Russell Moore: Superman Is Not Curt Schilling
Monday, May 06, 2013
Our state’s budget, while in better shape as of late thanks to cuts during the recession, still always seems to be cash-strapped. The Superman Building’s principal owners are wealthy investors, which leads people to interpret the potential tax credits as corporate welfare. And then of course what’s most concerning is the fact that Rhode Island is still smarting from the 38 Studios debacle.
But saying that spending tax credits to save the Superman Building is like saying I lost money buying Enron or Lehman Brothers stock and therefore I’ll never buy another stock again. It’s like a business owner saying that he lost money on one business venture and therefore he’ll never get into business again.
That hasn’t stopped some political opportunists who have been quick to jump on the issue and try to exploit it for their own advantage. Ken Block, of the Moderate Party, sent out a release comparing the Superman Building to 38 Studios, and Representative Patrick O’Neill (D-Pawtucket) has also compared the two issues.
I could certainly emphasize with that “once bitten twice shy attitude” if the two projects were in anyway similar to one another. But the empty Superman Building is only similar to Curt Schillings video game venture is that they’re both projects that sought historic tax credits. Outside of that, it’s hard to see what else the two issues have in common.
The 38 Studios project was highly speculative in that the business owner either had little or was willing to invest very little of his own capital on the project. The owners of the Superman Building already spent $40 million of their own money on the project, and the company is willing to invest another $55 million of their own money to make the project a reality.
Further, if the state didn’t choose to invest tax credits in the 38 Studio’s deal, the state wouldn’t have lost anything by telling the retired baseball star to find another interested party—the same way the state of Massachusetts did. For that reason, practically nobody, outside of Governor Donald Carcieri and his cronies, supported the deal.
But if the state just slaps its hands together and lets the Superman Building stay dark and vacant for an extended period of time, we very well may be cutting off our collective noses to spit our face. Does it really do us any good to have the tallest building, with lots of historical significance, just sit vacant in the middle of Rhode Island’s capital city? I think not. I would argue that if we don’t be proactive in preserving our economic climate, we run the risk of becoming Detroit East.
The fact of the matter is that this is a brick and mortar building that’s already here and is already an integral part of our state’s culture and our capital city’s skyline. If the state were to invest the tax credits, we will see a result of our investments sooner rather than later. If the project moves forward, it will create over 600 construction jobs, and would generate $44 million in employee compensation, according to a feasibility study commissioned by Highrock Westminster LLC. This includes $25 million in employee compensation from direct jobs and $19 million from multiplier jobs. Those numbers are admittedly from the people seeking a cash infusion and therefore can’t be taken as gospel truth, but it’s without question that the state would see some sort of an economic boon from the project’s construction, and the multiplier spending it will create.
Further, because there would be apartments that people will be living in, the city and state as a whole will see increased economic activity. And apartments seem to be one thing in demand in the city right now as several apartment complexes in the downtown area have waiting lists.
I also find it disconcerting that people are attacking the project by attacking Highrock’s representatives—some of which worked on House Speaker Gordon Fox’s re-election campaign last year. The project is either worthy of tax credits or not based its merits—not who is pitching the message. Besides, did people expect Highrock executives to hire individuals who the Speaker dislikes?
All that being said, I certainly would not support handing over $39 million in state tax credits to the developers with no strings attached. If the state has been backed into a position where it has to act as a venture capital company, then the state should act like a private sector venture capital company. And that means taking an equity position in Highrock as a result of its investment. That way, when the project becomes a successful money-making operation, the state’s taxpayers will profit on the back end of the investment.
With that approach, the state’s taxpayers will make money instead of losing it, while simultaneously benefitting from the economic expansion as a result of the project. The end result, as long as the project is a success becomes a win-win-win situation for everyone involved—most importantly, Rhode Island residents.
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