Jason Fane had said his 40-story tower would need only $18.5 million in public subsidies.

PROVIDENCE, R.I. — The public commission expecting to vote Tuesday evening on New York developer Jason Fane's latest proposal to build a single high-rise tower on former highway land released documents Friday showing that its independent researcher calculates the project may need a "substantial subsidy" to achieve market-rate returns.

The analysis conducted for the I-195 Redevelopment District Commission questions Fane's assumptions that a 40-story tower would need only $18.5 million in public subsidies and would generate a 6.99-percent "return on cost," defined as the net operating income divided by project cost.

Instead, the consultants for the 195 commission project that the tower would have a financing gap somewhere between $32.5 million and $44.8 million, if the high-rise tower were to achieve market-rate returns. The report by Real Estate Solutions Group, of Princeton, N.J., estimates the project would generate only 4.71 percent return on cost — and notes that market-rate returns range from 6.2 percent to more than 8 percent.

That doesn't mean Fane would necessarily seek that amount in public subsidies, 195 commission spokeswoman Dyana Koelsch said.

However, 195 District Executive Director Peter McNally told The Providence Journal, "It means that we have some challenges to overcome, and we need to be further convinced that the project is viable."

But Tuesday is not the time to focus on whether the commission's financial analysis is a better indication of how the project would perform than Fane's analysis, McNally said.

Fane cannot build a tower this high without Providence City Council approval for a zoning change, and McNally said it's time now for the commission to consider whether it's appropriate for Fane to seek that approval.

"And yes, we do have open questions as it relates to capitalization and financing and viability of the project," McNally said. "We do not anticipate ... answering all of those questions and fully bringing closure to those questions on Tuesday."

Only if Fane later won city approval to build such a high tower would the project come back to the commission.

Tuesday's meeting includes time for public comment on Fane's development and presentations by Fane and Real Estate Solutions Group.

Commerce Secretary Stefan Pryor, a non-voting member of the commission, said Friday that he's "pleased" with Fane's progress: "This single tower plan involves a more compact footprint and a better configuration."

Questions remain for Fane, "but we look forward to Tuesday's discussion," Pryor said.

If Fane wins City Council approval, McNally said the commission would also need to consider that Fane's proposal would require reconfiguration of Parcel 42 along Dyer Street, where he has proposed building, and of the planned city park east of that parcel and adjacent to the Providence River.

Any changes to the park's configuration would require General Assembly approval, McNally said.

Although Fane declined to speak Friday about the documents released by the commission, he spoke with The Providence Journal earlier this week about his intention to seek Level 2 approval at the commission's next meeting.

On Friday, the commission posted its agenda for a 5 p.m. meeting Tuesday at the R.I. Commerce Corporation, 315 Iron Horse Way.

Fane did not disclose details about his latest high-rise plan but said it was "conceptually different" from the earlier proposals he made: first of three towers, which the commission rejected, and then one. Fane said he had made a "big effort to comply with the various suggestions that the commission and their staff had."

When the commission voted in January to allow Fane to present more detailed plans for just one tower, the commissioners set conditions. One was to confine development to the northern portion of Parcel 42 and not more than 40 percent of that 1.08-acre site.

Fane told The Journal his project would cover more than 40 percent, but did not say how much. He wants parking inside the building for his luxury units, and he has said how difficult it would be to create enough turning radius inside a parking garage for a tower with too small a pedestal.

If the commission insists on that condition, Fane said, "They'll have their will and there'll be nothing more than 40 percent and probably nothing less than 40 percent, either. I'm not going to go through the whole process and then have a crippled project."

Trying to build something he deems unfeasible would make it far more difficult, Fane said, to get investors to make a construction loan. "If you do a project that doesn't make sense, they don't want to make a loan, and I'll tell you I don't want to sign on to a construction loan on a project that's crippled," he said.

Late Friday, the commission posted on its website its financial analysis of the project and Fane's site plan.

The analysis provides some details of the proposal: Hope Point Tower would include a five-story podium with seven townhouses, retail and parking; one 40-story tower with 400 rental apartments and 109 condominiums; and 965 square feet of seasonal outdoor space.

McNally said the project also addresses urban design concerns the commission voiced — and maintains sight lines to the Providence River along Dorrance and Ship streets.

Fane said the anticipated vote on Tuesday is crucial.

"We’ve got something that’s iconic, that’s high quality ... and they should be very enthusiastic about it. I don’t think that we have the ability to do anything better than this. We’ve got the top architects and they’ve worked very hard. And really the issue is if they vote for Level 2, I'll get the appropriate approvals and build it. And if they don’t go for it, I'll have to respect their opinion."

— kbramson@providencejournal.com

(401) 277-7470

On Twitter: @JournalKate