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IN PROGRESS: The Residences at The Westin

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Convention board weighs proposal to put Westin on the market

Day of decision

BY ANDREA L. STAPE

Journal Staff Writer | August 26, 2004

The Rhode Island Convention Center Authority is expected to decide this morning if it will put the state-owned Westin Providence hotel up for sale.

The board, which oversees the hotel and the convention center, is set to decide if it will accept proposals from developers interested in buying the Westin and developing the empty piece of land next to it.

The panel will also decide whether to look for a commercial real estate broker to market the Westin nationally.

These are decisions the board has been comptemplating for close to a year, according to David A. Duffy, chairman of the authority. But with interest in buying the Westin rising along with the health of the hotel industry, and debate about a state-subsidized downtown hotel resolved, Duffy said it's the right time to seriously entertain offers.

"This is not coming out of the blue [to the board] . . .," said Duffy. "At the end of the day, I hope to have approval of the two . . ."

If the board agrees to start taking purchase proposals, Duffy emphasized that it wouldn't mean that the state is definitely going to sell the hotel.

"We want to see what the market has to offer," he said.

If the authority agrees to accept offers, it will consider only development proposals that meet certain criteria.

Any buyer of the Westin would also be required to build a tower with at least 200 hotel rooms on the adjacent land, said Duffy.

The authority will also accept proposals from hotel developers interested only in developing a hotel on the adjacent parcel. In that case, the state would continue to own the Westin.

Also, Duffy said the authority would be open to having condominiums in the tower next to the Westin, but it would also have to contain at least 200 hotel rooms.

"I believe it's incumbent upon the authority to take a leadership position, to provide more hotel rooms to provide for convention demands," said Duffy. The authority has said for years that the convention center could attract larger events if the city had more hotel rooms.

THE LAST TIME the Convention Center Authority solicited proposals for the hotel was in 1998. But the state didn't receive any offers that were high enough to consider seriously, said James McCarvill, executive director of the Convention Center Authority.

Now, though, the authority is expecting a different response.

Already, the authority has received a dozen unsolicited inquiries from national hotel developers interested in buying the Westin, Duffy said.

"Because there's a level of interest, we need to take this step [and officially request offers] or go on record to say, 'No, we're going to hold it for a while,' " said McCarvill.

Now that the controversy over a publicly subsidized downtown hotel has been resolved, the authority expects greater interest from developers. Earlier this year, the General Assembly agreed to give former state Rep. Vincent J. Mesolella Jr. $20 million in tax credits to build a hotel across the street from the Convention Center. But last month Governor Carcieri vetoed the decision, and the General Assembly decided not to vote to override the veto.

Three hotel developers with local ties said in July that they were ready to submit proposals to build a hotel on the land adjacent to the Westin -- if they didn't have to compete with a publicly subsidized hotel.

Yesterday, one of the developers, Arnold "Buff" Chace, said his company -- Cornish Associates -- would still be interested in submitting a proposal to the authority to develop the land next to the Westin.

In addition, the state's contract with Starwood Hotels to manage and run the Westin expires next year. The hotel could fetch a higher price if it's not encumbered with a five-year management contract, said McCarvill.

Any decisions the authority makes today will not ultimately determine the fate of the hotel -- just open the doors for serious offers, he said. It's a move the governor has endorsed.

"GOVERNOR CARCIERI has consistently said that the state should not be in the hotel business," said Jeff Neal, a spokesman for Carcieri.

Still, selling the hotel would be complicated by $285 million the state owes on it and the convention center. In the early 1990s, the state issued $354 million worth of bonds to build the two facilities. Profit from the hotel, which had a net income of $8.9 million in fiscal 2004, is used to service the debt each year. The state still spends about $17 million a year subsidizing the hotel and the center.

Selling the Westin alone might not generate enough money to pay off all the outstanding bonds, said McCarvill. And that's why the authority is requiring any buyer to build the 200-room tower next door, he said. The additional room tax and income tax will ensure that the state has additional revenue to help pay down any remaining debt, he explained.

"It's not a simple decision because of the cash flow from the hotel," said McCarvill.

The Convention Center Authority's board consists of David Duffy, chairman; George Nee, vice chairman; Joseph Judge, treasurer; Paul MacDonald, secretary; Brad Waugh; Dave Gavitt; Dale Venturini; and Jerry Massa.

From The Providence Journal

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It's official: Westin Providence up for sale

The Convention Center Authority says it already has interested bidders for the state-owned four-star hotel and tree-lined parcel next to it.

BY ANDREA L. STAPE

Journal Staff Writer | August 27, 2004

PROVIDENCE -- One local hotel developer stepped forward yesterday to express interest in buying The Westin Providence and another said it would like to build a new hotel on the land next to the Westin.

The Rhode Island Convention Center Authority, at a monthly board meeting yesterday morning, agreed to entertain bids on the downtown hotel and the tree-lined piece of land next to it -- effectively putting the state-owned four-star hotel on the market.

The authority said it's already had at least a dozen informal inquiries about the Westin, but yesterday two local hotel developers were the first to say they will put official hotel bids or development proposals on the table.

Carpionato Properties Inc. of Johnston has "always had an interest in the Westin," said Jon Kokot, executive vice president for development for Carpionato. The company is also interested in putting a hotel tower on the park next to the Westin, he said.

The Convention Center Authority will only entertain bids for the Westin if the bidder agrees to build a 200-room hotel adjacent to the existing hotel. Developers can also submit proposals to build a 200-room hotel on the open parcel, without buying the Westin.

"Ideally, I would like to purchase the Westin and the parcel, and [build] a limited-service hotel [one without a restaurant or conference space]," said Kokot. He said he "fully expects" the company to respond to the request for bids.

Also, Cornish Associates, run by Arnold "Buff" Chace, said again yesterday that the company was interested in building a hotel on the parcel next to the Westin. Last month, Cornish wrote a letter to the authority stating that the company was ready to submit a proposal to build a 150 all-suite Residence Inn.

Earlier this week, Chace said Cornish might also be interested in the Westin itself, but only if the hotel's operations and finances were made available to potential buyers first.

The Convention Center Authority, which has been contemplating putting the hotel on the market for about a year, said yesterday that a number of factors were in place that made it an attractive time to put the hotel up for sale. With low interest rates fueling sales in the hotel industry and interested parties already knocking on the door, "everything is coming to a head here," said David A. Duffy, chairman of the authority.

Also, the authority is eager to get more hotel rooms in Providence -- which is one reason why it is requiring the Westin buyer to put up a new hotel. More rooms, it says, will allow the convention center to book much larger conventions and meetings.

"It would allow us to, maybe, sell 450 other potential clients [for the convention center]," said Duffy.

Duffy, however, stressed to the board that putting the Westin on the market does not mean the state has to sell it. Selling would require getting the right price, and a developer who is willing to meet all the board's criteria, he said.

The authority yesterday strengthened the criteria developers must meet if they are interested in bidding on the Westin. Besides the requirement to build a 200-room adjacent hotel, companies and developers will be required to set aside a certain number of hotel rooms for use by people booking the convention center.

