia has approvals to move ahead with an apartment building on nearby Metro Boulevard.

Mayor Picozzi said Tuesday he had issues with more intensely developed proposals for former Hillsgrove South. He said he favors the extension of the intermodal zone because it abuts the intermodal zone. He finds it odd that the parcel was not zoned intermodal from the start.

As for the tax stabilization provision that would phase in taxes, Picozzi understands how it will benefit the developer although it will be years before the city realizes the full tax revenues as based on the assessment.

In an email exchange City Planner Tom Kravitz outline the intended purpose of the gateway and intermodal zones.

“Generally speaking, those two zones allow for urban scale-type growth (i.e., taller buildings, with higher density and shorter dimensional setbacks). Those zones exist in an area of the City known as City Centre where the Comprehensive Plan promotes urban development. They also provide a smaller parking ratio in support of the location of those zones being closer to the interlink, public transit and available spaces in the parking garages at City Centre.”

Kravitz said volatility of the construction market could suppress construction.

“Developers are telling us that the various tiers of the subcontracted construction community are trying to compensate for this instability by estimating high bid estimates within the private building industry.  Interest rates on mortgages aside, when construction cost meets upper end rental income estimates, we’re apt to see a slow down on the rental side along with land use speculation and local Planning Board activity,” he wrote.

Kravitz also opined on the housing market and the impact of inflation.

“Rhode Island’s lack of housing production is only creating a higher demand for quality housing.  We’re seeing this in the rental market which can demand upwards of $1,800 (and I could be undercutting that estimate) for a basic two bedroom. Prior to the Federal rate adjustments we’ve seen three to six months ago, which are now resulting in 30 yrs. mortgage rates at 5%+ even for those with good credit scores, these projects all came in due to that market demand. Keep in mind too, rental apartments will still be desirable due to strong demand and their insulation from mortgage rates.”

Schiavo is hopeful of gaining council approval of the rezoning and completing the permitting for the project this year and starting construction in 2023. He estimated it would take 20 to 30 months to build.

EDITOR'S NOTE: Since publication of this story it has been brought to our attention that the purchase of the 6.5 acres is contingent on approvals of the project. The Rhode Island Airport Corporation has approved the purchase price of the site.