Economics, luck aid Woonsocket zoning plan

West Warwick, meanwhile, has been unable to take advantage of a law authorizing the town to develop a special reduced-tax commercial zone.

Friday, January 21, 2005

BY CYNTHIA NEEDHAM
Journal Staff Writer

WOONSOCKET -- Municipal Economic Development zones: too good to pass up, or too good to be true?

It depends on whom you ask.

While plans for a reduced-tax retail MED zone gain momentum in Woonsocket, a similar proposal in West Warwick has stalled for nearly three years.

Officials in both communities agree that MED zones have the potential to jump-start ailing economies, but success requires a serendipitous mix of hard work, economics and a dose of luck.

In 2002, the General Assembly passed a law authorizing West Warwick to develop a special reduced-tax commercial zone, where shoppers pay just half of the state sales tax, slashing the rate from 7 percent to 3.5 percent, for the first 10 years of operation.

And instead of the tax revenue going to the state, it's funneled directly to the city, to be used for economic upgrades in the designated MED-zone area.

The law was intended to spruce up West Warwick's blighted Arctic center, but was later expanded to include other distressed communities with populations below 50,000, namely Woonsocket and Central Falls.

Within days of the new legislation, West Warwick had a developer lined up and seemed poised to take advantage of the economic opportunity.

But when that developer fell through and the cost calculations showed a potential bill of nearly $100 million just to acquire land needed for the project, the pace slowed nearly to a halt in early 2004.

Meanwhile, Woonsocket was scrambling to make a MED zone work in that community. Joel D. Mathews, the city's director of planning and development, said it, too, encountered "prohibitive" cost projections when first considering a site near the Cumberland line.

But timing and a bit of luck were on their side. Around the time the West Warwick project conked out, a North Smithfield retail development project known as Dowling Village was making headway on property abutting Woonsocket.

Woonsocket Mayor Susan D. Menard said it "suddenly became obvious": if the city moved its proposed MED zone to the abutting site, it could serve as an extension of Dowling Village, while reaping the economic benefits that come with the tax-relief zone.

Within months, Dowling developer Brian Bucci of Warwick-based Bucci Development was on board for the projects in North Smithfield and Woonsocket and had created a sweeping plan for a series of "big-box" stores.

And though it has recently encountered some resistance in North Smithfield, the plan no doubt maintains momentum. Earlier this month, Woonsocket's City Council entered into a master development agreement with Bucci and is expected to amend the city's comprehensive plan next month.

By most accounts, the city is well on its way to making the state's first MED zone a reality.

Why such different fates for projects so similar? Menard and West Warwick Town Administrator Wolfgang Bauer say it comes down to the age-old reasons: location, location, location.

As proposed, the Woonsocket zone will be built on raw, wide-open land with the curious fortune of being underdeveloped, while still bordering Route 146, a major access road.

That makes for dramatically reduced startup costs when compared to West Warwick, where dozens of homes, commercial space and apartments must be bought and razed to make way any for large-scale retail development, Bauer said.

The West Warwick location has presented other problems as well. The legislation, originally written for that town, includes specific street parameters of where the zone may be situated, making it impossible for planners to pack up and move to cheaper property. When Woonsocket and Central Falls were later added, the legislation did not limit where the zone could be located.

And in an age when big-box stores seem to pop up faster than anyone can count them, there was also the issue of market saturation.

West Warwick's proposed MED zone would be located adjacent to Warwick's Route 2, a sprawling stretch of retail development that includes dozens of big-box stores.

"Why would I want to go off Route 2 to shop for the same kinds of things I can get there," Bauer asked. "You have to ask how you can package this zone so it can perpetuate itself after the 3.5-percent sales tax comes off in 10 years."

In the Blackstone Valley, the market is wide open for big-box development, with residents now traveling to Smithfield or Massachusetts for most retail needs.

Still, Bauer promises that the MED-zone vision is still alive in West Warwick. The town has hired a planning company to help consider design plans and a yet-unnamed developer may be interested in the project.

But they lag behind Woonsocket, which hopes to secure retailers and begin construction within the next year and a half.

Menard, though proud of her administration's work, is quick to acknowledge that luck no doubt played a hand in the project's apparent success.

"A lot of it is about luck and about being in the right place at the right time," she said. "But it's also about taking chances. If you have an opportunity like this, you have to grab it. You're not going to get anywhere development-wise if you sit back and settle for the status quo."