In addition, the authority agreed to start accepting proposals from hotel consultants. A consultant will be hired to help the board analyze any hotel offers that come in. The authority plans to issue that request for proposals either today or Monday, said James P. McCarvill, executive director of the authority.

The board expects to issue the request for hotel and development proposals early next month, said McCarvill, and is expecting significant interest both regionally and nationally.

One local commercial real-estate developer, C.B. Richard Ellis in Providence, said yesterday that it would be interested in getting involved on the hotel development proposals.

"Obviously we're interested in what goes on with the Westin Hotel and the adjacent land," said Charles T. Francis, president and partner at C.B. Richard Ellis. "We would go to our [national] hotel group and talk to them about the request for proposals. We're anticipating it."

The authority, though, declined to say how much it thinks the state can get for the hotel. The state borrowed $354 million to build the Westin and the convention center in the early 1990s and still owes $285 million. If the Westin is sold, the purchase price would be used to pay down the debt.

It is a strong market for hotel sales, with developers and hotel companies eagerly buying and rebranding hotels, said Dennis Nessler, managing editor of Hotel Business, an industry trade publication in New York.

"There's a lot of money chasing deals right now," said Nessler. "I also know that Rhode Island is one of the high-barrier to entry [hotel] markets -- hard to get into -- and that might help to explain some of the interest."

Since it's difficult to find real estate for a hotel in Providence and difficult to develop hotel properties in the area, Nessler said that when something comes on the market, it can attract a significant amount of interest.

If the authority does decide to accept a bid for the hotel -- it is not obligated to -- it must also offer Starwood Worldwide Hotels & Resorts the chance to place a bid on the hotel. Starwood is currently contracted to manage and run the hotel, and until its contract expires next May, Starwood is allowed to counter any hotel bid, McCarvill said.

"Starwood has first right of refusal on any bid on the Westin, if it happens before the expiration of [its] contract," McCarvill said.

From The Providence Journal

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Westin generates interest

The Rhode Island Convention Center Authority has started sifting through proposals to buy the hotel.

BY ANDREA L. STAPE

Journal Staff Writer | November 24, 2004

PROVIDENCE -- Fifteen international, national and local companies have officially offered to buy the state-owned Westin Providence and build a new hotel tower next to it.

The Rhode Island Convention Center Authority, which oversees the Westin, put the four-star hotel on the market in September. The authority started officially considering the bids yesterday during a closed session of its monthly board meeting.

The names of the suitors have not been released to the public. The authority doesn't want to lose any negotiating advantages by telling the companies who they are vying against for the hotel, according to James McCarvill, executive director of the Convention Center Authority.

According to the state's Open Meetings Law, public bodies can close discussions about the "disposition of publicly held property wherein advanced public information would be detrimental to the interest of the public."

"We just don't want to do anything to influence the sales process," said McCarvill. "We're trying to deal with a piece of real estate, confidentiality is in our best interest and therefore in the best interest of the public."

With the assistance of Pinnacle-Realty Investments, a Boston hotel adviser the board hired last month, the authority cut the list of bidders in half yesterday, said McCarvill. It then asked the semifinalists to submit clarified proposals by mid-December, he said. The authority has asked bidders to make their offers as attractive as possible, added McCarvill, who declined to release a potential sale price for the hotel.

The Convention Center Authority is set to meet again on Dec. 22, when it will review the updated plans. It may select a buyer during that meeting, said McCarvill.

If a buyer is chosen for the Westin, the winner will be required to build a 200-room tower next to the hotel. In addition, the buyer must agree to reserve a certain number of rooms that can be rented by people attending conventions, according to the authority.

The buyer will also be required to honor the hotel's union contract and keep the existing hotel employees. The union contract expires in October 2005.

"The union perspective was acknowledged in all the discussions and [in] all the bids received," said Matt Kenney, with Pinnacle-Realty.

This summer, RLJ Development, which owns the Courtyard Marriott across the street from the Westin, and Carpionato Properties Inc. of Johnston each said they were interested in buying the Westin. Neither company returned calls for comment yesterday.

The authority must also offer Starwood Worldwide Hotels & Resorts the chance to place a bid on the hotel. Starwood is currently contracted to manage and run the hotel, and until its contract expires in May, Starwood is allowed to counter any hotel bid, McCarvill said.

But just because the authority is entertaining bids doesn't mean it will sell the state-owned hotel. Currently, the state owes about $285 million on the hotel and the convention center. In the early 1990s, the state issued $354 million worth of bonds to build the two facilities. Profit from the hotel, which had a net income of $8.9 million in fiscal 2004, is used to service the debt each year. In addition, the state spends $17 million a year subsidizing the hotel and the center.

Selling the Westin alone might not generate enough money to pay off all the outstanding bonds, said McCarvill. And that's why the authority is requiring potential buyers to build the 200-room tower next door, he said. The additional room and income taxes will ensure that the state has additional revenue to help pay down any remaining debt, he explained.

Also, the authority is eager to establish more hotel rooms in Providence. More rooms, it says, will allow the convention center to book much larger conventions and meetings.

"It goes back to the original intent -- we were interested in selling at a good price with an ironclad commitment to develop the additional rooms," said McCarvill.

The Convention Center Authority's board consists of David Duffy, chairman; George Nee, vice chairman; Joseph Judge, treasurer; Paul MacDonald, secretary; Brad Waugh; Dave Gavitt; Dale Venturini; and Gerald Massa.

From The Providence Journal

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15 companies bid on Westin Providence

A Superior Court judge orders the Rhode Island Convention Center Authority to release the list of bidders in response to a lawsuit filed by The Providence Journal.

BY ANDREA L. STAPE Journal Staff Writer | December 18, 2004

At least two established Rhode Island developers and several national developers are among the 15 bidders that submitted proposals to buy the Providence Westin and build a new hotel next door.

The list includes The Procaccianti Group of Cranston, owner of the Holiday Inn in downtown Providence, and Carpionato Properties of Johnston, owner of the The Crowne Plaza in Warwick.

Also on the list is Richard L. Bready, chief executive of Nortek Inc., a Providence company, who made a joint bid with Jerrold L. Lavine, former chairman of the Rhode Island Solid Waste Management Corporation and director of administration for former Gov. Bruce Sundlun.

Others bidders include LaSalle Hotel Properties of Maryland, which owns the Hotel Viking in Newport; Starwood Properties of New York, which manages the Westin; and Host Marriott Corp., a national hotel developer based in Maryland.

The Rhode Island Convention Center Authority, the quasi-public agency that oversees the Westin Providence, yesterday disclosed the names of the bidders after a Superior Court judge ordered the agency to make public the names at the request of The Providence Journal.

The authority, which is funded by taxpayers, had kept the names secret since the proposals were submitted last month. The authority didn't want to publicly identify those interested in buying the taxpayer-owned hotel because the disclosure could "influence the sales process" and possibly chill the bidding, according to James McCarvill, executive director of the Rhode Island Convention Center Authority.

