The city of Providence is using a $3.75 million sale-leaseback deal to come to the financial rescue of the popular WaterFire Providence, and supporters say the move was crucial to save a nonprofit that provides a frequent economic boost to downtown.
But the leader of WaterFire acknowledges that the organization’s financial needs are still looming.
“Replenishing reserves doesn’t give us operating money every year,” Mark Allan, WaterFire executive director, told Providence Business News. “We still have to be in the black annually.”
WaterFire, known for its signature torch lighting at Waterplace Park, was on the brink of collapse in 2023, relying on a $650,000 line of credit just to meet payroll, Allen says. After the City Council agreed to purchase the WaterFire Arts Center on Valley Street for $3.75 million on Dec. 4, Mayor Brett P. Smiley signed a lease renting the space back to the nonprofit for $1 a year for 20 years.
With cash reserves exhausted and revenue streams shrinking, the deal gives WaterFire a lifeline while avoiding a direct hit to the city’s operating budget, city officials say. The purchase was financed using municipal bonds issued by the Providence Public Building Authority as part of a larger $25 million package.
Allan says the nonprofit’s troubles didn’t happen overnight: corporate sponsorships, once a budget cornerstone, have steadily eroded as major employers downsized or left Rhode Island.
In 2020, WaterFire budgeted $1.2 million in sponsorship revenue but received just $48,000 after the COVID-19 pandemic struck. By 2023, the cumulative impact was severe, according to Allan. WaterFire posted an $891,018 loss, cut staff by 26% to 20 people, and reduced programming, including fewer full lightings.
“That used up all of our reserves and then some,” Allan said.
With WaterFire at risk of closing, city leaders came to the rescue. On Dec. 4, the City Council unanimously approved the $1-a-year sale-leaseback.
“It was about protecting an iconic part of Providence’s arts and tourism economy at a critical moment,” said Anthony Vega, a mayor’s office spokesperson.
Now WaterFire officials are adjusting their strategies, trying to reduce their reliance on big sponsors by organizing a new major-donor strategy.
Since its first lighting in 1994, the nonprofit has drawn nearly 1 million visitors annually and has generated an estimated $114 million a year in local spending, WaterFire says. Over three decades, its total economic impact has surpassed $1 billion.
Even now, its popularity remains undeniable, says Kristen Adamo, CEO and president of the Providence Warwick Convention & Visitors Bureau.
A single lighting in August drew visitors from 27 states, she says, helping to fill Providence’s hotels, restaurants and entertainment venues.
Now on better financial footing, WaterFire plans to expand full lightings from six this year to at least eight next summer while maintaining staffing and core programming.
Over the 20-year lease, Adamo says, WaterFire-driven hotel stays are projected to generate roughly $50 million in state hotel tax revenue, based solely on current 2025 rates and without economic multipliers.
That economic weight helped secure the council’s unanimous vote – a rare moment of unity at City Hall, according to Councilwoman Jo-Ann Ryan, chairwoman of the finance committee.
“This wasn’t a bailout,” Ryan said. “It was a fiscally responsible investment that stabilizes a vital economic engine while adding a valuable asset to the city’s books.”
