Details Emerging About How CA Developer Robbins Got $3.6M From Commerce, Raimondo

Friday, October 07, 2016

 

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Darin Early earns $170K as President and COO of Commerce

GoLocalProv.com has learned from multiple sources that Rhode Island Commerce Corporation board members -- and Board Chair, Governor Gina Raimondo --  were not fully briefed on the past track record of California developer Lance Robbins, when they were asked to vote on $3.6 million in tax credits at the Board meeting on September 26.

In fact, only two documents were handed out to the Board prior to the vote, according to Commerce -- a GoLocalProv.com article, and what was presented as an "internal review" -- which proved to be from the grant recipient, Urban Smart Growth. 

The documents were a GoLocalProv story about the relationship between a candidate for the House of Representatives -- Michael Gazdacko -- relating to his effort to unseat Representative Anastasia Williams in the Democratic primary; and a two page memo from Aaron Iskowitz, who is the Regional CFO at Urban Smart Growth, according to his LinkedIn account.

Iskowitz claimed in the memo, "The 26+ years of development has not been without its challenges and legal hurdles." But he also refuted allegations outlined by elected officials in Los Angeles, as well as prosecutors, and housing advocates as reported by GoLocal.

He wrote in the memo, "The City has been found to use its housing enforcement procedures unlawfully for political purposes. The allegation against Robbins on slumlord charges occurred right before a mayoral election of James Hahn. The charges were ultimately thrown out of court 60 days after the election." Hahn is the only person to serve as Prosecutor, Mayor of Los Angeles and is now a sitting Judge in California.

Iskowitz did not address the many other legal issues that Robbins faced in California during the 15 plus year period, which included convictions and his losing his real estate license according to press reports.

Robbins and Controversy

Robbins has had a highly controversial thirty-year track record, starting in Los Angeles, CA in which he was known as the city’s most “notorious slumlord” to his ownership of the Hope Artiste Mill, where a growing number of former shop owners call him everything from “the lowest of the low” to “morally bankrupt.”

The state's deal with Robbins was overseen by Commerce RI’s Darin Early, and according to multiple sources, beyond the two memos, he failed to disclose any of the past or present controversies that Robbins has been embroiled in — issues previously reported in dozens of articles in the Los Angeles Times over a 15 year period, and ones that have been unveiled by a GoLocal investigation.

GoLocal has received confirmation that besides the initial article by GoLocal about the House race and the memo from the member of Gazdacko's team, no independent review was conducted by Early or his team. 

No Commerce staff members conducted any independent review nor did they contact officials in Los Angeles or in other communities in which Robbins faced controversies.

Early's Role in Tourism and now Robbins

Early, who oversaw the selection of the vendors for the failed RI tourism campaign, earns $175,000 a year plus benefits as President and Chief Operating Officer at Commerce.

Elected officials and state leaders are calling for this project to be halted and are questioning why Rhode Island would go into business with someone with a track record like Robbins.

On Thursday night, GoLocalProv received a statement from Michael F. McNally, Chairman of the Commerce Corporation’s Investment Committee.

“The Investment Committee of the Commerce Corporation Board reviews projects applying for tax credits. Our committee was made aware of two things: the importance of the Hope Artiste Village project by members of the community, and allegations against Urban Smart Growth in California. This information was also disclosed to the full board," said McNally. He is a retired Member of Skanska’s senior executive team.

Behind on Taxes

According to those with firsthand knowledge of the briefings, there was limited disclosure that Robbin’s Rhode Island properties, which had often been significantly behind in taxes, both in Pawtucket and Central Falls, but no disclosure of other issues legal issues, convictions or penalties.

According to a 2014 article by the late-Bill Malinowski, “Hope Artiste Village Proprietor LLC, and the owners of a mill complex referred to as The Thread Factory on more than 12 acres straddling the Pawtucket-Central Falls line owe the cities a total of $776,306 in unpaid property taxes. It breaks down to $410,000 owed to Central Falls and $366,306 to Pawtucket."

In addition, Malinowski wrote that Robbin’s 'Hope Artiste Village' owed Pawtucket $124,690 for that current tax year during that period. In total, Robbins owed Pawtucket and Central Falls over $900,000 in taxes.

Both Central Falls and Pawtucket Mayor's offices tell GoLocal that Robbins paid up his taxes in order to be eligible for Rhode Island tax credits.

Members of the Board of Commerce RI are less than pleased with the staff work on the Robbins project and are concerned that other projects may have issues. 

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LA Times story about Robbins

Controversies Across the Country Include:

Los Angles, CA 

- Robbins was cited with 105 health and building-code violations, piled up 32 convictions, paid a $1 million settlement, just to name a few of his legal problems, according to press reports.

