May 10th, 2013 at 11:07 am by Ted Nesi under Nesi's Notes
By Dan McGowan
PROVIDENCE, R.I. (WPRI) – R.I. Gov. Lincoln Chafee on Thursday sided with former campaign rival and Moderate Party Chairman Ken Block after Block ripped House Speaker Gordon Fox’s plan to restructure the state’s troubled Economic Development Corporation.
April 25th, 2013 at 5:15 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – House Democrats led by Speaker Gordon Fox on Thursday proposed a complete overhaul of the state economic agencies as they unveiled a sweeping set of bills they say will “improve the coordination and quality” of Rhode Island’s troubled economy.
The Democrats’ other proposals include bringing back the tax credit for historic buildings, this time capped at $5 million per project and potentially $30 million in total; allowing employers to pay workers biweekly; considering curbs on the overuse of jobless benefits by seasonal employers; and creating a new tax credit for local employers who add jobs after making major capital investments.
April 8th, 2013 at 2:33 pm by Ted Nesi under Nesi's Notes
By Dan McGowan
Gov. Lincoln Chafee’s nominee to head up the Economic Development Corporation may be a blast from the past, but Marcel Valois has made it pretty clear that the quasi-public agency is in need of major changes.
In an op-ed published last year in the Providence Journal, Valois and former Rhode Island Public Expenditure Council executive director Gary Sasse argued that the state’s economic development strategy “should be changed from a government-dominated, reactionary model to one that operates within a strategic network of committed, innovative, collaborative and agile stakeholders from all sectors.”
Here’s their pitch:
To reboot the Ocean State’s economic development, a new public/private economic-development process should be built on the following organizational framework:
• Create an Office of Strategic Development and Economic Policy within the governor’s office, using existing resources. This office would help set a vision and strategic direction for economic-development activities. It would also work with other state agencies to ensure that economic-development-related functions are effectively coordinated and to reinforce statewide economic strategies and programs. This office would help make sure that all state agencies are rowing in the same direction.
• Establish an independent, university-based professional economic-research collaborative to provide decision makers with real-time economic data and analysis needed in making evidence-based decisions. The collaborative would collect and aggregate critical economic data create dashboard indicators measure specific trends, develop performance metrics, conduct cost/benefit analyses for major state investments and market based reality checks. The mission of the collaborative would be provide invaluable insight and foresight necessary for formulating effective economic-development policies.
• Transform the current EDC in to a public/private Economic Resource and Management Investment Board. This new board would have the responsibility invest state economic-development resources into public/private initiatives in the areas of (1 marketing, reputation management, and customer-relationship management, (2) restructuring public-finance programs to better leverage private capital through public and private collaboration and professional financial management, including underwriting and oversight, (3) investing new business expansion strategies and value-added services and measuring the return on those investments.
March 7th, 2013 at 4:12 pm by Ted Nesi under Nesi's Notes, On the Main Site
As you may have heard, Governor Chafee opposed the 38 Studios deal.
After Curt Schilling’s game company collapsed into bankruptcy last spring, Chafee asked for the resignations of every R.I. Economic Development Corporation board member who voted in 2010 to approve the company’s $75 million taxpayer-guaranteed loan.
Nearly all the members complied in one way or another, with one noteworthy exception: George Nee, president of the Rhode Island AFL-CIO and the leading voice of organized labor in the state. Nee didn’t resign and continued to attend board meetings despite Chafee’s request.
And on Thursday it was Nee – not Chafee – who got the last word: the governor just nominated the union leader for another term on the struggling board, along with four other new members.
February 25th, 2013 at 11:03 pm by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi and Carl Sisson
PROVIDENCE, R.I. (WPRI) – The troubled R.I. Economic Development Corporation is losing three more board members less than a year after its taxpayer-guaranteed loan to Curt Schilling’s 38 Studios fell apart.
November 30th, 2012 at 4:38 pm by Ted Nesi under Nesi's Notes, On the Main Site
Governor Chafee decided to tap veteran R.I. Economic Development Corporation staffer William Parsons as its new executive director despite Parsons’ involvement in a 1999 scandal over executive expense accounts.
