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Providence kills $2.5M lease deal after questions raised

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PROVIDENCE, R.I. (WPRI) – The city of Providence has withdrawn from a multimillion-dollar agreement to lease building space on Federal Hill after learning a city official signed a letter of intent with the owner before the public had a chance to bid on the contract, Target 12 has learned.

The deal would have paid Northborough Realty Holdings LLC $2.5 million over 10 years to lease a building at 530 Broadway for a “one-stop job center.” But the Elorza administration informed the City Council Finance Committee Tuesday evening that it no longer plans to lease the space.

Emily Crowell, a spokesperson for Elorza, confirmed the mayor’s office pulled the contract after learning Brian Hull, the city’s director of the office of economic opportunity, signed a “non-binding” agreement with the building owner “prior to the normative process of seeking public bid.”

Crowell also said the administration learned the Providence-Cranston Workforce Development Board – the quasi-public agency the oversees the program, which connects potential employees with companies – has “an existing long-term lease on another property, for which the city continues to have certain responsibilities.” She said the board informed the administration it had a “strong preference” to continue using the job center’s existing location on Reservoir Avenue.

“Given these discussions and the complexity of the matter at hand, the administration requested that the matter be continued indefinitely,” Crowell said.

Nearly every city contract above $5,000 is required to be advertised for the public to bid on and then must be approved by both the Providence Board of Contract and Supply and the City Council. The policy comes from the city’s Home Rule Charter and is guided by state purchasing laws. It is highly unusual for any city employee to sign a letter of intent prior to going out to bid.

The decision to pull the contract angered Scott Adams, the owner of Northborough Realty Holdings. He appeared with his attorney before the council Finance Committee Tuesday, explaining that he met with “many people from the city” on several occasions in the month-and-a-half prior to the contract going out to bid.

Adams, who declined to comment to Target 12, told the committee Hull instructed him to bid on the contract, which was approved for advertising to the public on Dec. 10. The bids were opened two weeks later, on Dec. 26, and Adams’ company was the sole bidder on the contract.

“We took the property off the market at the request of the city and now the city is pulling the rug out from underneath us,” Adams told the committee. “That’s not really fair. I’m going on record to tell you that this process has been an abomination. It’s been not fair. It’s cost us money. It’s cost us time. It’s cost us aggravation. And this has been a joke.”

The council first raised questions about the proposed lease deal last week when Hull appeared before the Finance Committee to ask them to approve the contract. In a presentation to the committee, Hull claimed the deal with Northborough Realty Holdings could save the city more than $231,000 a year, but Committee Chairman John Igliozzi pointed out his numbers did not accurately represent what the city currently pays for the one-stop center.

The committee continued the matter until Tuesday, but the administration stepped in to pull the deal.

Hull, who earns $102,000 a year, did not respond to a request for comment this week. Asked if Hull would face discipline, Crowell said it is “under review.”

The city has not provided a copy of the letter of intent Hull signed with Northborough Realty Holdings prior to going out to bid.

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Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Facebook and Twitter: @danmcgowan

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