“Residents of a dilapidated building who say they regularly fight off armies of giant rats, swarms of cockroaches and youth gangs that roam their hallways have sued the building's owner for $10 million,” wrote the Associated Press in a 1986 article.

For more than 15 years, housing advocates, consumer groups and government attorneys took dozens of legal actions against Robbins and his companies. After years of legal battles, he pleaded to some crimes, and paid more than a million dollars in fines. 

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.”

As early as the mid- 1980's Robbins was being prosecuted by housing code violations.  As the LA Times reported, "He was fined $500 for a misdemeanor health code violation, in the first of eight convictions he would receive over the years for health and safety violations that included rat and cockroach infestations. He was sentenced to a 30-day jail term in 1987 after pleading no contest in two slum cases and admitting that he violated parole in an earlier one. Robbins agreed to donate $5,000 to the nonprofit Children of the Night in connection with another violation. He pleaded no contest to three fire code violations at a 63-unit building he runs and was ordered to serve 18 months probation."

Former Business Partner

Frank Gamwell, a former business partner of Lance Robbins of Urban Smart Growth (USG), said that he would "never do business with him again" after suing Robbins for $28 million and ultimately receiving the amount in arbitration.

Now, Gamwell is warning that Rhode Island should be doing its "due diligence" in dealing with Robbins. 

North Carolina

Urban Smart Growth (USG), was sued by the Town of Belville, North Carolina, in 2015 for backing out of a project, GoLocal has learned.  

Not only did the project never come to fruition, press reports show that USG engaged in discussions with the adjacent town of Leland to annex Belville's downtown and undertake the project with them instead. 

"We need to bring [Robbins] to light. It's really a shame-- he goes and buys up cheap property and tries and hoodwinks the local city councils to fund this kind of development," said Peter Schardien, who is the husband of Belville Commissioner Donna Schardien, of Robbins. "He's an attorney, or he used to be, and he knows how to get around things. He's no good."

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Threatening text from Robbins

Rhode Island

Blaze:

Phyllis Arffa, the originator and owner of the restaurant Blaze, said that Lance Robbins of Urban Smart Growth threatened to bankrupt her when her business was struggling at Hope Artiste Village.

Arffa, who owned and operated Blaze on Hope Street in Providence before moving to Hope Artist Village in 2015, said that she has had to go back to working in a kitchen to pay back $70,000 in debt that she accrued while trying to make Blaze work under Robbins, which she said she ultimately had to step away from due to financial and health reasons. 

Nosh:

A fourth former business owner in Hope Artiste Village has come forward to tell her story of a failed business venture under developer Lance Robbins -- who she says is "lower than low." 

Lee Forbes told GoLocal on Tuesday of how she opened Nosh in 2014, but by 2015 was fighting Robbins to try and stay in the mill space, despite having always paid rent on time, she claims. 

"[Commerce] didn't do their due diligence. Were there meetings open to public input on this? If so I would have been present," said Forbes of Governor Gina Raimondo and Commerce awarding the tax credits. "This guy is as low as they go."

Rosinha's:

A former restaurant owner at Hope Artiste Village said that she "wished she had sued" Urban Smart Growth (USG), the management company that was awarded $3.6 million in tax credits from the RI Commerce Corporation this week.

Rosinha Benros, who had opened and owned the restaurant "Rosinha" at Hope Artiste Village, said she had a number of issues with USG -- including having had gas being turned off due to USG not having paid their National Grid bill.  

"I opened that space, I created that place," Benros told GoLocal on last Thursday, of the restaurant she ran for over three years. "I can't even drive by, I loved that place so much. It just breaks my heart."

Metropolitan Public Safety:

A former security services vendor for Hope Artiste Village is claiming that owner Urban Smart Growth (USG) never paid them $23,583 for  services in a six-month span starting in 2013.

On Monday, USG, whose CEO and principal is controversial developer Lance Robbins, was awarded $3.6 million in state tax credits from Governor Gina Raimondo and the RI Commerce Corporation. 

“We started services on December 13, 2013 and ended services on June 21, 2014. They paid a total of six invoices during our services,” said Karen Voisard with Metropolitan Public Safety, who provided the check stubs from USG. “As of current standing with the company we are owed $23,583.00 for eighteen overdue invoices.That doesn't include any of the late charges as stated in our contract.”

Voisard provided copies of the eighteen overdue invoices along with the contract in place.