Parsons was reprimanded and demoted from deputy director to associate director after he approved – perhaps inadvertently – the EDC’s purchase of a plane ticket to Disney World for the son of its legal counsel, who wound up resigning along with other top staff members, according to newspaper accounts.
Parsons was also criticized for taking a $300 cash advance off his EDC credit card, charging $19.77 at a Family Pet Center in North Providence and failing to reimburse the agency for $390 he spent to bring his wife on a trade mission to London.
Christine Hunsinger, a spokeswoman for Governor Chafee, said Friday the governor was aware of the expense irregularities but decided it wasn’t a reason to pass over Parsons, who has worked for the EDC and its forerunner since 1975, a year after former Gov. Philip Noel created it.
“Yes, there was an issue several years back and that was dealt with, and since that time his track record has been impeccable,” Hunsinger told WPRI.com. “The governor is confident that Bill Parsons is the right person because of the institutional knowledge he has in 37 years of public service. EDC will move forward and under the governor’s direction will be a force in driving economic development in the state.”
Hunsinger declined to say how many others Chafee approached about taking the job. She also said the governor called Senate President M. Teresa Paiva Weed to inform her of the choice. Parsons’ appointment must be confirmed by the Senate.
October 4th, 2012 at 10:44 am by Ted Nesi under Nesi's Notes, On the Main Site
The Rhode Island Public Expenditure Council’s 140-page study on the post-38-Studios future of the R.I. Economic Development Corporation has drawn mixed reviews, and even its supporters would agree the policy-heavy tome isn’t exactly a beach read.
Yet as both Lou Mazzucchelli and Karl Wadensten pointed out on Executive Suite, the study has its merits. And one of the best parts is actually a chart tucked away on page 40.
One of the EDC’s problems as an agency is that it’s never clear exactly how success should be measured. Is it job growth? Total startups? Net business migration? Income growth? State GDP? Something else? The lack of metrics makes it hard to judge whether the EDC is accomplishing anything.
It doesn’t have to be this way. RIPEC reports that Michigan and Utah “outline their performance metrics in their annual economic development organization report.” (EDC doesn’t do one of those.) As the table below indicates, “for each state economic development strategic initiative … Michigan lists measurable outcomes used to track performance on initiatives.” Take a look:
July 19th, 2012 at 5:39 pm by Ted Nesi under Nesi's Notes
By Ted Nesi and Tim White
PROVIDENCE, R.I. (WPRI) – Congressman David Cicilline and former House Finance Committee Chairman Steve Costantino are defending their support two years ago for government assistance to politically connected Capco Steel even though the company has defaulted on a taxpayer-guaranteed loan.
July 17th, 2012 at 4:44 pm by Ted Nesi under Nesi's Notes, On the Main Site
Stateline’s Jake Grovum was among the reporters who attended last week’s 38 Studios bankruptcy hearing, and today he’s out with an extended article about what went wrong. Some highlights (emphasis mine):
The state’s first error, economic development experts say, was placing so much of its economic development fund in one venture, especially a risky video game company.
“It’s the first time I’ve heard of a government giving away almost the entire store to one company,” says Anthony Figliola, the vice president of Empire Government Strategies and a familiar figure in economic development policy. “The state gave away most of its money to a start-up company. That’s alarming.” …
Since they’re moral obligation bonds, there’d be little standing for bondholders to recoup their losses should the state walk away. The wild card is the market’s reaction, and some say the backlash would be swift. “The market would treat it as tantamount to defaulting,” says Matt Fabian, managing director of Municipal Market Advisors. “They would be ostracized.”
But others say that’s overstated. With more debtors facing accumulated red ink, the market could be more forgiving. “Bondholders knew what they were getting into,” argues Craig Chilton, an adviser with BondView. “If I were a taxpayer in Rhode Island, I’d be hard-pressed to want to make good on the obligation.”
