Stefan Pryor, Heads Commerce RI, refuses to respond to questions about the amount of diligence conducted on the project
A growing group of leaders -- and candidates -- in Rhode Island are publicly questioning the awarding of $3.6 million in state tax credits to developer Lance Robbins and Urban Smart Growth, after a GoLocal investigation. Now, nearly twenty are raising questions about the level of due diligence conducted by commerce in vetting Lance Robbins.
SEE SLIDES BELOW OF LEADERS RAISING QUESTIONS
Robbins had come under scrutiny in California after being reported in the press as the state's most notorious slumlords. He has been the subject of lawsuits in North Carolina and Connecticut. This week, former tenants of Hope Artiste Village in Pawtucket have come forward with their stories of failed businesses and financial ruin.
"One of the major economic development initiatives of the Governor and General Assembly was the massive expansion of the corporate welfare agency that did the 38 Studios deal. Rebranded as Commerce RI, this agency now has the tremendous power to hand out millions of dollars in preferential tax deals and cash subsides directly to corporations. Company-specific deals put the state government in the position of picking winners and losers. Without getting into a discussion of the merits of corporate welfare driven economic development, any agency that has the power of a Commerce RI must constantly be put under the public microscope," said Sasse.
Repeatedly, GoLocal has asked Governor Gina Raimondo, who chairs the Commerce RI Board, if she has concerns about the issues in California, Connecticut, North Carolina, and Rhode Island relating to Robbin's business practices, but she has refused comment.
"In granting preferential tax deals to developers Commerce RI has the responsibility to undertake a due diligence process that among other factors considers the developers past performance, reputation in the community, and the statewide strategic implications of the deal. The decision to award tax breaks to any business must be conducted in the most transparent, accountable and open fashion. It is long past time for the General Assembly to fully investigate the decision-making process of Commerce RI and let the sunshine in," said Sasse.
Related Slideshow: Growing Chorus of RI Leaders Call For Review of $3.6M to Controversial Developer
Commerce took over a year to award the first round of these [RebuildRI] tax credits, and then they do them with an organization we’d like to think they did their due diligence. I take it personally — it’s my district, I’ve seen [USG] not be forthcoming and do what they said they’d do.
When [Robbins] came in ten years ago, he got state and federal tax assistance. He accrued a million dollar (tax) liability between two struggling cities. His way of 'figuring out a way to make it work' was a 'too big to fail approach.' This unscrupulous approach of the owner showed that they have very little respect for the taxpayer.
Rep. Bob Craven (D - District 32 - North Kingstown)
Yes, I believe that the agreement with Robbins should be rescinded. In order to do so, we have to have legal reasons. That would include failure to repay, lack of transparency in the type of business he sought the loan for or any other legal reason to rescind the $3.6 million contract with Commerce.
Yes, I’m concerned about [the vetting process] in light of this Robbins deal. Yes, I would call for Oversight to look into this matter.
Mark Zaccaria (Republican Candidate for House District 32 - North Kingstown)
My question is how did Governor Raimondo’s people miss all this so completely? See, once again, we have a PR nightmare developing. Was the Commerce Corp’s ‘due diligence’ really diligent? The scouting book on Lance Robbins seems to have been out there. If they checked at all they found all this out. So, assuming they knew about their guy’s sordid past, what did they think would happen when we gave him a three point-six million dollar check? If the Commerce Corporation had reason to believe that this would all end well, then they should have started the public discourse on some of Mr. Robbins’ past peccadillos just in order to inoculate themselves from the fear, sarcasm, ridicule, and suspicion that is now growing around this decision.
Michael Smith (Independent Candidate for District 75 - Newport)
Yes, I absolutely agree that the $3.6 million in funding to Robbins should be stopped. It does not have a rigorous process. Intentionally? I would join for an Oversight Committee investigation on this matter.
Rep. Patricia Morgan (R - District 26 - Coventry, Warwick and West-Warwick)
This is corporate welfare gone totally awry. This deal should be stopped immediately. It is very troubling that the Governor would give money to a developer with such a disturbing track record of dishonest and unprincipled business practices. These are taxpayer dollars that Commerce RI is giving away. With what the public now knows, I doubt that Commerce RI board members would gamble their personal funds on a venture with this questionable developer. Why is it appropriate to ‘invest’ tax dollars? It is, after all, real money that comes from hardworking Rhode Islanders.
The scrutiny needs to be more rigorous, not less. The fact that the Commerce Board has refused to answer all questions, makes me concerned about their vetting process. Did they in fact do their homework and if so, how did they justify this award? Revelations of his shady practices in other states that have hurt tenants and communities need to be examined in public view. This is a ‘deal’ that needs transparency and legislative oversight.
Vin Marzullo (Independent Candidate for House District 26 - Coventry, Warwick, and West Warwick)
It has become increasingly obvious that the RI Commerce agency lacks the in-depth vetting process to award tax credit investments for RI business deals. The $3.6 million in funding to Robbins should be immediately suspended and the Speaker of the House should immediately direct the House Oversight Committee to examine Commerce's vetting process and make appropriate recommendations for legislative action. We should not be partnering with corporations that have established a practice of being irresponsible and divisive to the community. After the 38 Studios debacle we must be very selective & thorough in any public investment.
