Top Democratic Social Club Received Low-Interest Loan from PEDP
Tuesday, August 14, 2012
A prominent Democratic social club in Providence’s Silver Lake neighborhood was a recipient of a taxpayer-funded loan through the Providence Economic Development Partnership (PEDP), GoLocalProv has learned.
In August 2003, the PEDP signed off on an $87,510 loan for the Rosario Society, a now 79-year-old non-profit fraternal organization that has hosted dozens of political fundraisers and Providence Democratic City Committee meetings over the years.
The loan’s two percent interest rate over ten years was at least two percentage points lower than every other loan awarded during Congressman and former Mayor David Cicilline’s first several years leading the city (another two percent interest loan wouldn’t be awarded by the PEDP until April 2005), although Cicilline did not take over a chairman of the agenecy's board until 2004.GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST
“This revelation illustrates why there needs to be serious consideration whether economic development loan programs should continue to be a function of agencies subsidized by local government, period,” said Donna Perry, executive director of the Rhode Island Statewide Coalition (RISC).
Club has Political Connections
The PEDP has come under fire in recent months after the quasi-public agency admitted that its loans had an extraordinarily high default rate. Last month, the Department of Housing & Urban Development (HUD) cited the city for lacking “adequate oversight” over the loan fund over a ten-year period. In its investigation, HUD found poor record keeping and more than $1.5 million in questionable expenditures by the agency. HUD also questioned whether several nonprofit organizations were even eligible to receive a loan from the city.
In June, the PEDP’s board of directors, chaired by the sitting Mayor (in this case, Angel Taveras) voted to write off 29 loans that were unlikely to ever be paid back. The board agreed to consider write-offs every year moving forward, something it had not done since 2008.
Records show the Rosario Society still owes about $13,500 on its loan, but it is currently up to date on its payments.
Still, Perry questioned why the PEDP would ever loan money to a social club known for its connections to local politics.
And those connections run deep.
According to its most recent corporate filing, the Rosario Society’s President is Phil Almagno, who has been a fixture in city politics since the ‘70s. Campaign finance reports show politicians have spent more than $6,600 at the club since 2007.
In 2010, the club was also the site where the Democratic City Committee overwhelmingly endorsed Steven Costantino in his bid for Mayor. Costantino ended up finishing third in a four-way primary, behind Taveras and John Lombardi.
Most recently, the Rosario Society’s treasurer, State Senator Frank Ciccone, held a fundraiser at the club in March. Following the event, Senate Majority Leader Dominick Ruggerio was arrested on drunk-driving charges in Barrington and Ciccone allegedly threatened the arresting officers. The incident led to Ciccone losing his position as chairman of the Senate Government Oversight Committee and his post on the Finance Committee.
“Whether statewide or coming out of the Providence agency, this newest revelation shows there has been too little oversight on these programs, and too much of a favor factory environment connecting economic development loans to insiders,” Perry said. “There’s little opportunity for these loan programs to translate into job market growth or economic activity expansion when they are misused in this way, and that is a betrayal to both the taxpayer and the unemployed in Providence and statewide.”
Cicilline’s campaign did not respond to a request for comment on this story.
Republicans Rip Congressman
Because he served as chairman of the PEDP during his time as Mayor, Cicilline’s handling of the agency has been called into question by critics on both sides of the aisle. Last weekend, Councilman Kevin Jackson and former Councilman John Lombardi each confirmed that they were told the Council could have no oversight over the agency in 2006.
On Monday, the campaign for Republican Congressional candidate Brendan Doherty chastised the Congressman for his record as Mayor of Providence.
“David Cicilline's tenure as Mayor of Providence was an abject failure,” said Doherty campaign manager Ian Prior. “We know that he failed to tell the truth. We know that he failed to manage the city’s finances. Now we continue to learn how he failed to manage federal money allocated as part of the PEDP loan program. Simply put, David Cicilline failed the residents of the city of Providence, left the city in shambles, yet parlayed it into a position in the United States Congress.”
Republican Party chairman Mark Zaccaria agreed with Prior. He questioned whether other organizations similar to the Rosario Society would have been extended a similar loan.
“What is really an affront to the hard working taxpayers of Rhode Island – the men and women who provided the cash that enabled the Mayor’s largesse – is that instead of sticking up for them and representing them as his constituents his disregard may have just numbed them further to government,” Zaccaria said.
Zaccaria said residents should take pride in the opportunity they have to improve government and hold officials accountable, but the Rosario Society loan is just another black eye.
“Instead, a story like this just elicits one more Rhode-Island eye-role followed by the fatalistic resignation that it will never change,” Zaccaria said.
Dan McGowan can be reached at [email protected]. Follow him on Twitter: @danmcgowan.
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