(photo: Ted Nesi/WPRI)
June 29th, 2012 at 5:38 pm by Ted Nesi under Nesi's Notes
By Ted Nesi and Tim White
PROVIDENCE, R.I. (WPRI) – House Speaker Gordon Fox on Friday denied that he pushed lawmakers to create a new $125 million loan program in 2010 knowing the R.I. Economic Development Corporation planned to pledge $75 million of the money to Curt Schilling’s 38 Studios.
In his first extended broadcast interview since 38 Studios’ demise, Fox told WPRI 12 about an April meeting where Schilling and Tom Zaccagnino, a 38 Studios board member, asked Gov. Lincoln Chafee to sign two consent agreements, one allowing the company to get tax credits and another to provide bridge financing.
Fox didn’t rule out the possibility that Rhode Island will opt to default on the $75 million moral-obligation bonds the EDC issued for 38 Studios, which are not legal obligations of the state and could require lawmakers to appropriate more than $12 million a year for bondholders through 2020.
June 26th, 2012 at 3:00 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) - The R.I. Economic Development Corporation has hired a special counsel, Max Wistow, to examine whether taxpayers have legal avenues to claw back some of the tens of millions of dollars they’re poised to lose after the collapse of Curt Schilling’s video game company, 38 Studios.
June 14th, 2012 at 1:11 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Citizens Bank is suing former Red Sox ace Curt Schilling personally for more than $2.3 million, alleging he promised to repay money his now-bankrupt video game company 38 Studios borrowed from the bank.
The court documents obtained by WPRI.com in the Citizens suit shed new light on how 38 Studios capitalized on its $75 million taxpayer-guaranteed loan from the R.I. Economic Development Corporation and what happened behind the scenes as the company fell apart last month.
June 11th, 2012 at 3:45 pm by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
PROVIDENCE, R.I. (WPRI) - Senate President M. Teresa Paiva Weed says her chamber may not take up Governor Chafee’s nominees to the troubled R.I. Economic Development Corporation board before lawmakers leave Smith Hill this week.
“I think we may have to come back,” Paiva Weed told WPRI.com. “That’s the way it’s looking.” She said the governor has been sending a significant number of appointments to the Senate in the waning days of the session.
Lawmakers are hoping to adjourn as soon as Tuesday, but confirmation hearings haven’t been scheduled for any of the six EDC nominees Chafee has put forward in the wake of the 38 Studios debacle: Marcia Blount, Pablo Rodriguez, Roland Fiore, Stephen Hardy, William Holmes and Peter Crowley.
The EDC board has 12 members in addition to the governor, who serves as chairman but only votes to break ties. The board has a number of major issues to take up in the coming months, including the runway expansion at T.F. Green Airport and dredging the port at Quonset Point.
Failure to confirm Chafee’s nominees would not necessarily cripple the EDC board, however. State law says “a majority of directors holding office shall constitute a quorum,” and that a vacancy “shall not impair the right of a quorum to exercise all of the rights and perform all of the duties of the corporation.”
As The Providence Journal first reported, Paiva Weed opted to move the EDC nominations through the Senate Judiciary Committee instead of the Senate Corporations Committee, which considered and approved his previous slate of candidates last year.
May 31st, 2012 at 4:55 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Governor Chafee on Thursday nominated three new board members to the R.I. Economic Development Corporation and ordered an independent outside review of the agency after a $75 million loan guarantee to 38 Studios blew up in its face.
May 30th, 2012 at 11:03 am by Ted Nesi under Nesi's Notes, On the Main Site
The average Rhode Islander would probably say 38 Studios has been lobbying Rhode Island political leaders, in light of multiple confirmed meetings and the company’s success in getting a $75 million taxpayer-guaranteed loan.
Secretary of State A. Ralph Mollis, however, takes a different view. His office says the company is under no legal obligation to register as an organization with business before the government.
“State law defines lobbying as influencing action on legislation by the General Assembly or the governor or on policy-making by the executive branch,” Mollis spokesman Chris Barnett told WPRI.com. “We have received no evidence or allegations of any such activities by 38 Studios that would trigger the requirement to register.”
