Blue Cross to Build New Headquarters in R.I.

$114-million project slated for providence, will consolidate offices

But Governor Carcieri immediately questions the $114-million project slated for Providence.

PROVIDENCE - Blue Cross & Blue Shield of Rhode Island plans to build a large office building in Capital Center, and will consolidate its now-scattered operations into this new site. The health insurer, which serves 700,000 customers in Rhode Island, currently operates six offices in Providence for its 1,100 employees.

The insurer plans to leave these buildings and construct a 325,000-square-foot, roughly 12-story building on top of a parking garage already under construction in Capital Center by Intercontinental Development, which is building two residential condominium towers on the same two-acre lot.

Blue Cross hopes to start construction on the building late this year and occupy the site in early 2010. The design is subject to approval by the Capital Center Commission, which should review the project at its meeting on Tuesday. The building is expected to cost $114 million to complete.

But Governor Carcieri immediately expressed his skepticism about the proposal, saying through a spokesman that the project appeared too costly. In selecting such a high-value location, Carcieri said the insurer failed to take into account the impact such an expense would have on its customers, who are dealing with ever-increasing rates.

Of the six Providence locations it uses now, Blue Cross owns two of the buildings, at 15 LaSalle Square and 1 Empire St. The insurer expects to sell the two buildings for $20 million and put that money toward the construction of the new building.

The project will receive more than $25 million in tax breaks from the city, thanks to a one-of-a-kind tax plan negotiated in 2004 with Boston-based Intercontinental when the developer signed its long-term lease on the two-acre Capital Center parcel and started building its residential towers, Blue Cross officials said.

Blue Cross has been looking to relocate for three years and toured 40 locations across the state before settling on this site.

"As one of Providence's larg8est employers, we felt an obligation to remain here if possible," said James E. Purcell, Blue Cross president and CEO. "Our analysis concluded that this location is best for us and our members. We're thrilled to remain in the city and to be able to continue to contribute to the vibrancy of the downtown area."

The insurer came close to leaving Providence after touring 16 sites and not finding any to its liking. In Providence, Blue Cross looked at Francis Street next to the Masonic Temple, the former Providence Wholesale Produce Terminal on Harris Avenue, and at various locations along Westminster Street, among others. But none suited its needs.

"We wanted to stay in Providence if the price was right, and it wasn't until this site was brought to our attention," said Blue Cross spokesperson Kim Keough.

Fearing that the insurer was close to leaving the capital city, Mayor David N. Cicilline pushed the site to Blue Cross, trying to entice it to stay downtown.

"It's great for the capital city that Blue Cross & Blue Shield is remaining in Providence, where 1,100 employees will continue to fuel our economy and add to the life and vitality of our city," Cicilline said.

Carcieri, however, indicated he has serious reservations about the plan.

"It is not clear at this time that the construction of a Class A office building in one of the most expensive locations in Rhode Island comports with Blue Cross' responsibility to provide affordable health insurance to the people of this state," said Jeff Neal, the governor's spokesman. "It is also not clear how this project will affect the public perception of Blue Cross, especially as thousands of Rhode Islanders struggle to afford ever-rising health-care costs.

"It is important to remember that Blue Cross was chartered by the General Assembly to serve the citizens of Rhode Island. That is its only mission and the governor will be examining this project with that mission in mind," Neal said.

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