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Committee approves $25M PBBA bond to buy city office building and WaterFire arts center
Summary
The Providence City Finance Committee voted Sept. 23 to back a $25 million PBA bond to acquire 444 Westminster for $18.5 million and 475 Valley Street (WaterFire) for $3.75 million, a move city officials said will replace an escalating lease and allow capital improvements.
The Providence City Finance Committee on Sept. 23 voted to support a $25 million bond issue through the Public Building Authority (PBA) to acquire two downtown properties: 444 Westminster (commonly called the Doorley Building) for $18.5 million and 475 Valley Street (the WaterFire arts center) for $3.75 million.
City finance staff and external advisers told the committee the purchase is intended to replace an expensive, escalating lease for 444 Westminster and to provide a more stable long-term location for city operations and city-managed public services. Committee materials and staff testimony said the city currently pays about $1.5 million a year for 444 Westminster; over the life of the existing lease through 2036 the city would pay at least $18.5 million (assuming minimum escalators). Staff said buying the building and moving the cost into the city’s debt-service line would yield an estimated $7.5 million in savings over a 20-year period compared with continued rent, as well as create the opportunity to invest in the building for energy efficiency and reorganized downtown office space.
City staff also proposed buying 475 Valley Street and leasing it back to WaterFire. Under the outline presented, WaterFire would be responsible for operating costs and carry the debt service; the arrangement is intended to provide WaterFire with capital stability while the city retains an asset and the PBA holds long-term ownership. Staff said the bond structure provides for a modest capital reserve and anticipated bond premium; documents cited an expected bond premium of roughly $1.46 million and an approximate reserve of $932,000 tied to the 444 Westminster portion.
Council members raised questions about appraisal values and optics. Councilwoman Perez said she was concerned that the purchase price of $18.5 million for 444 Westminster significantly exceeded an appraisal figure she referenced, asking why the city would pay about $18.5 million for a building she understood had an estimated cost of about $7 million. Staff replied that the seller’s appraisal considered the market value with the city’s lease in place and that other appraisals produced different valuations; staff characterized the transaction as a business negotiation between willing buyer and seller and said the city’s projected savings and strategic downtown goals informed the recommendation.
City finance staff, legal counsel and outside advisers described transaction mechanics: the issue is structured as two series within a single financing, with closing targeted for late October if the council approves the item as scheduled. Staff outlined cost splits (approximately $18.5 million assigned to 444 Westminster and $3.75 million to 475 Valley Street), potential capitalized interest for initial months, and normal issuance costs. The council will consider the measure at its next meeting; if authorized by the council, the PBA would proceed with underwriting and pricing.
Councilman Taylor moved approval; Councilman Grace seconded. The committee voted in favor and the motion carried.
City staff said purchase would move the recurring cost from a vendor-managed lease into the city’s debt profile, free operating budget for other uses, and permit capital improvements to the two properties; they also said the city would not take on management of the WaterFire facility and expected WaterFire to continue operating the building under a lease-back arrangement.
