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Riley: Simple Questions in Need of an Answer by Providence Officials

Tuesday, July 28, 2015


Not only did Providence default on a $62 million dollar loan to the Police and Fire pension Plan Pension Plan on June 30, 2015. They will borrow $71.5 million dollars at 8.25 % in 2015 and 2016.In other States and Cities across the United States cash flow problems like the nearly insolvent city of Providence has are addressed by Tax Anticipation Notes. Yet Cicilline, Taveras and currently Elorza (a former accountant) borrow at 8.25% from their own pension plan when Tax anticipation notes are much cheaper. This has been going on for decades. This behavior is just one of 50 signs of distress in Providence Rhode Island and indicative of insolvency.

If you are a citizen of Providence or a reporter in the media here are some simple questions for the Mayor or Councilman Igliozzi.  
    •    Did Providence Default on an approximately $62 million dollar loan due June 30 2015?
    •    Does Providence borrow money from its own Pension fund?
    •    What rate of interest rate does Providence pay on its “timing difference”  for money due to pension plan that is paid late in October?

Those are simple Questions that every Providence Councilman, Treasurer and Mayor should know the answer to. Yes or no.  The same question should be asked of our State Treasurer, Auditor General and Governor. There is something very wrong if they can’t or won’t answer these simple and very relevant questions. I recently produced a report contending Providence has borrowed regularly from the pension fund without knowledge of the investment commission. Providence has paid and continues to pay over 8% for the use of these funds when Tax anticipation notes would suffice an could yield only 2 %. My report shows that Providence has been purposely and materially misleading bond investors, taxpayers, ratings agencies and pension beneficiaries for at least 10 years and as a result violated federal securities laws.

Recently, a Providence resident and supporter called the city hall and whoever answered the phone said the city had “no Knowledge” of a loan default. All I need is to get that person s name on the record. It’s clear that main stream media such as wpri, wpro, projo  etal can’t afford to be cut off from City Government and its news flow so the tough questions will  have to be asked by the citizens who are paying the freight.

Read the report and then contact Providence Officials if you are concerned.
Here is the email address for Finance Chair Igliozzi: [email protected].  Here is the Phone Number to town hall ask for the Mayor or Finance Director if you can’t ask them directly ask them using their voice mail. We will tabulate and publish how many taxpayers ask these three questions  and don’t get an answer through emails and phone calls.   401.421.2489     https://www.providenceri.com/mayor/contact

Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.    


Related Slideshow: 10 Questions Elorza Has to Answer as Mayor



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Department staffing?

Economic Development. Chief of Staff. Policy Director. Who will Elorza place in these key posts? Will former opponent Brett Smiley play a role? Will Elorza keep on any key Taveras staffers?

There are multiple questions in this category, and Elorza should be making moves shortly as to what his administration will look like.  Will former opponent Michael Solomon be part of the team?  Look to see. 

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Budget deficit?

Opponent Buddy Cianci famously said during the campaign that if there was a budget surplus in the City of Providence, he'd drop out of the race.

Councilman Terry Hassett told GoLocal that a close watch on the budget would be necessary in the coming year, as a "deficit exists." So how will Elorza tackle the fiscal challenge?  He's talked about looking at city government department by department.  Where will he make cuts if necessary?  Or will Providence see taxes being raised?

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Police force?

The Providence Police Department recently graduated a new class of officers from its academy -- but council members to community leaders are pointing out the numbers are still below even minimum staffing levels.

Will Elorza look to push through a new academy when he takes office?And how will he handle issues surrounding the department -- which following the most recent graduation, was at the center of intense public scrutiny?

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Car Tax Changes?

Elorza said during the campaign that he wants to raise the car tax exemption from where it stands at $1,000 back to where it once was at $6,000.  

So how's he going to make this happen?  He teamed with Raimondo at the Olneyville press conference to pledge that if elected they would work in tandem make it possible.  Will Providence see more aid from the state to fill the tax revenue hole?  

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Tax Breaks?

Tax stabilization agreements (TSAs) between developers and the City of Providence came under close scrutiny in 2014, as a report from City Auditor Matt Clarkin showed that the city wasn't collecting nearly what it was owed on the properties that cut special tax deals with the city in the name of development and job creation.  

One council member -- Sabina Matos -- proposed putting a freeze on new TSAs until a full review was done, and a standardized process was put in place.  Will Elorza continue to use TSAs as a tool in the economic toolbox? 

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195 development?

The 195 land, while in the hands of the State -- and 195 Commission, rests squarely in Providence, and as such, its redevelopment will have a profound impact on the economic future of the city.  

How active will Elorza be in the process of courting businesses to put their stake in the ground and be part of the urban renewal process in Providence? Lots of work is already underway with the roads and infrastructure -- how soon will shovels be the ground for tenants?

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Nonprofit relations?

As part of his administration, Mayor Angel Taveras ushered through historic PILOT (payment-lieu-of-taxes) agreements with the city's nonprofits, in order to obtain some fiscal relief from the tax-exempt institutions at t time when the city desperately needed it.  

Will Mayor Elorza look to go back to the colleges, universities, and hospitals should the city find itself in difficult circumstances once again? 

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Elorza's jobs plan as proposed during the campaign included such components a supporting entrepreneurs, women, and minority-owned businesses, and promoting a mentoring program with the city's colleges and universities.  

One of Elorza's proposals included the doubling of Providence's exports over the next five years.  How is Elorza going to make this happen?  He mentioned used cars and design exports during debates on the campaign trail.  What policy moves will Elorza unveil to make this prophecy a reality?  And where will Providence see the jobs?

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School success?

Central to Elorza's education plan is the concept of community schools, so that the buildings are utilized long after the school day for increased learning and recreation opportunities for the surrounding neighborhoods.

Elorza has called for less emphasis on standardized learning, and has proposed an investment in technology in the classrooms.  Where will Elorza find the money to achieve these goals -- and will they translate into academic success?

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One Providence?

In the next two weeks, Elorza will be making staffing decisions that will set the tone for the new administration.  Elorza won overwhelmingly on the East Side -- will he cull his talent from the 02906, or will he reach out to leaders across the city to comprise an administration reflective of the entire city's population?  How will Elorza achieve the vision of "One Providence?"


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