David A. Duffy is chairman of the authority's board, which also includes George Nee, vice chairman; Joseph Judge, treasurer; Paul MacDonald, secretary; Brad Waugh; Dave Gavitt; Dale Venturini; and Gerald Massa.

Superior Court Judge Daniel Procaccini yesterday morning ordered the authority to release the information. Late yesterday afternoon -- five hours after the order was issued -- the authority's law firm, Adler Pollock & Sheehan, released the list of names to Blish & Cavanagh, The Journal's law firm.

The one-page list included names of bidders, but no identifying information; it did not state the amount the bidders are offering.

The authority put the four-star hotel in downtown Providence up for sale in September. The authority decided to test the market to determine what the Westin could be worth after more than a dozen hotel developers expressed an interest in buying it, McCarvill said.

The authority is scheduled to decide on a buyer for the hotel on Wednesday during its monthly board meeting, according to McCarvill.

The authority has winnowed the list of bidders from the original 15, but has declined to say how many remain or who they are.

The authority has not released the price it is willing to consider for the hotel.

ONCE THE FINALIST is chosen based on its bid, complete proposal and reputation, the authority will negotiate the final price and conditions of sale, McCarvill said.

Currently, the state owes about $285 million on the hotel and the adjacent Rhode Island Convention Center. In the early 1990s, the state issued $354 million in bonds to build the two facilities. Profit from the hotel, which had a net income of $8.9 million in fiscal 2004, is used to service the debt each year. In addition, the state spends $17 million a year subsidizing the hotel and the convention center.

Selling the Westin alone may not generate enough money to pay off the bonds, so the authority is requiring that any potential buyer of the Westin also promise to build a 200-room hotel tower on the adjacent small, grassy plot between the Westin and the corner of Sabin and Francis Streets, said McCarvill.

Last month, when the offers on the hotel were initially due, the authority decided not to release the names of the bidders, citing a state law that allows the shielding of some discussion about the sale of public property.

A Journal reporter made several requests for the names of the bidders and their offers.

After the authority continued to turn down the requests, The Journal this week sued the authority in Superior Court for the information. Yesterday, Judge Procaccini ordered the authority to release the list of bidders.

The Journal has also asked the court to require the authority to release how much each bidder is offering for the hotel. Joseph V. Cavanagh Jr., managing partner of Blish & Cavanagh, has requested a court hearing about the bid amounts to be scheduled for early next week.

"It's unclear to me the specific reason or reasons why they are refusing to provide the amount of the bids," Cavanagh said. "As I understand it, the bidding has been closed and it's difficult to see how in any way the process would be compromised."

The authority said it would not release the amounts of the bids because a specific request for that information was not made by The Journal when the original request was made for the list of bidders, Cavanagh said. Consequently, the authority argued it has 10 days from yesterday to respond to the request for bid amounts, Cavanagh said.

The authority's lawyer is arguing that The Journal's request under the Open Records Law was not expressed appropriately because the newspaper asked for bid information instead of bid documents, according to Cavanagh.

"It's disappointing that we are only able to get the names after filing a lawsuit," Cavanagh said.

The bidders for the Westin Providence are:

  • Carpionato Properties, which also owns the Holiday Inn Express & Suites near T.F. Green Airport in Warwick.
  • Cornerstone Real Estate Advisers Inc. of Connecticut. The company was established in 1994 to provide private real-estate equity investment management services for its parent company, Massachusetts Mutual Life Insurance Co., according to the company's Web site.
  • Eagle Hospitality Properties Trust Inc. of Covington, Ky., which plans to qualify as a real-estate investment trust, or REIT, and holds interests in hotels in Colorado, Florida, New York, Kentucky, Ohio and Illinois, the company said in a statement. The company's properties operate under a number of names, including the Embassy Suites Hotels, Marriott, Hilton and Hyatt brands, the company said in a document filed last month with the U.S. Securities and Exchange Commission.
  • FaulknerUSA, of Texas, a development and construction firm.
  • Host Marriott Corp. of Maryland, a national hotel operator. It owns a number of hotels in Massachusetts, including The Boston Marriott Newton, The Hyatt Regency Cambridge, the Boston Marriott Copley Place, and the Hyatt Regency Boston.
  • Hotel Capital Advisors Inc. of New York City. The company's principal is Simon M. Turner, who sits on the board of the Four Seasons Hotels & Resorts.
  • INTELL Management and Investment Co.
  • Bready, head of Nortek, which was sold last year to a New York investment firm, Kelso & Co. Lavine, at the time he joined the Sundlun administration, was the owner of Southporte Group, a consulting and investment firm.
  • Kennedy Associates Real Estate Counsel Inc., of Seattle, Wash., a real-estate investment adviser. Its clients include three funds, one of which acquires hospitality properties.
  • LaSalle Hotel Properties.
  • Magna-CB Ventures LLC.
  • Shubh Hotels of Florida, a manager of hotels in Florida, North Carolina, New Jersey, New York, Connecticut and Massachusetts.
  • Starwood Hotels & Resorts Worldwide of New York, a national hotel operator. The convention center authority had to offer Starwood the chance to place a bid on the hotel. Starwood is currently contracted to manage and run the hotel, and until its contract expires in May, Starwood is allowed to counter any bid, according to McCarvill.
  • The Procaccianti Group, which also owns a number of other hotels in Rhode Island and elsewhere in the country.
  • Westbrook Acquisitions LLC.

From The Providence Journal

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homepage_330_westin1.jpg

Cranston firm picked to negotiate to buy Westin Providence

By JACK PERRY

projo.com staff writer | Wednesday, December 22, 2004

PROVIDENCE -- The Rhode Island Convention Center Authority has chosen to negotiate with a Cranston hotel ownership and construction company to purchase the Westin Providence.

The Procaccianti Group, which bid $95.5 million to buy the 364-room hotel, was chosen today from among15 companies that bid for the state-owned property.

The authority voted unanimously to select the group at its meeting this morning. However, the vote is not the final step in the selection process. The Procaccianti Group and the authority will now work out a purchase-and-sales agreement, which the authority hopes to vote on at its next meeting in January.

The privately-owned company says it plans to spend $40 million to $60 million to improve and expand the hotel by 200 rooms on adjacent vacant land, according to a company press release issued today.

As part of the expansion, Procaccianti wants to build a mixed-use development containing street level retail, several floors of office space and luxury residential on the top floors, the company said.

The 28-story Westin is located at One Exchange Street and linked to Providence Place mall and the Rhode Island Convention Center. It offers 18 meeting rooms with 25,000 square feet of meeting space, as well as fitness and spa facilities, a pool and restaurant.

The Procaccianti Group owns the nearby Holiday Inn.

The demand for downtown hotel rooms should increase with international lottery company GTECH's plans to move downtown and the success of the convention center in drawing events, according to Gregory D. Vickowski, chief financial officer for Procaccianti.

The company is also considering moving its corporate headquarters, with more than 100 jobs, downtown, Vickowski said, "to be on-site and keep a watchful eye on the hotel operations."

