Why is McKee rushing to have the state buy a Citizens Bank building? Here's what we found.

PROVIDENCE – While trying to convince legislators that the state can save millions of dollars on leases by purchasing a Citizens Bank-owned building in East Providence that's been on the market for at least two years, the McKee administration on Thursday acknowledged it had not looked at other properties.

How much would the state pay for the building and refurbishing? $33.7 million.

How much would the purchase cost over a projected 10-year borrowing term? $44.5 million without voter approval.

What is the assessed value of the property? $16.9 million.

A spokeswoman for the Department of Administration acknowledged, in response to a Journal inquiry, that there was no request for competing offers from other property owners before presenting this building acquisition proposal to lawmakers in the closing weeks of the legislative session.

And she said state law does not require one.

But why not?

Members of the House Finance Committee did not ask this question of Administration Director Jonathan Womer when he appeared before them Thursday night to explain this and a second budget amendment Gov. Dan McKee proposed last week that could benefit Citizens.

One lawmaker voiced concern about the half-mile distance to the closest bus stop, while travel along the half-closed Washington Bridge remains dicey. Another asked how much East Providence would lose in taxes if the property shifts to state hands. (Answer: Citizens paid a discounted $384,297 in 2023.)

"Is there a reason why there's a rush for this?," asked Democratic Rep. John Edwards. "None of these buildings are in falling down type condition," he said of the state-owned buildings where some of the agencies targeted relocation are now.

Womer's answer: the administration wanted to get a head start on needed renovations before the Department of Environmental Management's lease expires in July 2026.

After getting administration officials to confirm Citizens' asking price is $27 million, Republican Rep. George Nardone noted the two years the building has been on the market and said: "Just make sure you get the taxpayers the best price. These buildings are not in demand right now."

(The other McKee budget amendment would revise the state's "financial institutions tax" in a way that might make Rhode Island more competitive with Massachusetts but cost the state $15.6 million in annual revenues.)

McKee administration explains the Citizens building purchase

When asked by The Journal how the state knows this is the best deal, spokeswoman Christina O'Reilly said: "It is rare to find buildings of this size and condition on the market."

"Knowing a space so large could accommodate the needs of multiple agencies, the state felt it prudent to explore the Tripps Lane property as an option," she said. "The unique features of this building make it appealing, specifically the 60,000-square-foot, state-of-the-art data center, large single-story layout, ample parking, and public access for customer service.''

She said the state "used an independent appraisal and other market factors to inform negotiations and ensure best use of taxpayer dollars."

More: Inside McKee's 11th hour pitch to keep Citizens Bank - and its jobs - in RI. Here's the deal.

What is driving McKee's new Citizens-centered tax-and-spending plans?

The stated reason for the proposed taxpayer purchase of 115 Tripps Lane - a 225,458 square foot, 1979-built Citizens building that previously housed the Citizens One Home Loan Center: the opportunity to relocate one or more state agencies from "costly" leased space a potential savings.

An example: The Department of Environmental Management has two years left on a lease that costs roughly $2.5 million a year. Getting out of that lease would save the state a potential $25 million over 10 years.

The other examples involve the relocation of state employees from what is already state-owned space, such as the relocation of state police, Treasury and the state technology offices out a building at 50 Service Avenue in Warwick that the state purchased in 2010 for $4.5 million.

That building now reportedly requires $10 million in repairs.

Another example: The relocation of the Department of Human Services out of another state-owned building on the Pastore Complex in Cranston to avert "significant long-term investment(s)."

The presentation given to a Senate committee earlier this week anticipated a potential $39 million in savings and averted maintenance costs over 10 years, which would offset the potential $44.5 million cost of buying and refurbishing the Citizens building.

"If successful, the timing of the negotiations coincides with an appropriate runway to transition 115 Tripps Lane to state use and the conclusion of ongoing leases, as well as future planning and budgeting," O'Reilly said.

How are key lawmakers reacting?

Citizens has a top-ranked legislator on its payroll, Senate Majority Leader Ryan Pearson who, by day, is a senior vice president in "partner lending" at the bank.

Asked this week if he had discussed the potential state purchase of the Citizens building or the rewrite of the state's bank tax law with other legislators − or the governor, Pearson texted a one-word answer: "No."

But Citizens has a powerhouse lobbying team that includes:

• Former House Speaker William J. Murphy at $25,000 a year

• William Farrell & Associates at $5,000 monthly.

House Speaker K. Joseph Shekarchi, asked about McKee's late-game asks of the legislature, told The Journal on Wednesday: "There'll be a robust, open, transparent, public hearing and we'll allow the governor's people to make their case."

"I try to keep an open mind on every issue," he said.

But when asked if he had any concerns about the price of the building and the potential $15-million annual revenue loss from the proposed tax move, he said:

"I am always concerned about the fiscal stability of the state ... So yes, if you ask me, 'Speaker, what's the one thing that keeps you up at night?' It's always making sure that we pass a balanced budget. I'm always concerned with the fiscal realities of the current day situation."

Any upside? He said "the rent that we're paying for several state agencies is very high. So we have to look at this in the long term."

But "I'm sure there'll be questions from the public and I'm sure there'll be questions from the members of the committee. I look forward to the administration's response to those questions and their presentation."

What about the bill to change the banking tax approach?

"We always want to be competitive and we want to look at what our neighbors are doing, but we have to balance ... the fiscal realities of the present day situation," said Shekarchi, acknowledging his growing concern about the "evolving" cost of demolishing and rebuilding the failed Washington Bridge, last pegged at $679 million, including borrowing costs.

"Even the latest numbers we have may not be the last numbers," Shekarchi said of the bridge.

This article originally appeared on The Providence Journal: McKee pushing purchase of Citizens Bank-owned building