PawSox Deal is in Chaos
Monday, October 30, 2017
The deal that requires the City of Pawtucket and the State of Rhode Island to provide the financing scheme and more than $38 million to the billionaire owners of the Pawtucket Red Sox is in a state of chaos. The three primary decision-makers in the fate of the project have a range of positions.
Failed Economic Review By Commerce
Now, Governor Gina Raimondo, Senate President Dominick Ruggerio, and Speaker of the House Nick Mattiello have all voiced a range of opinions about the deal. The unraveling of the proposal negotiated by Raimondo’s Secretary of Commerce Stefan Pryor is wildly unpopular and the collective group of team owners are refusing to guarantee the project and are refusing to turn over the team’s financials.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTMany have voiced frustration with Pryor’s failure to properly vet the project. This is not the first time the Pryor’s Commerce dropped the ball in conducting a financial review.
Last September, GoLocal unveiled that Governor Raimondo and the Board of the Rhode Island Commerce Corporation voted to provide Urban Smart Growth — which is run by controversial developer Lance Robbins — up to a maximum of $3,569,657 in Rebuild Rhode Island Tax Credits.
However, one of the top advocacy lawyers in the country, Lauren Saunders, told GoLocalProv.com following the announcement on Tuesday, “Robbins was one of the most dishonest and unscrupulous people I have come across in my career working for vulnerable tenants and consumers. I cannot imagine entrusting any (public) money to him.”
Saunders, who is Associate Director of the National Consumer Law Center in Washington, DC, had battled with Robbins when she represented tenants in Los Angeles, CA where Robbins operated before relocating to Rhode Island.
Owners in Focus
The ownership group — with an estimated net worth of $6 to $8 billion — includes only one Rhode Island resident.
Now, state leaders are scrambling and running from the proposal. The concerns about the deal are spiraling. The chief advocate of the project said he is waiting. “[Senate President Dominick Ruggerio] is awaiting the recommendation of the Senate Finance Committee, and open to convening in November pending their recommendation,” according to Greg Pare, Director of Communications, Rhode Island Senate.
Senate Finance Chair William J. Conley, Jr. who has been an outspoken advocate of the project, has voiced frustration with the ownership for lack of transparency.
“Normally, the Commerce Corporation conducts a financial review and assessment of a company’s financial viability prior to moving forward with an agreement," said Conley. "Because this protocol was not followed, our committee has been working with the team since August to gather and vet this information, while recognizing the proprietary nature of the disclosure.”
“Several weeks ago we offered an arrangement by which the team would disclose necessary financial information to the Office of the Auditor General, which would assess the financial stability of the team as a partner to the proposed ballpark, subject to a non-disclosure agreement," said Conley. "Discussions are ongoing, however, the committee will not move forward without this necessary information.”
Raimondo recently made similar comments. “If they want the state to be their partner, they can’t hide anything from us,” Raimondo said on WPRO AM in an interview with Gene Valicenti. “That’s sort of part of the deal. And if they don’t want to, then, fine. Finance it on your own."
But Raimondo’s office somewhat flipped on that comment in a statement provided to GoLocal on Sunday.
"Yes, the Governor believes the PawSox belong in Pawtucket and supports the proposal before the General Assembly because it’s a good deal that protects Rhode Island’s taxpayers and helps to revitalize the city,” said David Ortiz, spokesman for Raimondo, and then followed up with, “The Senate has asked for more financial information as part of the public vetting they are giving the proposal. We will see how the team responds. The process is working.”
PawSox owners refused to respond to questions about releasing their financials or assuming the responsibility "backstop" the project, but PawSox Executive Vice President/General Manager Dan Rea issued the following statement to GoLocal on Sunday night: "We have no comment, other than to say that we continue to work with the Senate and House Finance Committees, and we're enthused about recent positive developments we've seen, including: the hundreds of citizens who have testified at the hearings, more than three quarters of whom expressed support for our project; eight separate chambers of commerce throughout the state that have endorsed our deal; and polling conducted by respected experts that shows broad support for our agreement when it's explained correctly."
Mattiello Opposes Existing Deal
A big shift in the fate of the financing deal is that Mattiello is now opposed to the deal now pending in the legislature.
"I have questions and concerns about this deal. In listening to many Rhode Islanders, my assessment is that most people may want the PawSox to stay here, but they are not comfortable with the present deal. This is the feeling of most of my Cranston constituents I have spoken with, as well as what I am hearing from my House colleagues, who are talking to their own constituents,” Mattiello told GoLocal Sunday.
As GoLocal unveiled in September, the provision of the 2010 RI General Law that created the guarantee loan program 38 Studios and the now pending legislation to fund the Pawtucket Red Sox Stadium shows that in both cases Rhode Island taxpayers will ultimately have the full obligation to pay off the bonds.
Former Director of Administration Gary Sasse weighed in on the PawSox financing scheme, following his appearance on Business Monday on GoLocal.
"I'm askance anytime government uses moral obligations -- in practice, it becomes a financial obligation," said Sasse. "Out of an abundance of caution, I'd advise against using moral obligation again."
Sasse noted that he believes the use of state funds for a local authority -- in this case, the Pawtucket Redevelopment Agency -- should constitutionally require a 2/3 vote by the General Assembly, similar to the budget.
Now, Mattiello is raising the same issue, "Under the terms of the current deal, I have concerns that the mechanism for Pawtucket repaying the city's share of the bonds is not specific enough and could put the taxpayers of Pawtucket and the state at risk.
"However, I will continue to assess the situation and communicate with House Finance Committee Chairman Marvin Abney and the committee members, who conducted lengthy hearings. I will continue to work with all parties involved, most importantly the taxpayers,” added Mattiello.
Lack of Public Support
Mattiello’s concerns about the lack of public support are reinforced by a recent poll conducted by John Della Volpe of Harvard in conjunction with GoLocal which found that there is little public support for the taxpayer dollars supporting the stadium.
The poll found just 28 percent support the financing and 67 percent oppose, when asked the following.
Recently, a proposal has been made to permit the issuance of $81 million in bonds by the State to build a new stadium for the Pawtucket Red Sox. If there was an election today on this issue, would you vote to approve or reject issuing $81 million in financing supported moral obligation bonds to build the stadium?
Net: Approve: 28%
Definitely approve: 15%
Probably approve: 14%
Net: Reject: 67%
Probably reject: 19%
Definitely reject: 48%
Don't know: 4%
EDITOR'S NOTE: An earlier version made reference to the stadium as being owned by the PawSox. As the Stadium deal is presently constituted the Pawtucket Redevelopment Agency will own the stadium -- the error has been corrected.
Related Slideshow: GoLocal: Benchmark Poll, October 2017
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