The Procaccianti Group, operating in its fifth decade, owns and manages 23 hotels in 11 states. It also manages the Waterside Convention Center in Norfolk, Va., for the city and has worked with the city of Richmond, Va., managing the Richmond Convention Center hotel attached to the city's new convention center.

From The Providence Journal

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This is good news.. Although, whether they actually move their corporate headquarters downtown remains to be seen...

What I would like to see is old downcity be incorporated into the new retail core.. There are a lot of possibilities there, and even as a resident, it took me quite a long time to actually meander those streets..

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The great thing that retail in the ground floor of the new tower would do is create a stepping stone from the mall. The mall is well designed in that all of the restaurants are on the street and that creates good foot traffic outside. The retail that will be on the ground floor of GTECH will draw people across the street, then the retail at the Westin will draw people toward Kennedy Plaza, and eventually into Downcity.

I hope they do move their HQ downtown, another 100 people in the city during the day will be a good thing, and hopefully some of their employees will be RIPTA riders. With 100 people I don't see then building their own HQ building, likely they'll look for existing space in the city, which is also a good thing.

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I read somewhere that the mall was originally proposed with no restaurants or food court, so that people would flow downcity to eat, thus incorporating the old core..

Then, they changed it last minute, as no mall has ever suceeded with out a food court.. Interesting..

Nice to see the Masonic Temple underway... I would like to see that thing cleaned up... What would really be great would be if they actually decked over RT 95... The "Westminster Crossing" plan... Out of the New Cities plan, that is the only one that hasn't taken on life.. The Jewelry District nad a waterfront are proposed, the Promenade District has taken on life, mainly by the private sector...

Good times in Prov, good times.. Now, if a couple more business move here.. And there are actually jobs to support the folks living there, Prov will be the absolute ideal place to live..

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The big thing that the mall wasn't supposed to have was a movie theatre, one was to be built Downcity. There's still talk of a Downcity movie theatre, but I think the party interested in developing it is probably still waiting for a bit more critical mass in the Downcity residential development before taking the plunge.

Westminster Crossing would certainly rock, but I fear that's one of the big things that we'll probably be waiting a while for, moving rivers, moving interstates, creating an entire new downtown district (Capital Centre, 2 if you count the land freed by 195)... there's only so many mega-projects that little Providence can undertake. It's stunning that what has been done already or is in the works has been done.

I think things can be done to mitigate the impact of the 95 ditch. Andres Duany's proposal for small shops on the Westminster bridge is certainly doable, reopening Cathedral Square is key though. Also developing the parcel across from the Holiday Inn and redeveloping the former Public Safety Complex will make that gap between Federal Hill and the Dunk not seem so desolate. Little things like extending Atwells Avenue's decorative street lighting over the highway to Broadway would help too.

There's a proposal that the West Broadway Neighbourhood Association is fighting, for a drive-thru Dunkin Donuts at the corner of Broadway and the Service Road. That kind of auto-centric development is what will make the 95 ditch worse.

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The company is also considering moving its corporate headquarters, with more than 100 jobs, downtown, Vickowski said, "to be on-site and keep a watchful eye on the hotel operations."

<{POST_SNAPBACK}>

A Providence Business News story says that they would consider moving their corporate offices into the new tower that would be built next to the Westin. Seems like a good idea to me. If you're going to build a shiny new tower, might as well make shiny new offices for yourself.

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Nice... The IM Pei idea to close Westminster to foot traffic only was the worst idea... I mean, it cut downtown away from the residential FURTHER than what RT 95 did.. Opening that up again will be huge.. They are also extending Point Street accross the highway.. That will be nice..

not sure how I feel about the D&D on Broadway.. There is D&D on every corner!! haha.. But I know the WBNA doesn't want that type of retail in their area.. Not sure I agree with that mentality... I bet if a Starbucks wanted to go their they would be fine with that..

Hey Cotuit.. How do you feel about the Armory aka the West End??? I think it is the biggest sham.. Its just not nice there! The housing stock is excellent, a lot of gothic victorians.. But the neighborhood is really tough...

One more thing.. What do you think about all the developers taking 3 decker houses and trying to sell each floor as a condo??

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not sure how I feel about the D&D on Broadway.. There is D&D on every corner!! haha.. But I know the WBNA doesn't want that type of retail in their area.. Not sure I agree with that mentality... I bet if a Starbucks wanted to go their they would be fine with that..

<{POST_SNAPBACK}>

I don't think it's the DD that they are opposed to, it's the drive-thru. Also it'll be one of those stupid suburban looking buildings set back from the street. The auto-body shop there now is nothing to write home about, but it is an older building that could clean up nicely, and it presents well to the street, maintaining the street wall. I just hope they don't close the DD on Atwells at the Arch, that's my DD!

Hey Cotuit..  How do you feel about the Armory aka the West End??? I think it is the biggest sham.. Its just not nice there! The housing stock is excellent, a lot of gothic victorians.. But the neighborhood is really tough...

One more thing.. What do you think about all the developers taking 3 decker houses and trying to sell each floor as a condo??

<{POST_SNAPBACK}>

I think the Armory is coming along slowly. We need the job market to get better in the city so that the poor people in the area have a little more resources to take care of their neighbourhood. Also the bankrupt city and state governments aren't able to provide the services that the low-income and immigrant residents need. Most of the people in that area just need a little push, and they'd be able to stand on their own. We need more programs that can help the people in that neighbourhood buy their homes. It's probably like 90% rental units, owner-occupied units are always better maintained, give the people there the tools to be owners and the neighbourhood will turn around.

Which leads us to the condo-ization question. Owner occupied units are a good thing I think. We still have enough vacancies that we aren't seeing a big crush drive up prices like has happened in Boston. But soon we will, rents are on their way up and the city and state need to be on top of the problem now, before it gets out of control.

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State says buyer of Westin hotel owes $2.9 million

At issues is a loan The Procaccianti Group defaulted on during the credit-union crisis in the 1990s.

BY ANDREA L. STAPE Journal Staff Writer | January 3, 2005

The Procaccianti Group, which plans to buy The Westin Providence for $95.5 million, owes the state about $2.9 million, according to a lawsuit pending in Rhode Island Superior Court.

Last week, the Rhode Island Convention Center Authority named The Procaccianti Group the top bidder for the state-owned Westin, based on the hotel developer's $95.5-million offer to buy the hotel and build a $50-million hotel tower next to the Westin. The authority's board of directors chose The Procaccianti Group over 14 other national, international and local bidders.

The Procaccianti Group has spent the past 10 years fighting the state in Superior Court over repayment of $2.9 million, the remainder of a loan the company defaulted on in the early 1990s.

The Rhode Island Convention Center Authority did not discuss the possibility that The Procaccianti Group may owe the state money when it was choosing a bidder on the Westin, said James McCarvill, executive director of the Rhode Island Convention Center Authority.

"We didn't consider it; we didn't know about it. It wasn't a question that we asked," said McCarvill. "No. DEPCO involvement wasn't discussed at all."