 

Related Slideshow: Growing Chorus of RI Leaders Call For Review of $3.6M to Controversial Developer

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Rep. Carlos Tabon (D - District 58 - Pawtucket)

Commerce took over a year to award the first round of these [RebuildRI] tax credits, and then they do them with an organization we’d like to think they did their due diligence. I take it personally — it’s my district, I’ve seen [USG] not be forthcoming and do what they said they’d do.

When [Robbins] came in ten years ago, he got state and federal tax assistance. He accrued a million dollar (tax) liability between two struggling cities. His way of 'figuring out a way to make it work' was a 'too big to fail approach.' This unscrupulous approach of the owner showed that they have very little respect for the taxpayer.

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Rep. Bob Craven (D - District 32  - North Kingstown)


Yes, I believe that the agreement with Robbins should be rescinded. In order to do so, we have to have legal reasons. That would include failure to repay, lack of transparency in the type of business he sought the loan for or any other legal reason to rescind the $3.6 million contract with Commerce.

Yes, I’m concerned about [the vetting process] in light of this Robbins deal. Yes, I would call for Oversight to look into this matter. 
 

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Mark Zaccaria (Republican Candidate for House District 32 - North Kingstown)

My question is how did Governor Raimondo’s people miss all this so completely?  See, once again, we have a PR nightmare developing.  Was the Commerce Corp’s ‘due diligence’ really diligent?  The scouting book on Lance Robbins seems to have been out there.  If they checked at all they found all this out.  So, assuming they knew about their guy’s sordid past, what did they think would happen when we gave him a three point-six million dollar check?  If the Commerce Corporation had reason to believe that this would all end well, then they should have started the public discourse on some of Mr. Robbins’ past peccadillos just in order to inoculate themselves from the fear, sarcasm, ridicule, and suspicion that is now growing around this decision.  
 

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Michael Smith (Independent Candidate for District 75 - Newport)

Yes, I absolutely agree that the $3.6 million in funding to Robbins should be stopped. It does not have a rigorous process. Intentionally?  I would join for an Oversight Committee investigation on this matter.
 

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Rep. Lauren Carson (D -District 75 - Newport)

Refused repeated requests for comment.
 

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Rep. Patricia Morgan (R - District 26 - Coventry, Warwick and West-Warwick)

This is corporate welfare gone totally awry. This deal should be stopped immediately.  It is very troubling that the Governor would give money to a developer with such a disturbing track record of dishonest and unprincipled business practices.  These are taxpayer dollars that Commerce RI is giving away.  With what the public now knows, I doubt that Commerce RI board members would gamble their personal funds on a venture with this questionable developer.  Why is it appropriate to ‘invest’ tax dollars?  It is, after all, real money that comes from hardworking Rhode Islanders.
 
The scrutiny needs to be more rigorous, not less. The fact that the Commerce Board has refused to answer all  questions, makes me concerned about their vetting process.  Did they in fact do their homework and if so, how did they justify this award?  Revelations of his shady practices in other states that have hurt tenants and communities need to be examined in public view.  This is a ‘deal’ that needs transparency and legislative oversight.
 

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Vin Marzullo (Independent Candidate for House District 26 - Coventry, Warwick, and West Warwick)


It has become increasingly obvious that the RI Commerce agency lacks the in-depth vetting process to award tax credit investments for RI business deals.  The $3.6 million in funding to Robbins should be immediately suspended and the Speaker of the House should immediately direct the House Oversight Committee to examine Commerce's vetting process and make appropriate recommendations for legislative action.  We should not be partnering with corporations that have established a practice of being irresponsible and divisive to the community.  After the 38 Studios debacle we must be very selective & thorough in any public investment.
 

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Anthony Paolino (Democratic Candidate for House District 26 - Coventry, Warwick, and West Warwick)

In years past, Rhode Islanderss have been forced to pay for the mistakes of failed investments, as we've seen with companies like 38 Studios. We cannot afford to make any more decisions like this. Now, more than ever, we need to ensure that the Commerce corporation is doing its due diligence when making investments of this magnitude.

This investment should not have been made with an individual like Robbins, given his history of poor business practices. However, if the commitment has already been made by our Governor, we need to fully understand the ramifications of "stopping the funding". 
As for the Oversight committee, that is a function of the Legislative branch. This decision is made by the administrative branch of our government, therefore, oversight has little involvement to my knowledge per our Constitution.  
 

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Ray Mathieu (Independent Candidate for District 2 - Providence)

Yes, the $3.6 million in funding to Robbins should be stopped. 

Yes, I’m worried that Commerce doesn’t have a rigorous enough vetting process. 

Yes, someone should definitely look into​ this.
 

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Steve Frias (Republican Candidate for District 15 - Cranston)

Yes, the $3.6 million in funding to Robbins should be stopped. 

Yes, I’m worried that Commerce doesn’t have a rigorous enough vetting process. 