38 Studios apparently agrees. The company has never registered anyone to lobby at the Rhode Island State House, even though Carcieri and Chafee administration officials, as well as House Speaker Gordon Fox, have all acknowledged meeting with Curt Schilling and other company representatives to discuss its plans.
May 29th, 2012 at 6:12 pm by Ted Nesi under Nesi's Notes
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – Governor Chafee sparred with Curt Schilling over his handling of the 38 Studios crisis on Tuesday as another one of the R.I. Economic Development Corporation’s board members resigned.
May 29th, 2012 at 9:52 am by Ted Nesi under Nesi's Notes, On the Main Site
There were no major headlines about 38 Studios and Rhode Island last August. Curt Schilling’s game company was quietly working on “Project Copernicus” on Empire Street, and the state was busy with other matters, like the looming special session on pensions.
Out of the spotlight, though, Aug. 16, 2011, marked a big day in the 38 Studios-Rhode Island relationship.
That day the EDC delivered 38 Studios $4.1 million in cash from the $75 million bond transaction the previous November. The EDC says the money was provided because 38 Studios had entered “into a satisfactory distribution agreement for its Project Copernicus.”
Strangely, however, no other evidence corroborates that 38 Studios nailed down a distribution deal for Copernicus, even though the EDC gave the company $4.1 million based on the existence of one.
May 25th, 2012 at 9:09 am by Ted Nesi under Nesi's Notes, On the Main Site
38 Studios laid off all its employees on Thursday, and in the subsequent coverage there’s been some confusion about how much cash the company actually got out of the $75 million loan Rhode Island’s EDC took out on its behalf. Here’s an outline of exactly when (and why) the EDC says it transferred the money to Curt Schilling and company.
• Nov. 2, 2010 … $10.9 million. “Upon delivery and the Date of Issuance of the Bonds AND after the date when [38 Studios], or a letter of credit bank selected by [38 Studios], presents reasonable documentary evidence to the [EDC] that the letter of credit required in connection with [38 Studios'] execution of that Lease dated Sept. 20, 2010 is to be issued subject only to the funding of a deposit account at such letter of credit.”
• Nov. 2, 2010 … $2.1 million. ”Collateralization for letter of credit that serves as the security deposit on Empire Street lease.”
May 24th, 2012 at 1:59 pm by Ted Nesi under Nesi's Notes, On the Main Site
Two more largely unknown subsidiaries that 38 Studios established are not incorporated in Rhode Island, casting further doubt on whether the company is eligible for millions of dollars in tax credits it needs from the state.
In November 2009, Curt Schilling’s embattled video game company apparently incorporated two limited liability companies under Delaware law, records show: Mercury Project LLC and Precision Jobs LLC. Neither company was registered in Rhode Island.
WPRI 12 reported Wednesday evening that 38 Studios’ failure to incorporate in Rhode Island could make it ineligible for more than $8 million in state tax credits it’s seeking to avoid insolvency. The governor’s office says officials are looking into the question of 38 Studios’ corporate residency.
May 23rd, 2012 at 10:50 am by Ted Nesi under Nesi's Notes
Wedbush Securities’ Michael Pachter tells Joystiq he’s not optimistic about how much money Rhode Island could raise by selling off 38 Studios’ intellectual property if the company goes under:
“Nobody is buying MMOs after Star Wars fizzled. I think value is low, probably $20 million or so,” Pachter said. “There is just no demand for game assets right now, as THQ proved when it tried to sell the Warhammer MMO. I think [Electronic Arts] could step in, since they are the publisher, so you might see some alternative way to get 38 some bridge financing.”
An Electronic Arts spokesman offered no indication to Joystiq that the company which distributed “Reckoning” is planning to step in as 38 Studios’ savior. On the other hand, Pachter’s comments are a reminder that Rhode Island won’t be stuck with nothing if 38 Studios collapses.
Principal and interest payments due on the 38 Studios bonds total $112.6 million through 2020. Subtract the $23.4 million set aside from the initial proceeds to pay the bonds, add another $20 million in proceeds from selling 38 Studios’ assets, and Rhode Island taxpayers’ total tab could be reduced to roughly $69.2 million.