The Cranston-based hotel developer, which owns 23 hotels in 11 states and manages several state convention centers, reached a tentative settlement agreement with the state on the $2.9 million earlier this year, according to Richard MacAdams, a lawyer with MacAdams & Wieck Inc., representing The Procaccianti Group.

"As far as we're concerned, that case is settled," said MacAdams. "Our intention would be to enforce the settlement."

But on Thursday, MacAdams declined to release the settlement details, and said he had not heard from the state about the settlement documents. The case is still open and pending, according to Superior Court records.

The Procaccianti Group helped trigger Rhode Island's banking crisis in the early 1990s, by defaulting on about $14.75 million worth of loans, according to state estimates.

After loan defaults by individuals and companies caused state banks and credit unions to fail, the state set up the Depositors Economic Protection Corporation, to reimburse bank customers for the losses they suffered. DEPCO, a taxpayer-subsidized entity, was tasked with selling the banks and credit unions' assets and collecting money from the businesses and individuals that had initially defaulted on loans from the credit unions and banks. DEPCO was dissolved in 2002, after paying the account holders.

In the mid-1990s, as part of the credit union cleanup, DEPCO wanted the Procaccianti Group to acknowledge the $14.75 million worth of defaulted loans and pay them back. But no settlement was reached, according to John F. McJennett III, former executive director of DEPCO, and a current consultant to the Rhode Island Division of Taxation.

"Nothing's changed on that, they haven't paid on that," McJennett said.

But the amount of debt and whether it is owed to the state is still in contention.

"If they felt they were owed anything else during the years, why didn't they make a case for it?" asked James Procaccianti, the company's president and chief executive officer, during an interview at his Cranston office on Thursday.

DEPCO, however, did sue The Procaccianti Group for $2.9 million, in an attempt to recoup a $3-million loan the company defaulted on in 1991. The Marquette Credit Union, which loaned the company the $3 million, was closed by the state in 1991. When it closed, The Procaccianti Group stopped paying on the loan. The loan was part of the overall $14.75 million the state said The Procaccianti Group owed.

The Procaccianti Group says that because the credit union was shut down, the company was unable to finish a construction project and suffered financial losses. It also says that more than 200 acres in Hopkinton, used as collateral for the loan, was not sold for its true market value. The state foreclosed on the property and sold it for $145,000 to help pay off the loan -- leaving about $2.9 million to be repaid, according to court records. The Procaccianti Group contends that the land was worth about $2 million, according to James Procaccianti. He and his father, Armand, were head of the firm in the early 1990s.

The Convention Center Authority is planning to consider Procaccianti's official purchase-and-sale contract for The Westin Providence at its monthly board meeting on Jan. 27, according to executive director McCarvill. The Procaccianti Group was the highest qualified bidder on the hotel, and said it is planning to pay for the hotel with cash and debt. The company already has the financing lined up, according to James Procaccianti.

Before the sale is completed, though, the heads of the House and Senate Finance Committees have called for public hearings next month, since taxpayer dollars are used annually to pay off outstanding debt on the hotel. The state issued bonds in the mid-1990s to pay for building the hotel, convention center and the garages. The state owes $280 million -- not including interest -- on the Convention Center, the Westin and two parking garages.

Senate Finance Chairman Stephen D. Alves and House Finance Committee Chairman Steven M. Costantino said earlier this month that they were concerned that the hotel sale could cost the taxpayers more money and wanted the deal explained in detail.

James Procaccianti said on Thursday that the company has agreed to public hearings and wants to be open about the sale process.

Governor Carcieri's office, which has been pushing for the state to sell the hotel, said last week that it has confidence in the Convention Center Authority.

"The governor is confident that the board's final decision will be in the best interest of the convention center and of the state," said Jeff Neal, a spokesman for Carcieri.

From The Providence Journal

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Nothing's easy in Rhode Island is it?

Westin suitor regained land lost in loan default

The developer used a 250-acre Hopkinton parcel as collateral on a $3-million loan that defaulted during the state's 1991 banking crisis. Two years later, he bought the land back at a bargain-basement price.

BY ANDREA L. STAPE Journal Staff Writer | January 7, 2005

The company planning to buy the state-owned Westin Providence for $95.5 million defaulted on a $3-million loan in 1991. When the state foreclosed on the loan, the company's president, James Procaccianti, used another business to buy the land serving as collateral at a fraction of what he says it's worth.

Procaccianti's Kuehn Road Associates LLC bought 250 acres of land in Hopkinton for $145,000 at a state auction in 1993.

The land was being auctioned by the state because it was the collateral on a $3-million loan the Procaccianti Group -- also run by James Procaccianti -- defaulted on in 1991. Since the land was sold for less than the loan, the state was left with a $2.9-million debt.

The state sued the Procaccianti Group for the $2.9 million 10 years ago. The case is pending in Superior Court. Procaccianti is fighting the suit, arguing that the land is worth about $2 million -- and that the state should have sold the land for more money to pay down the loan.

One of James Procaccianti's business entities still owns the 250 acres in Hopkinton.

Last month, the Rhode Island Convention Center Authority named the Procaccianti Group the winning bidder for the state-owned Westin Providence, based on the Procaccianti Group's offer to buy the hotel for $95.5 million and build a $50-million hotel tower next to the Westin.

The Procaccianti Group, run by James Procaccianti and his father, Armand, was among the major borrowers who defaulted in the early 1990s on loans made by credit unions insured by the private Rhode Island Share and Deposit Indemnity Corporation. One of the Procaccianti Group's defaulted loans was for $3 million from Marquette Credit Union.

James Procaccianti, the company's current president and chief executive officer, said in a recent interview that the real-estate development company continues to contest the state's lawsuit demanding $2.9 million

Procaccianti said he has an appraisal showing the land used as collateral for the $3-million loan is really worth $2 million, not the $145,000 it sold for at the foreclosure auction.

Richard W. MacAdams, a lawyer with MacAdams & Wieck who is representing the Procacciantis, said the state is responsible for the low sale price, since it didn't adequately market and publicize the land sale.

"If the land had been properly marketed it would have resulted in a higher value," said MacAdams, who said he didn't recall any other companies bidding on the property in 1993.

The actual buyer of the property in Hopkinton at the foreclosure sale and the current owner is Kuehn Road Associates LLC, according to property records filed in Hopkinton Town Hall.

The company's manager is listed as James Procaccianti, according to the Corporations Division of the secretary of state's office. The company changed its name in 2000 from Kuehn Road Associates LLC to Hunt Club Associates LLC.

"It's typical in a foreclosure that interested parties, including owners, appear. In a residential situation, it would not be unusual for a family member to appear [at the auction] to purchase the home."

Not far from Hopkinton Town Hall off Route 95, the land has remained undeveloped since Kuehn Road Associates purchased it in 1993. The company failed to pay taxes on the property in the late 1990s, and the town sold it at tax sale in 1997 to a business entity called Hopkinton IV. A year later, in 1998, Kuehn Road Associates paid off the $2,414 tax bill and reclaimed the property. Under Rhode Island law, owners whose real estate is sold for delinquent taxes have one year to pay the taxes and penalties and reclaim the property.

