Overview of the Proposed Purchase

The City of Providence is considering a significant financial move by taking out a $25 million loan to acquire two key properties: the WaterFire Arts Center and the Joseph A. Doorley Jr. Municipal Building. The combined assessed value of these buildings is $9.5 million, but the city is proposing to pay a much higher amount for them. This decision comes in the wake of a challenging budget season, during which residents faced one of the largest tax increases in recent years.

Mayor Brett Smiley first introduced the idea in late August, and the City Council’s Finance Committee discussed it on September 23. The mayor has negotiated a deal to purchase the Doorley building for $18.5 million and the WaterFire Arts Center for $3.75 million. He also anticipates an additional $2.75 million in closing and improvement costs. However, the city’s most recent valuations suggest the buildings are worth significantly less—$7 million for the Doorley building and $2.5 million for the WaterFire Arts Center.

Details About the Buildings

The Doorley building, located at 444 Westminster St., serves as office space for various city departments and employees. In contrast, the WaterFire Arts Center is situated at 475 Valley St. and functions as an arts venue and headquarters for the group that organizes Providence’s iconic river lighting events.

WaterFire Providence, a nonprofit organization, acquired its property in 2012. The site was once a dilapidated U.S. Rubber Company factory, purchased for $425,000. The organization spent $13.7 million on renovations, with the city providing a $250,000 grant early in the project. Despite its cultural significance, WaterFire has struggled financially in recent years, leading to reduced lighting hours, even though the city continues to support the event.

Providence has been leasing the Doorley building since 2011 from Paolino Properties, owned by former Mayor Joseph Paolino. The current lease agreement costs the city $1.7 million annually in rent and maintenance, with rent escalating at 3% per year.

Rationale Behind the Purchase

According to Smiley, purchasing the Doorley building for $18.5 million would save the city and its taxpayers $7.4 million over time. He explained that after acquisition, the city will reorganize the space to make it more efficient, potentially reducing other space costs. The city would continue to lease the WaterFire Arts Center to the WaterFire group, ensuring that the location remains a creative hub for artists, performers, and partners who host events there.

Smiley emphasized that the lease agreement includes community benefits and that the WaterFire event brings significant tourism and economic benefits to the state each year.

Concerns from City Council Members

At the finance committee meeting, several council members expressed concerns about the deal. Councilwoman Althea Graves questioned why the city would consider purchasing a building valued at $7 million, highlighting the impact on taxpayers and mentioning the vacant school buildings owned by the city.

City officials explained that both buildings underwent new appraisals before the purchase was considered. The WaterFire Arts Center was assessed at around $6 million, while Paolino Properties valued the Doorley building close to $23 million. Under the current lease agreement, the city cannot terminate the lease early, and any sale of the building would be tax-free.

A committee member suggested that the high appraisal was partly due to the fact that the seller was willing to sell, making it an opportune time for the city to buy the building. The discussion also noted that the Doorley building’s high rent had been a point of concern during earlier budget cuts.

Next Steps

The finance committee agreed to send the resolution to the full City Council for all 15 councilors to vote on whether to approve the deal. The proposal requests $25 million in municipal bonds, meaning the city would borrow the money and repay it over a 20-year period. Importantly, this payment structure does not require voter approval.

This development marks a pivotal moment for the city as it weighs the long-term benefits of acquiring these properties against the immediate financial implications.

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