September 22nd, 2011 at 9:50 am by Ted Nesi under Nesi's Notes
Rhode Island often finds itself at the wrong end of state ranking lists – think of unemployment, pension funding, business friendliness. But technologically speaking, you couldn’t be in a better place, the NYT reports (emphasis mine):
Internet speeds in the United States have long trailed those in other countries like South Korea. Downloading videos, games and other big files often takes far longer for Americans than their counterparts across the globe.
In the latest global rankings, the United States remained a slow-poke, placing No. 26 in terms of speediest Internet connections, according to Pando Networks, a company that delivers games and other large online files online for other companies. …
A separate study by Pando Networks earlier this month showed the average speeds in all 50 states. Rhode Island led the list with 894 [kilobytes per second] while Idaho finished last at 318 KBps.
Back when I was at PBN, I did a story on why Rhode Island’s Internet connections are so speedy. Experts gave a lot of the credit to Cox Communications, which invested early and heavily in Rhode Island’s broadband infrastructure; Verizon has done the same more recently.
July 13th, 2011 at 9:38 am by Ted Nesi under Nesi's Notes
38 Studios' R.A. Salvatore, Todd McFarlane and Schilling
Curt Schilling moved 38 Studios to Rhode Island in return for a $75 million taxpayer-guaranteed loan. But that doesn’t mean he’s given up on convincing private investors to put money into his gaming startup.
The investment banking arm of Swiss financial giant UBS has started circulating a “brief teaser” to drum up interest in a “pre-IPO fund raise” for 38 Studios, The Boston Globe’s Scott Kirsner reports.
The document includes some ambitious forecasts, according to Kirsner. UBS says 38 Studios will generate more than $100 million in revenue next year and be “extremely profitable” by 2013.
Kirsner describes the “pre-IPO” language as “quite a stretch for a company that has yet to release its first game.” 38 Studios’ first title, “Kingdoms of Amalur: Reckoning,” is due out in the first quarter of next year; its second, the massively multiplayer title “Project Copernicus,” is due in the fourth quarter. The latter’s development is being funded with the Rhode Island loan.
The Wall Street Journal’s Venture Capital Dispatch blog followed up on Kirsner’s item with its own take:
Privately, many venture capitalists that we talked to over the years about Schilling’s ambitious endeavor have rolled their eyes, saying they’d never invest in a hit-driven business. That’s especially true in this era of social gaming, in which companies like Zynga can build games cheaply and quickly. … Further, these VC said Schilling wasn’t willing to give up much control of the company. The case study said Schilling owned 82.5% of the company’s stock.
We’re unsure which, if any, venture firms would lend a hand, but if much of the development risk is out, Schilling might have a strong case. And hedge funds and mutual funds are swarming to Web companies right now, especially if this company really is pre-IPO (though also pre-revenue).
“Reckoning” has been winning quite a bit of advance praise since 38 Studios and distributor Electronic Arts began previewing it this spring, which is surely music to the ears of officials in Rhode Island (as is the fact that the company has dozens of job openings here).
The Globe and WSJ also imply that the state-backed loan is a key reason the company now feels so bullish about its prospects. 38 Studios received $21.4 million from the loan in two installments on April 18, which were its most recent payments, EDC spokeswoman Judy Chong said. That brings the total disbursed to about $43.8 million.
(photo: 38 Studios)
March 29th, 2011 at 7:00 am by Ted Nesi under General Talk, Nesi's Notes
So reports Business Insider, using data collected by the New America Foundation’s Measurement Lab.
The average download speed in No. 1 Delaware was 11.36 Mbps, compared with No. 2 Rhode Island’s 9.74 Mbps. We’re a heckuva lot faster than last-place Montana, which came in at 2.57 Mbps, but still in the slow lane compared with South Korea, where the government is promising universal 1 gigabit per second broadband by next year – that’s 1,000 Mbps.
Here’s a map of the Northeast posted by BI – the closer to red, the faster:
This doesn’t really surprise me. Back when I was a tech reporter at PBN, I reported on how Delaware’s broadband pushed Rhode Island’s from the top spot in the 2009 Speed Matters survey.