The lawyer representing the state at the sale of the land in Hopkinton, Richard Mittleman, with the law firm of Cameron & Mittleman in Providence, said earlier this week that he couldn't remember details of the 11-year-old sale.

As of last month, the Town of Hopkinton had the land assessed at $911,700.

Loan defaults in the early 1990s by the Procacciantis and other big borrowers helped trigger the state's banking crisis, which led to the closing of 45 institutions and froze the deposits of 211,000 families. Previous reports from the early 1990s estimated that the Procaccianti Group had between $12 million and $14.75 million in loans outstanding at the time of the bank and credit union collapse.

After the state closed the credit unions, it created a state agency called the Depositors Economic Protection Corporation to pay back depositors and sell the failed institutions' loans and other assets. The agency sued some companies -- such as the Proaccianti Group -- when it couldn't raise enough money to cover the outstanding loan amounts.

James Procaccianti said the Procaccianti Group originally borrowed the $3 million from Marquette Credit Union for a building project. But when the credit union was shut down during the banking crisis in 1991, the company was unable to finish the project, suffered financial losses and stopped paying on the loan, he said.

Last month, when it was choosing a company to buy the state-owned Westin, the Rhode Island Convention Center Authority's board of directors did not discuss the possibility that the Procaccianti Group may owe the state money, according to James McCarvill, executive director of the authority.

He said the board is still planning to approve the purchase and sale agreement with the Procaccianti Group during its meeting on Jan. 27.

"I think [the hotel sale and the lawsuit] are separate issues and I think they should be taken separately," McCarvill said last week.

The authority's board includes: David A. Duffy, chairman of the authority; George Nee, vice chairman; Joseph Judge, treasurer; Paul MacDonald, secretary; Brad Waugh; Dave Gavitt; Dale Venturini; Gerald Massa and Michael Mello.

The state borrowed money to build the Westin and the attached Rhode Island Convention Center and garages in the early 1990s, and still owes about $280 million on the buildings. Hotel and garage revenue and annual state appropriations are used to pay down the debt. Although the $95.5-million offer by the Procaccianti Group would pay for some of the debt, the state will still have to set aside taxpayer money for years -- even after the hotel is sold -- to pay down the debt.

Governor Carcieri has been urging the authority to sell the Westin and get the state out of the hotel business. The chairmen of the House and Senate Finance Committees have questioned the sale process and plan to hold public hearings at the State House this month to have the deal explained.

From The Providence Journal

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Thats quiet a scam.. Interesting.. Corporations provide an anonymity to do just what he did.. Of course, until someone looks deeper into it..

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So what does everybody think about the possible appearance of this new tower? It will be right next to the Westin which is one of the more impressive-looking highrises in our lovely city and could overshadow it. If it really does end up being at least one of the tallest in our city than it's appearance is a truly grave matter. This being the responsibilty of the people who brought us the could-be-anywhere Holiday Inn leaves me feeling a little uneasy. They've tossed the figure of $50 million out there but are coming off as if the project could be much grander. I'm taking into consideration the small footprint of the building but $50 million doesn't seem to cover a lot these days (no pun intended). So is there a compromise? Is my theoretical math off? My main concern is that corners will be cut on the design and if that's the case then it spells doom for the character of our city. Gtech's HQ isn't ugly but I'm happy it's only going to be 12-ish stories high because I believe it would have been a skyline blemish. When you can see it on a street level in the context of it's surroundings I think it could work but to see it as one of the defining features of our skyline would have changed the whole dynamic of our city. Parcel 2 isn't shaping up to be all it could be considering the location either (I almost like it) but we're still early-on. Is it possible we could end up with a large, sub-standard building? I think most people that live here realize that this isn't a huge city by any means but almost everything we do have here is beautiful. It's quality over quantity. That's why most of us stay here or come here from other places. It's a place to enjoy living in. So why would we tolerate having it look like any place from a distance?

A while back I checked out an article (which if you aren't familiar with, I would highly suggest) that was referenced in a David Brussat column and I really thought that some of the buildings in the photos (some) would fit in really nicely in our home. I figured I'd include them for the sake of discussion.

http://www.city-journal.org/html/14_4_reimagining.html

It's so early that it could be a waste of time to speculate but I can't help but anxiously anticipate what we end up with. I think the next few large scale projects (parcel 2, parcel 6, this hotel, where the circular gas station was, etc.) will set a trend in how we handle a development boom while maintaining our character. If we can keep a "common theme" during these projects then we could carry it all the way to the waterfront when 195 is done. We end up with something along those lines (the article), something that matches the Westin, something that ties the room together, or something shiny. Do you think our aim for this spot should be classy or glassy?

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It's hard to improve upon what you write here. My fears are similar. It would be my sincerest hope that what would be built next to the Westin would be similar in character for several reasons:

1) It would look bizarre if it wasn't...

2) If you build the ugly hotel right next to the beautiful current hotel, where do you think people will want to stay? (Oh, honey! What a thoughtful, wonderful, weekend gift... What? Oh, we're not in that one, we're in the other? Oh, um... Thanks...). For competitiveness alone, they'll have to do something comparable...

3) There won't be the huge politics involved with this building as there was with G-Tech. The later is bringing a zillion jobs to downtown Providence and is one of the state's biggest companies... You didn't want to risk them upping and leaving... The hotel, however, is just another hotel, and the city will probably be bolder in advancing its architectural interests...

At least I hope so...

- Garris

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Oh, and BTW, regarding the link you had to the "City" publication, I doubt anything looking like that will happen here or anywhere in the U.S. anytime soon. American cities used to have architecture that embodied our growing boldness, our economic might, our forward looking culture, our civic pride, and our high national aspirations. I'm not sure there is anything in America anymore that embodies any of these things, or even if we have any of those emotions anymore. It certainly doesn't show up in our urban architecture. The cities that are thriving are doing so as quirky, hip, residential communities, including Providence. Cities used to be the axis of their regions, but that power has shifted to the suburbs long ago. For this reason, you see little of the bold, daring, and pride filled architecture of the past.

In his argument for traditional architecture, I believe this is where David Brussat fails. He is arguing for the modern application of older styles on purely aesthetic grounds, when, in fact, one could argue those older styles were products of how people *felt* in times past, not how they wanted things to *look*. The traditional style won't return today not because people don't like the way it looks (they do), it won't return because people just don't *feel* that way anymore. How many people visit places like Providence and Newport just to oogle at the wonderful architecture, then go build their bland McMansion or their banal contemporary ranch in some characterless suburban subdivision?

We live in an odd time. We want to fit in, not stand out. We want space, efficiency, security, and privacy. We want community and character, but not in our backyard. We want diversity without risk. We want prestige on the cheap. With all these competing demands, is it any wonder our civic architecture is so schizophrenic and has so little room for beauty and community?

