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RI GOP: $450 Million Spent on Convention Center Red Flag for PawSox Deal

Tuesday, March 10, 2015

 

The Rhode Island Convention Center

Members of the Rhode Island House Republicans are warning about "lessons learned" from the Rhode Island Convention Center lease agreement that has cost the state nearly a half billion dollars over the last twenty years, as the new owners of the PawSox eye Providence for a new stadium.

"Original forecasts said the Convention Center would pay for itself," said policy analyst Jeffrey Robert in the House Minority Fiscal office, who helped conduct the working group research. "Be wary of lease agreements -- [they] can cost Rhode Island millions with no voter approval required."

In a meeting Monday of the Rhode Island House Republican Policy Group, which included Deputy House Minority Leader Patricia Morgan, Representative Antonio Giarrusso, Representative Robert Nardolillo and Representative Robert Lancia, the first topic covered by the group has been the Convention Center Authority (CCA). The legislators present looked at a timeline of the inception of the CCA -- and its lease agreement with the state that resulted in nearly a half billion in subsidies appropriated by the General Assembly in 1994.  

"Since construction began in 1991, the CCA has cost the taxpayers approximately $440 million dollars and is expected to cost over $780 million dollars before all debt is retired.  The tab, picked up by Rhode Island taxpayers, amounts to about $25 million a year," wrote the Minority office in a release.  "That is twice the yearly price tag for 38 Studios and eight times more in total."

The report, which can be found here, referenced primary materials that showed early cost estimates for the Convention Center to be much lower than what the costs turned out to be.

Ballooning Projections, Cost To Taxpayers

Rep. Patricia Morgan

The power point presentation detailed the Convention Center from its conception as far back as 1984, when a Providence Foundation study projected that a convention center would run an annual deficit between $600,000 and $1.9 million.  

By 1987, the report showed that a City State Task Force Study, which called for a doubling of the size of the initial proposal of 45,000 square feet to up to 95,000 square feet, pegged the potential cost of the project to to be $100 million. 

"Most of those City State Task Force members were ultimately given jobs on the Convention Center Authority," said Robert. 

The report showed that the General Assembly created the Convention Center Authority that year in 1987 -- and Robert cited a Providence Journal article from 1993 by John Castellccui with the headline, "Will the Rhode Island Convention Center gobble up tax dollars and yield few benefits? Or will it help revive the state's economy?"

"Convention center officials praised Skeffington for coming up with the financing plans that made it possible for the project to be build as its price more than tripled and the cost of debt service jumped from $9.4 million to $24.3 million a year," wrote Castellucci of James Skeffington -- one of the new owners of the Pawtucket Red Sox.  

The report then goes on to show that in 1991, the state signed a lease agreement with the CCA, which meant taxpayers would pay debt service and operational costs -- and that a 1993 consultant's report said that by 1995 the project would require $18 million in subsidies a year.  

"In 1994, the first state subsidy [was] made to the CCA, and $5.5 million appropriated for debt service," wrote Robert.  "Subsidies have been appropriated each year since -- $454,500,000 has been appropriated from 1994-2015."

Currently the task force is looking at operating costs for the CCA.  NBC10's Parker Gavigan uncovered in a report on February 23 that even with a $25 million handout in 2014, the CCA lost $1.4 million in 2014.

Implications Moving Forward

The report cited the importance of the CCA's lease agreement moving forward. 

"The State has spent over $450 million," wrote Robert, noting that as designed the Convention Center had not been an obligation of the state, and was not expected to cost the state a dime.  "Rhode Islanders never voted to issue debt [which is] completely legal and could happen again. Be wary of lease agreements, [which] can cost Rhode Island millions, and no voter approval is required."

Currently, the new ownership of the Pawtucket Red Sox has expressed its interest in pursuing Providence as the ball club's next location with a new stadium. GoLocal spoke with economists and experts about the possible move would mean in early March.  

"I think what most economists not associated with teams find is that for professional sports, minor league sports is a low economic impact  -- so the amount of public investment should be low," said Victor Matheson, a Holy Cross Economics Professor who specializes in sports economics, on March 1.

"That doesn't mean that you don't provide infrastructure, support, so people can get to the stadium efficiently," said Matheson. "But putting a bunch of public money into the stadium to support someone else's business isn't the most prudent use of public funds."

The policy council said it planned to continue meeting on the CCA, with a "continued call for greater transparency and a follow-up of information."

"We will issue a final report to the Speaker and Senate President," said Morgan. 

 

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