Experts I spoke with back then gave a big part of the credit for Rhode Island’s speedy connections to Cox Communications, which invested early and heavily in Rhode Island’s broadband infrastructure; Verizon has done the same more recently. The EDC is now making its own push through its Broadband Rhode Island initiative.
(map: Google, via Business Insider)
March 16th, 2011 at 2:35 pm by Ted Nesi under General Talk
Here’s something I haven’t seen anyone mention amid all the excitement over Fidelity moving workers from Massachusetts to Rhode Island – the state is giving the company significant financial assistance in return for building out its Smithfield facility.
The EDC borrowed a combined $35 million on Fidelity’s behalf to help the company pay for upgrades and then an expansion in Smithfield – $25 million in 1996 and another $10 million in 2002. Rhode Island taxpayers are also shouldering part of the payments so long as Fidelity keeps meeting certain targets for employment here.
EDC Executive Director Keith Stokes specifically cited the Fidelity agreement in defending the 38 Studios deal to the press last year. A third-party consultant monitors Fidelity on behalf of the EDC to keep tabs on whether it’s in compliance, he said.
Rhode Island spent $2.6 million in 2008-09 to cover its share of Fidelity’s repayments, Revenue Department documents show. The outstanding balance on the original $35 million debt was $27.7 million as of June 30, 2009, the documents say.
A separate report shows Fidelity received tax credits from Rhode Island worth $5 million in 2008-09 and $3.5 million in 2009-10. I’m not sure how those two payment streams interact, if at all; EDC spokeswoman Judy Chong said she is putting together materials explaining Fidelity’s state support now.
January 19th, 2011 at 3:07 pm by Ted Nesi under General Talk
Massachusetts got a little bit of a black eye last summer when 38 Studios agreed to decamp for Providence thanks to a $75 million taxpayer-guranteed loan. (“Who lost Curt Schilling?” asked The Boston Globe.)
But even as Rhode Island officials crow about spawning a new gaming hub here, at least some Bay State leaders are preparing to fight back. A new Massachusetts Video Game Institute was announced last month, and legislation to boost the industry is now being drafted, The Associated Press reports:
Massachusetts video game companies could receive tax credits and other incentives under legislation that seeks to strengthen the state’s foothold in an industry that’s sustained strong growth in a weak economy. …
Details of the legislation aren’t finished, but a draft offers a menu of possible tax credits tied to job creation or production goals for companies that design or produce video games.
Incentives would be offered to startups or existing companies who expand or relocate in Massachusetts. A so-called ‘clawback’ provision would help the state recoup investments in firms that leave or fail to produce promised jobs.
State Rep. Vincent Pedone said it’s too early to say what the effort would cost, but the goal is expand the state’s $2 billion video game industry to $20 billion in five years. …
Seventeen other states offer financial incentives to video game companies and the Province of Quebec has aggressively lured firms with tax credits. …
The effort comes after former Boston Red Sox star Curt Schilling decided to move his video game company, 38 Studios, to Rhode Island after that state offered a $75 million loan guarantee. Pedone said he believes Rhode Island took the wrong approach by focusing on one company and not the entire industry.
Rep. Bradley Jones, the House Republican leader, said he’s not against cutting taxes but doesn’t believe the state should pick “winners and losers” in the private sector. …
Massachusetts has already carved out a respectable niche in the industry, with 1,295 people directly employed by video game developers or publishers, according to a recent report by the Entertainment Software Association. That places the state fifth behind California, Texas, Washington and New York.
Those five states account for 71% of total employment in the video game industry, according to the same organization. Rhode Island doesn’t even merit an individual state report on its website. The state has a long way to go if it’s going to become a major hub for game developers.
January 11th, 2011 at 3:24 pm by Ted Nesi under General Talk
Electronic Arts will unveil 38 Studios’ debut game at an industry event in San Francisco on March 1, WPRI.com has confirmed.