- Garris

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From what I have heard, the new tower at the Westin is to be nearly a clone of the current tower. It will be a different height, and thinkness and shape, but should look like it was built at the same time as the current tower, from similar plans. I'm pretty sure it is outside the purvue of the Capital Centre Commission so the process might be able to move a bit faster, especially if everyone agress that it will look basically like thew Westin. I hope this won't create a Magic Kingdom effect, where we have this miniskyline of faux historic buildings plunked down on the edge of downtown.

I've heard that the Holiday Inn is to get a facelift and become a Hilton. Last I heard it was going to get a cutesy ye olde timey makeover, I would prefer to see a nice clean glass slab. I really like Andres Duany's idea for what David Brussat calls the modernist sandbox at the area near LaSalle Square and Route 95. I find the brick fetish around here to be very shortsighted. Many of our most beloved buildings were a departure from the Providence esthetic at the time they were built. As long as buildings interact well with their surroundings, they need not look like they were built in the 19th century. The Hospital Trust Tower is a giant white box, but it is pure iconic Providence, I couldn't imagine the view from Prospect Park, or the Point Street Bridge without it.

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From what I have heard, the new tower at the Westin is to be nearly a clone of the current tower.

Good news!

I hope this won't create a Magic Kingdom effect, where we have this miniskyline of faux historic buildings plunked down on the edge of downtown.

We could have bigger problems :-)

I find the brick fetish around here to be very shortsighted.

I certainly don't think the entire city should be sheathed in brick, but I think that, as a traditional "district" near the capitol, it has a place. While I don't have a huge problem with the G-Tech building's appearance (not great, not bad), I do think it's in the wrong place. I think that area should have been brick as well.

Many of our most beloved buildings were a departure from the Providence esthetic at the time they were built. As long as buildings interact well with their surroundings, they need not look like they were built in the 19th century.

I completely agree. I think the interplay between varying styles, as long as they are all done well, makes for the most interesting cityscape. This is why I very much like the proposed RISD center on N. Main and I very much like the whitish/grey cubist building on S. Main (I forget the name right now). But this is why I dislike the idea of any "sandbox," modernist or otherwise... No variety.

- Garris

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Glad someone is not completely appauled by the idea of the RISD (Chase) Centre.

I can hear ya on the not wanting a "sandbox." An isolated piece of a particular style probably wouldn't be so good. I fear there is no other way that some of the brick fetishes would allow any glass into the cityscape.

I'd like to see the Holiday Inn sheathed in glass, something mostly glass at the old circular gas station site, and something with a degree of glass, but maybe some nice stone cladding added to the old public safety complex. Some glass to tie in with the neighbouring glass structures, and some stone to tie it in with itself. If we could grab that vacant space behind The Regency we could fit in a nice row of brick townhouses for the brick crowd. :)

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If we could grab that vacant space behind The Regency we could fit in a nice row of brick townhouses for the brick crowd.  :)

<{POST_SNAPBACK}>

I know this is getting a bit off topic, but what does Providence have against streetfront townhouses/rowhouses? They are the most desirable places to live in NYC and Boston, but are a rare species in Providence. There are a couple on Benefit Street, but that's about it. My townhouse is kind of strange, with a courtyard in the middle that is somewhat invisible from the street (not a true city-style townhouse in that sense, as it isn't on the streetfront). A couple of brand new (very nice) city-style townhouse units were just constructed in Wayland Square at the corner of Butler and Waterman (starting at $500,000 each).

It's a mystery to me that given the efficient high density of this construction, its desirability, and the high prices they command that this housing style seems (outside of Boston's Beacon Hill) to be so rare in Providence and New England as a whole (New Haven and other New England towns don't seem to have any either)? Any ideas why?

- Garris

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I think we'll see more. The Federal Hill condo proposal will front the street (though it's not a row house, and the ground floor I think is to be retail). The Capital Cove condos will be row houses on the riverfront, across the river from being on the street (if that project still lives and I think it does). The areas under what is now Route 195 will probably see a good deal of this type of construction too. Jefferson at Providence Place is streetfront rowhouses, and it looks quite nice I think, if only there were anything else in that are to give life to the street.

Providence seems to be mostly made up of individual wooden structures. Many of Boston's outer neighbourhoods are built this way. Many of the areas that are rowhoused in Boston, like Comm. Ave out through Allston and the Back Bay were grand plans. I don't think Providence ever had any grand plans, it was all built rather willy nilly.

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Lawsuit left out of Westin bid

The Rhode Island Convention Center Authority is not happy that The Procaccianti Group did not mention a pending lawsuit involving the state when it bid to buy the Providence hotel.

BY ANDREA STAPE Journal Staff Writer | January 19, 2005

The Procaccianti Group did not tell the Rhode Island Convention Center Authority that its president was being sued by the state when the company submitted a $95.5-million offer to buy the state-owned Westin Providence hotel.

David Duffy, the chairman of the Convention Center Authority, said yesterday that "it's bothersome," that the authority wasn't told about a pending $2.9-million lawsuit against James Procaccianti, the company's president, before it chose the company as the winning bidder for the hotel.

"We're not happy about it," Duffy said.

But Duffy said the authority is still negotiating with The Procaccianti Group on a purchase-and-sale agreement. The Procaccianti Group has also offered to build a $50-million, 200-room hotel tower next to the Westin.

In 1994, the state sued Procaccianti for defaulting on a $3-million loan left over from the Rhode Island credit union crisis. The case is pending in Superior Court.

After the authority's board chose The Procaccianti Group as the top bidder on the hotel last month, the Cranston-based hotel development company told the state agency about the lawsuit, Duffy said.

When the authority put the Westin on the market last year, all companies offering to buy the hotel were asked specifically to "indicate any past or pending litigation" regarding finances or development projects, according to the authority's public request for proposals.

The authority has also reserved the right to reject the bid if the bidder is found to have "an unresolved claim" with the "Authority or any other State of Rhode Island department or agency."

After the authority called The Procaccianti Group about its winning bid, it was told about the lawsuit, Duffy said.

"The Procaccianti Group has been very, very cooperative about the matter since," he said.

In a recent interview, James Procaccianti said that his company, which employs 3,000 people and owns and manages 23 hotels across the country, has been forthcoming with the authority about the pending lawsuit.

"We made full disclosures to the authority of all the litigation we have," Procaccianti said during an interview at his company's headquarters. "It's a civil argument where there is one lawsuit and we are litigating."

A lawyer representing the company, Richard MacAdams, said yesterday that the bid was accurate since the actual business entities that submitted the bid for the Westin have "nothing to do" with the lawsuit in Superior Court.

MacAdams said that the bidding business entities -- PRI XVIII LLC, Lenox Hotels Inc. and CMS/Procaccianti Hotel Opportunity Fund L.P. -- do not "have any past or present litigation that would affect their ability to be chosen as the winning proposal."

"It is a true, accurate and complete response. It's clear the bidding entity is PRI XVIII," said MacAdams, who is with the law firm of MacAdams & Wieck.

The Convention Center Authority, though, refers to the winning bidder as The Procaccianti Group.

The Procaccianti Group put out a news release on Dec. 22, saying that it was the winning bidder for the Westin Hotel. "The Procaccianti Group to acquire the Westin Providence in Rhode Island," reads the headline on the news release.

