PROVIDENCE – The Public Building Authority on Thursday approved the issuance of $25 million in bonds for the city to purchase the Joseph Doorley Municipal Building located at 444 Westminster St. and the WaterFire Arts Center at 475 Valley St.
The agency's approval was the final step needed for Mayor Brett P. Smiley's proposal to acquire the buildings. The City Council approved the plan on Oct. 3.
Under Smiley's plan, the city would purchase the municipal building, which houses 10 city departments, at 444 Westminster St. for $18.5 million. The city currently leases the property from former Mayor Joseph R. Paolino Jr. who owns it through his corporation, 444 Westminster Partners LLC, and is managing partner for Paolino Properties LP.
Since 2011, the city has paid $14.7 million in base rent for the building, according to a presentation by the City Council’s Finance Committee. The cost of buying the property would be $7.4 million less than continuing the lease, which was signed under the administration of former Mayor Angel Tavares and is scheduled to expire in 2036.
The city leases the property for $1.4 million a year, with automatic rent increases each year. Plus, the city pays about $250,000 every year in management, maintenance and utility costs, according to Smiley spokesperson Michaela Antunes.
The property is valued at
$7 million according to city tax assessor records. The Smiley administration says it’s worth $22.4 million while Paolino’s own appraisals value it at $22.9 million.
Along with $18.5 million to purchase the Westminster building, the $25 million bond issuance would be used for: $2.75 million for closing and borrowing costs of the Westminster building and a fund for improvements on the building; and $3.75 million to purchase the WaterFire Arts Center, located at 475 Valley St, according to Antunes.
City Councilors who support the transaction have said buying the WaterFire center will help stabilize the organization’s financials and boost the city’s art economy. The nonprofit reported a loss of $891,018 in 2023, based on its most recent tax filings.
Not everyone has been supportive of the city buying the Westminster Street building.
City council member Althea Graves, who was one of three to vote against the resolution last week, said the proposal was an example of elected officials fixing previous administrations’ mistakes.
The lease agreement included increases of up to 3% annually and a total cost of $34.5 million over the term.
“Such a purchase should never have happened,” she said during last week’s council meeting. “And shame on those who signed that lease.”
Sen. Samuel Bell, D-Providence, said he was not concerned about the idea of the city buying the building, but he raised red flags about the deal’s financing.
Usually, funding for capital purchase should go through a bond process in which residents can vote on issuance, Bell said. But bonds issued by the Providence Public Building Authority don’t require voter approval.
Also, Bell was concerned about the phrase “other capital projects” included in the proposed resolution authorizing the bond funding.
“I do not believe the people of Providence would ever approve a blank check for the mayor to have a slush fund when we have to go into debt to pay for it,” Bell said. “Avoiding voter approval on that is wrong, and creating a slush fund is wrong, too.”
Antunes said that financing with bond proceeds avoids “large upfront costs,” which makes it more affordable for taxpayers by spreading payments over many years.
Bell also noted the discrepancy between the city tax assessor’s estimated value of the property and the appraisal that Paolino had done reveals a larger issue of the city under-assessing commercial real estate properties. This means commercial real estate property owners have been able to pay less in taxes. Also, when property taxes on office space are low, it makes it cheaper for owners to keep those properties vacant, which can limit the number of jobs based in the city, he said.
“This is terrible public policy,” Bell said.
City Council member Miguel Sanchez said during last week’s meeting that he was originally concerned about the proposal coming in a year when the city had hiked residents’ property taxes. But was confident in the move after learning the financial details
Katie Castellani is a PBN staff writer. You may contact her at Castellani@PBN.com.