Anthony Paolino (Democratic Candidate for House District 26 - Coventry, Warwick, and West Warwick)
In years past, Rhode Islanderss have been forced to pay for the mistakes of failed investments, as we've seen with companies like 38 Studios. We cannot afford to make any more decisions like this. Now, more than ever, we need to ensure that the Commerce corporation is doing its due diligence when making investments of this magnitude.
This investment should not have been made with an individual like Robbins, given his history of poor business practices. However, if the commitment has already been made by our Governor, we need to fully understand the ramifications of "stopping the funding".
As for the Oversight committee, that is a function of the Legislative branch. This decision is made by the administrative branch of our government, therefore, oversight has little involvement to my knowledge per our Constitution.
Steve Frias (Republican Candidate for District 15 - Cranston)
Yes, the $3.6 million in funding to Robbins should be stopped.
Yes, I’m worried that Commerce doesn’t have a rigorous enough vetting process.
Yes, Oversight should look into this. I would not have voted for Rebuild Rhode Island Tax Credits in the first place.
In 2015, in an opinion column, I spoke out against these type of corporate welfare programs. I wrote: "Rather than trying to fundamentally change Rhode Island’s business climate to benefit all, Raimondo’s business financing programs are designed to benefit a select few. These programs are not game-changers. It’s just the same old game, under a different name, that Rhode Island politicians have long played, while our economy has gone down the drain."
Where is the oversight and transparency? The state should adopt debarment — any company that’s had problems should not be able to get public monies for five to ten years.
Also, let them insure the money or set up bond equal to money given — collateralize money. Who’s doing the vetting — keystone cops?
Sav Rebecchi (Independent Candidate for Senate District 13, Newport)
This reminds me of what we had to contend with at Quonset back in 2005 when the QDC was established. I was on the Board representing the interests of Jamestown through 2010.
Those of us on the Strategic Planning Committee were challenged with the haphazard way tenant agreements were in place and those that never existed. There was no vetting of the businesses in the park before we took over, so we had a legal and financial quagmier to clean up.
It took almost three years to get it all settled and producing benefits for the State. Fortunately, with good management from a quasi public corporate structure, it flourishes today. The GA rewarded our work by firing the Managing Director, Geoff Grout and taking half of our profits. (Story for another day)
EDC/Commerce should have learned from that experience and built on the model we developed over the six years I was there (term limited). QDC was just the child protege of EDC back then with little appreciation for what had been done and so they went ahead and did 38 Studios. Very disappointing.
Senate President Teresa Paiva Weed (D - District 13 - Newport)
She refused to respond about the questions and submitted via her Senate staff the following statement:
“When the budget was enacted, we indicated we will review the success and strengths of all programs, including the economic development tool box. The Senate will conduct this review as part of its annual hearings on the budget.”
Brian Newberry (R - District 48 - North Smithfield, Burrillville)
I have never been a fan of the whole Commerce RI corporate welfare program and I seriously question how transparent the process is. It would seem a prime candidate for House or Senate Oversight just as a matter of good practice. As for Lance Robbins in particular all I know is what I have heard in the press lately so I wouldn’t jump to any conclusions but it certainly does not sound good.
Daryl Gould (Libertarian Candidate for District 67 - Bristol)
The idea that an individual could be considered the worst slumlord in California, and their last name isn't "Sterling", is disturbing. I do believe that the $3.6 million in funding should be stopped, as should many of these public private partnerships. The fact that Robbins has such a checkered past only makes it more concerning.
If it were to move forward. I would like to see protections for the state incorporated into these agreements, far beyond what we have seen from Commerce Corp in the past. They have demonstrated an inability to act in the best interest of the RI small business and taxpayer.
(In the spirit of full disclosure, my business was hired by Urban Smart Growth in 2010 to assist them with environmental concerns/mold remediation at Greystone Lofts in Smithfield.I did not observe any impropriety with regard to our dealings and I have nothing negative to say about the local management, which includes former candidate for State Representative, Michael Gazdacko).
My concerns with the Commerce Corporation extend far beyond their vetting processes. We have seen one example after another that indicate that they are suffering from systemic failure. These failings have, and continue, to cost RI taxpayers millions of dollars. As such, there should be forensic level scrutiny into their business practices and relevant transactions.
I would support legitimate, independent oversight of Commerce Corp's operations. Rhode Islanders deserve accountability and transparency.
You have to question every move [Raimondo] makes with a great amount of caution. We’re seeing fit to give $3.6M that would otherwise be revenues and we're giving to a millionaire.
Let's not forget - [Commerce] wants to talk about safeguards. The language of the legal document for 38 Studios required a third party monitoring firm, which they never did. What makes us think if they couldn’t monitor $75M, how can we trust they’ll monitor $3.6 million? None of this adds up. It’s got too many holes in it.
Rep. Pat Serpa (D - District 27 - Warwick, West Warwick, Coventry)
I read [Representative Chippendale’s] press release with interest. I agree in calling for a halt [to the credits].
Serpa cited separation of powers constraints on the Oversight Committee, as well as the fact the Assembly is out of session and members are in political battles, as reason she thought the Assembly should discuss how to look at the issue in the upcoming legislative session.