EA will host a 20- to 30-minute demonstration of the game, “Kingdoms of Amalur: Reckoning,” at a press event during the annual Game Developers Conference, spokeswoman Amanda Taggart said in an e-mail. 38 Studios has a deal with EA to distribute and market the game.
“Reckoning” is being developed by Big Huge Games, a Maryland-based subsidiary that 38 Studios acquired in May 2009. The game is scheduled to be released this fall, Taggart said. It will cost $59.95 and be available on Playstation 3, Xbox 360 and PCs, according to Amazon.com.
38 Studios’ other project – Project Copernicus, a massively multiplayer online game – is the one that will be funded by the $75 million taxpayer-guaranteed loan the company got from the R.I. Economic Development Corporation last year. That game is supposed to be released in September 2012, according to bond documents.
38 Studios has received $22.4 million of the loan money so far, according to the EDC. The company will move into its new headquarters at One Empire Street in Providence by May 1.
January 10th, 2011 at 6:04 pm by Ted Nesi under General Talk
Remember the Verrecchia report?
That was the scathing outside review of the R.I. Economic Development Corporation commissioned by Governor Carcieri in late 2008, following the abrupt departure of its then-executive director, Saul Kaplan. The report’s recommendations inspired lawmakers to make a number of changes to the EDC the following year, and Lincoln Chafee cited it all the time as a way to back up his own criticisms of the agency during the campaign.
It’s worth noting, then, that Governor Chafee’s decision to only commit to one more year for Keith Stokes at the EDC’s helm, and Carcieri’s original decision to only give him a one-year contract, both go directly against a key point made by former Hasbro CEO Al Verrecchia and his co-authors.
“There has been far too much turnover at the [EDC] director level, and that, unquestionably, has affected the performance of the organization,” they said in their final report. Carcieri echoed that after the report was released, saying the EDC needed to be guided by someone whom business leaders and agency officials were confident would be around for the long haul.
More from the report:
Given the end of the Governor’s term in 2010, it may be difficult to attract the best candidate possible if the director position is perceived to have a short term. Accordingly, the State should be prepared to offer a 3-5 year employment contract at market-based compensation levels, if required. Naturally, the next Governor would have the flexibility to replace the director, but the guaranteed term of employment (as outlined in an agreement) should afford sufficient protection to candidates so that they consider the position an attractive one.
The General Assembly followed that advice by allowing the executive director to serve a three-year term, regardless of whether someone else takes office in the interim. Carcieri then offered the job to Ioanna Morfessis, who accepted before quickly backing out.
By that time, the EDC had been without a permanent leader for a year, and the state’s unemployment rate had long since hit double-digits. So Carcieri brought in Stokes – but only for a year. Now Chafee is keeping Stokes – but only for a year.
Chafee doesn’t have to get rid of Stokes next January, of course. But if Verrecchia & co. are to be believed, the failure to put someone at the helm of the EDC for the duration is hurting the state’s economic development efforts. Since Verrecchia is now chairman of the EDC board, maybe he’ll make that point to Chafee himself.
Update: Chafee spokesman Christian Vareika argues that focusing on how long Stokes serves in the job misses the report’s larger point, which is that the EDC needs to be given a clear direction.
“Nothing in what Governor Chafee has said about retaining Keith Stokes precludes him from completing his appointed term,” which goes until February 2013, Vareika said in an e-mail. “Further, the policy, strategy, and programmatic focus of the RIEDC is the purview of the governor and the [EDC] Board of Directors, and regardless of whether Stokes serves one year or more, there will be consistency in those areas.”
January 10th, 2011 at 5:01 pm by Ted Nesi under General Talk
Keith Stokes can stay in his job for up to two more years without a vote by the Senate, according to the Chafee administration.
When Governor Carcieri appointed Stokes to lead the R.I. Economic Development Corporation last winter, Carcieri said he was appointing him to a one-year term so the next governor could decide what to do about the EDC once he took office.
But it turns out the Senate’s vote to confirm Stokes gave him a three-year term, so he can stay in the job until February 2013 without another confirmation vote, spokesman Christian Vareika told me a few minutes ago.