The $2.9-million lawsuit results from a $3-million loan the state says James Procaccianti and his father, Armand, defaulted on during the state's credit union crisis. After the state took over the insolvent credit unions, a state recovery agency, the Depositors Economic Protection Corporation, sold property serving as collateral on the loan for $145,000 and sued James Procaccianti and Armand for the remainder.

The case has been pending in Superior Court for 10 years. But last month MacAdams said that the two parties had reached a settlement agreement. "As far as we're concerned, that case is settled," MacAdams said. He declined to release details.

A lawyer representing the state declined to comment on any settlement discussions.

No settlement has been filed in court. No trial date has been set.

The directors of the Convention Center Authority have not discussed the lawsuit or the lack of notification, Duffy said. The board oversees the state-owned Westin, the Rhode Island Convention Center and two parking garages. The nine-member board is expected to meet next Thursday to vote on a purchase-and-sale agreement. Duffy said that if the Procaccianti lawsuit is settled with the state, then it could "put a different light on the situation." He added that by next Thursday, "a lot of things could happen."

The $3-million loan was just one of 10 that the state said the Procacciantis defaulted on in the early 1990s. DEPCO records indicate the Procacciantis and entities related to the Procacciantis had $14.75 million in outstanding loans. The state has declined to release information detailing those loans -- the amounts, the collateral and how much the state received from selling land serving as collateral.

The state did attempt to negotiate a settlement with the Procacciantis in 1994. But the DEPCO board rejected the offer, according to board minutes. The board wanted the Procacciantis to pay more back to the taxpayers, who bailed out the insolvent credit unions, according to previous Providence Journal reports. The settlement had proposed that the Procacciantis pay $2.25 million, in return for the state forgiving $12.5 million worth of outstanding loans.

Yesterday, former Gov. Lincoln C. Almond said that during his tenure as chairman of the DEPCO board from 1995 to 2002, the "Procaccianti matter never came before the board."

"I don't think it was settled. No, I don't recall any settlement negotiations," Almond said. "The only thing I would recall that would come before the board was an update on the litigation."

From The Providence Journal

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Westin sale on hold pending DEPCO debt details

The governor, who must sign off on any settlement, is waiting for a review of 10 loans left unpaid by James Procaccianti and related entities during the credit union crisis in the 1990s.

BY DAVID McPHERSON Journal Staff Writer | January 28, 2005

PROVIDENCE -- The fate of The Procaccianti Group's $95.5-million bid to buy the state-owned Westin Providence now rests with Governor Carcieri.

The Rhode Island Convention Center Authority yesterday deferred action on the hotel sale until The Procaccianti Group reaches a settlement with the state on a decade-old lawsuit stemming from the credit union crisis in the 1990s.

And the governor said there will be no settlement until his administration finishes reviewing all records on 10 credit union loans left unpaid by James Procaccianti and related entities.

The governor, who refrained from endorsing the deal, said he wants to know how much the state can recover from James Procaccianti, president of The Procaccianti Group, the Cranston-based owner of 23 hotels around the country.

"We're going to do our homework and get everything we can for the state," Carcieri said.

The process could take weeks, the governor said. "There's a big file in there."

A Journal review of the Procaccianti loan records compiled by the now-closed Depositors Economic Protection Corporation found no current accounting of the total amount owed by Procaccianti.

Procaccianti said at two legislative hearings Tuesday that he thought he had a settlement with the state in September, but is willing to increase his offer and pay off in full the one loan still in litigation.

The loan was for $3 million, and after DEPCO sold the collateral, the remaining balance was $2.9 million, according to court records.

A company spokesman indicated that James Procaccianti would agree to pay $2.7 million upfront to settle the lawsuit and then pay interest on the loan over the next 15 years. State records estimate that with interest, expenses and late fees, the outstanding balance on the loan is $6.59 million.

Procaccianti has said his company did not help trigger the closing of 45 privately insured credit unions and banks in 1991. He told legislators that his company was current on its Marquette Credit Union loans at the time, and defaulted because it could not meet its obligations when Marquette closed.

The governor commented yesterday on the muddled deal to sell the Westin at a news conference called to discuss his new state budget proposal.

Lawyers for The Procaccianti Group and the state Department of Administration have been negotiating in recent days to settle the state's 1994 lawsuit seeking repayment on a loan obtained from the failed Marquette Credit Union.

With the Department of Administration answering to the governor, Carcieri would have to sign off on any legal settlement.

Beverly E. Najarian, Carcieri's director of administration, said in an interview that her staff has been combing through the records. Thus far, she said, it appears the state can collect on only one of the 10 defaulted Procaccianti loans and that the statute of limitations to pursue payments on the others may have passed.

But the governor wants to be sure that is the case before signing any settlement with Procaccianti, Najarian said.

When asked if he supported selling the Westin to The Procaccianti Group, the governor said only that he supports selling the Westin.

The Procaccianti Group was one of seven finalists reviewed by the convention center authority. A resolution passed by the authority board allows it to negotiate with the second-place bidder, Cornerstone Real Estate Advisors, which offered $95 million, if the authority is unable to reach a deal with The Procaccianti Group.

The governor's comments came after the Rhode Island Convention Center Authority voted to continue negotiating with The Procaccianti Group, but held off on approving a final agreement.

The authority last month selected The Procaccianti Group as the winning bidder to buy the Westin hotel. The company agreed to pay $95.5 million for the Westin, which is connected to the Rhode Island Convention Center, and to build a 200-room hotel tower next door at an estimated cost of $50 million.

The authority board originally expected to vote yesterday on a final purchase-and-sales agreement.

But the deal has been mired in questions since The Journal disclosed an outstanding lawsuit brought against Procaccianti in 1994 by DEPCO, which was charged with cleaning up the credit union crisis.

"The DEPCO matter has to be settled," said David Duffy, convention center authority chairman, after the board met yesterday morning. Duffy is a Carcieri appointee to the authority and a political adviser to the governor.

"We have to take into concern the feelings, the sensitivities, of all the people of Rhode Island," Duffy said. "DEPCO left a lot of pain."

Duffy told board members he was hopeful a settlement could be reached and that Najarian told him progress was being made in the negotiations with The Procaccianti Group.

"In my mind, if they settle with the state willingly, and the state is very happy and it's blessed by the governor, that would be fine with me," Duffy said.

The convention center authority deferred action on the Procaccianti bid to buy the Westin for two reasons.

One was to await the outcome of the negotiations on the DEPCO lawsuit.

Second, the authority and The Procaccianti Group have yet to negotiate a final purchase-and-sales agreement.

The authority's executive director, James P. McCarvill, told the board that there are several details to be worked out including easements, zoning applications and security cameras. He called them all "solvable issues" and said there are no disagreements on them with The Procaccianti Group.

At the suggestion of board member George Nee, the board approved a resolution calling for continued negotiations with The Procaccianti Group and a special meeting to vote on a deal if a final agreement is reached before its next scheduled meeting, on Feb. 24.

From The Providence Journal

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