Yes, Oversight should look into this.  I would not have voted for Rebuild Rhode Island Tax Credits in the first place.

In 2015, in an opinion column, I spoke out against these type of corporate welfare programs. I wrote: "Rather than trying to fundamentally change Rhode Island’s business climate to benefit all, Raimondo’s business financing programs are designed to benefit a select few. These programs are not game-changers. It’s just the same old game, under a different name, that Rhode Island politicians have long played, while our economy has gone down the drain."
 

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Speaker Nicholas Mattiello (Republican Candidate for District 15 - Cranston)

 

See GoLocalTV Here
 

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Rep. John Lombardi (D - District 8 - Providence)

Where is the oversight and transparency? The state should adopt debarment — any company that’s had problems should not be able to get public monies for five to ten years. 

Also, let them insure the money or set up bond equal to money given — collateralize money. Who’s doing the vetting — keystone cops?
 

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Sav Rebecchi (Independent Candidate for Senate District 13, Newport)

This reminds me of what we had to contend with at Quonset back in 2005 when the QDC was established. I was on the Board representing the interests of Jamestown through 2010. 

Those of us on the Strategic Planning Committee were challenged with the haphazard way tenant agreements were in place and those that never existed. There was no vetting of the businesses in the park before we took over, so we had a legal and financial quagmier to clean up. 
It took almost three years to get it all settled and producing benefits for the State.  Fortunately, with good management from a quasi public corporate structure,  it flourishes today.  The GA rewarded our work by firing the Managing Director, Geoff Grout and taking half of our profits. (Story for another day)

EDC/Commerce should have learned from that experience and built on the model we developed over the six years I was there (term limited).  QDC was just the child protege of EDC back then with little appreciation for what had been done and so they went ahead and did 38 Studios. Very disappointing.
 

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Senate President Teresa Paiva Weed (D - District 13 - Newport)

She refused to respond about the questions and submitted via her Senate staff the following statement:

“When the budget was enacted, we indicated we will review the success and strengths of all programs, including the economic development tool box. The Senate will conduct this review as part of its annual hearings on the budget.”
 

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Brian Newberry (R - District 48 - North Smithfield, Burrillville)

I have never been a fan of the whole Commerce RI corporate welfare program and I seriously question how transparent the process is. It would seem a prime candidate for House or Senate Oversight just as a matter of good practice.  As for Lance Robbins in particular all I know is what I have heard in the press lately so I wouldn’t jump to any conclusions but it certainly does not sound good.
 

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Daryl Gould (Libertarian Candidate for District 67 - Bristol)

The idea that an individual could be considered the worst slumlord in California, and their last name isn't "Sterling", is disturbing. I do believe that the $3.6 million in funding should be stopped, as should many of these public private partnerships. The fact that Robbins has such a checkered past only makes it more concerning.


If it were to move forward. I would like to see protections for the state incorporated into these agreements, far beyond what we have seen from Commerce Corp in the past. They have demonstrated an inability to act in the best interest of the RI small business and taxpayer.

(In the spirit of full disclosure, my business was hired by Urban Smart Growth in 2010 to assist them with environmental concerns/mold remediation at Greystone Lofts in Smithfield.I did not observe any impropriety with regard to our dealings and I have nothing negative to say about the local management, which includes former candidate for State Representative, Michael Gazdacko).
My concerns with the Commerce Corporation extend far beyond their vetting processes. We have seen one example after another that indicate that they are suffering from systemic failure. These failings have, and continue, to cost RI taxpayers millions of dollars. As such, there should be forensic level scrutiny into their business practices and relevant transactions.

I would support legitimate, independent oversight of Commerce Corp's operations. Rhode Islanders deserve accountability and transparency.
 

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Rep. Mike Chippendale (R - District 40 - Foster)

You have to question every move [Raimondo] makes with a great amount of caution. We’re seeing fit to give $3.6M that would otherwise be revenues and we're giving to a millionaire.

Let's not forget - [Commerce] wants to talk about safeguards. The language of the legal document for 38 Studios required a third party monitoring firm, which they never did. What makes us think if they couldn’t monitor $75M, how can we trust they’ll monitor $3.6 million? None of this adds up. It’s got too many holes in it.
 

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Rep. Pat Serpa (D - District 27 - Warwick, West Warwick, Coventry)

I read [Representative Chippendale’s] press release with interest. I agree in calling for a halt [to the credits].

Serpa cited separation of powers constraints on the Oversight Committee, as well as the fact the Assembly is out of session and members are in political battles, as reason she thought the Assembly should discuss how to look at the issue in the upcoming legislative session. 

 
 

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