However – and here’s where it gets confusing – Carcieri’s agreement with Stokes only covered one year. So Stokes will now need to negotiate a new contract with the Chafee administration to figure out, among other things, how much he makes. Carcieri paid him $185,000, nearly double what Stokes’ predecessor made but less than the $250,000 offered to Ioanna Morfessis, who backed out after taking the job.
For now Chafee is only committing to keeping Stokes for another year, through next January. “During that time, the governor wants to develop a working relationship [with Stokes], and they’ll revisit the issue in a year’s time,” Vareika said.
Update: Only giving Stokes a one-year commitment also goes against the Verrecchia report that Chafee has praised in the past.
January 10th, 2011 at 12:23 pm by Ted Nesi under General Talk
Governor Chafee has decided to retain Keith Stokes as executive director of the R.I. Economic Development Corporation. (Told ya.) Stokes was appointed to lead the agency last February by Governor Carcieri after Ioanna Morfessis decided not to take the gig. He makes $185,000 a year.
Mike Trainor, Chafee’s spokesman, tells me it’s unclear at the moment whether the Senate will need to approve Stokes’ reappointment.
The EDC’s press release from last year said Stokes “will serve in the position for one year, pending advice and consent of the Rhode Island State Senate.” According to Trainor, Stokes has a three-year contract with the EDC but only took a one-year leave of absence from his job as head of the Newport County Chamber of Commerce.
Thus it may be Stokes can continue on through February 2013 without action by the Senate. The administration’s legal team is sorting all that out at the moment, and Trainor says he’ll let us know when they figure things out.
Despite Chafee’s condemnation of the 38 Studios deal, Stokes has had kind words for the new governor since the day after the election.
As I mentioned in December, 38 Studios aside, Chafee and Stokes share similar versions of how Rhode Island should move forward economically – a point Chafee made in his statement today. “Keith Stokes shares my vision of encouraging the success of small business while building on Rhode Island’s economic assets,” he said, “from the soon-to-be-developed Station District in Warwick and the Knowledge District in Providence to our defense industry on Aquidneck Island and our impressive tourism industry.”
Update: Senate spokesman Greg Paré says the Senate is also looking into whether Stokes needs to come before the chamber again. He said it does appear Stokes was only given a one-year term when the vote was taken last February.
Update #2: Just spoke with Paré again, who said that after asking around some more, he’s not sure whether Stokes got one year or not. They’re trying to figure that out this afternoon.
Update #3: The mystery is solved – no vote is needed. See my follow-up post for more.
(photo: EDC)
January 7th, 2011 at 12:13 pm by Ted Nesi under News and Politics, On the Main Site
38 Studios had a good reason to firm up its May 1 target date for relocating to Rhode Island – it was worth nearly $10 million to the company.
The EDC just confirmed to me that the company recently received another hefty infusion of cash from its $75 million loan:
The video game company founded by former Red Sox pitch Curt Schilling got the $9.4 million payment last month after it confirmed plans to move from Maynard, Mass., to Providence by May 1, EDC spokeswoman Melissa Chambers told WPRI.com on Friday.
38 Studios has now received $22.4 million, or 30 percent of the loan money, in two installments. The first payment of $13 million was handed over when the loan transaction closed on Nov. 3.
38 Studios is moving to the six-story, 104,316-square-foot One Empire Plaza building in Providence, which has been vacant since Blue Cross & Blue Shield of Rhode Island relocated to a new facility near Providence Place mall. Renovations are currently under way at the building, owned by Boston-based Berkeley Investments.
38 Studios’ next payout will be for $17.2 million, according to the timeline in the bond documents. It can obtain that money once it relocates to Rhode Island and employs 80 full-time workers here.
The company is tentatively scheduled to have all but $11 million of the total loan money by the end of this year. It cannot receive the remainder of the money until it pays off the rest of the loan, which is supposed to happen by November 2020.
Full story on WPRI.com. Back in September, I did a big story explaining how the loan payouts to 38 Studios are structured, and I included a year-by-year timeline at the bottom of it. That story is here if you want to check it out.