Economic Development Blog

The Rhode Island Department of Environmental Management (DEM) was awarded a $2.9 million grant from the U.S. Economic Development Administration (EDA) for infrastructure improvements at the Port of Galilee.

Port of Galilee, RI (photo – Juliancolton/wikimedia)

Deputy Assistant Secretary of Commerce for Economic Development Matt Erskine was there for the announcement and a tour of the port, along with Rhode Island Gov. Lincoln Chafee, U.S. Senators Jack Reed and Sheldon Whitehouse, U.S. Representative Jim Langevin and other local officials.

“Modernizing the Port of Galilee is a smart investment that recognizes the importance of the fishing industry to our economy and will help spur business activity, create jobs, and boost Rhode Island’s economy,” said U.S. Senator Jack Reed.

Reed is a senior member of the Senate Appropriations subcommittee that oversees EDA funding, and also hosts an annual EDA Grant Workshop to help Rhode Islanders successfully apply for EDA grants.

“This federal funding will support some of the most critical components of Rhode Island’s economic recovery: our infrastructure and our key fishing and tourism industries,” said Gov. Chafee. “For generations, the Port of Galilee has been a significant part of the economic life of our state. We are grateful to the Obama administration for this grant, which is a long-term investment in Rhode Island’s economy with the added benefit of good construction jobs in the near-term.”

The $2.9 million EDA investment will support major repairs at the Port of Galilee. The project is expected to create 21 new jobs, retain an additional 685 jobs, and generate $720,000 in private investment, according to grantee estimates.

“DEM has a long history of managing construction projects of this size and is adept at doing them in an environmentally sustainable manner,” said DEM Director Janet Coit. “We look forward to taking on this project that will bolster the commercial fishing and tourism industries in Rhode Island and pleased to be the recipient of these federal funds, particularly in such challenging times.”

The Port of Galilee is operated by DEM and is one of the largest working commercial fishing ports on the East Coast, providing fish, squid and lobster to both national and international markets.

According to a Commercial Fisheries Research Foundation report, the annual value of sales associated with fish landed by Rhode Island vessels is about $200 million. Nearly 7,000 people are employed catching, processing, distributing, and selling the fish harvested by Rhode Island vessels.

Home to over 240 commercial vessels, the Port includes 38 docks and piers and supports hundreds of small and medium-sized businesses, hundreds of jobs, and attracts thousands of tourists.

Rhode Island Governor Lincoln D. Chafee announced the state a plan to integrate the economic development efforts currently undertaken by multiple state agencies is now underway.

RIEDC (Photo – ri.gov)

The plan begins with an effort to collect and analyze economic data, and identify the state’s strengths and possible ways to improve the economic conditions of Rhode Island.

To this end, the Rhode Island Economic Development Corporation (RIEDC), in collaboration with Statewide Planning, issued a request for proposal (RFP).

The funding for this project comes from a $1.9 million federal grant by the U.S. Department of Housing and Urban Development (HUD) Sustainable Communities program.

In addition to RIEDC and Statewide Planning, the Rhode Island Departments of Environmental Management, Labor and Training, and Transportation are all part of this project.

“Because of this federal grant through HUD, we have an opportunity to develop a whole new approach that integrates efforts across state agencies and involves community partners to mobilize our assets to create a better place for all of Rhode Island,” said Statewide Planning director Kevin Flynn. “This partnership with the RIEDC is the first step in a larger plan to combine business growth with strategic land use, transportation, housing, environmental protection and social equity issues.”

As per the RFP, the analysis will focus on six key areas – business climate; targeted cluster analysis and validation; state regulatory environment; financial resource assessment; marketing analysis; and economic development assessment.

The aforementioned sixth and last key area involves assembling all the data analysis and assessment into a single, written report that describes and analyzes Rhode Island’s existing economic development assets and challenges. It must be suitable for use as the basis for the development of both short-term economic development strategies and a separate but related long-term economic development plan.

“This data and information collection will enable us to better execute economic development strategies that bring Rhode Island the best chance of success,” said Paul McGreevy, director of the Department of Business Regulation and special advisor to the Governor. “We want to understand the areas where Rhode Island excels and should focus additional resources in the short term and long term.”

This data analysis project looks to be the first step towards implementation of the REPEC study asked for by the Governor. The study had called for a “Council of Economic Advisors” to provide economic analysis and serve as a repository of economic related data.

The completion deadline for the economic data collection and analysis project is Feb 8, 2012.

“In 90 days we will have data analysis that we will use to inform decisions to use our assets wisely, prioritize our ideas and focus our resources in specific areas where we can make a real difference,” says Gov. Chafee.

The Rhode Island Economic Development Corporation (RIEDC) has filed a lawsuit against 38 Studios founder and former Red Sox pitcher Curt Schilling. Apart from Schilling, the lawsuit names thirteen other defendants including former RIEDC executive director Keith Stokes and the RIEDC’s own lawyers who acted as legal counsel for the deal.

RI Gov. Chafee video on 38 Studios lawsuit

38 Studios was a video game company that was provided a $75 million loan guarantee by the RIEDC as an incentive to relocate from Massachusetts to Providence, RI.

They spent the loan money and more borrowed funds trying to make the video game, but ended up laying off hundreds of workers before filing for bankruptcy.

The state of Rhode Island was left holding an unfinished finished game and a huge unpaid loan. This led to RIEDC executive director Keith Stokes and others to resign. Curt Schilling blamed the Governor for denying the company film tax credits and eroding confidence in the company with public statements that pulled the rug out from under financing deals 38 Studios was negotiating.

Many state and federal agencies, including the FBI, were investigating actions taken by the company and its officials leading up to the layoffs and bankruptcy. The company’s headquarters was recently auctioned by the RIEDC, and that brought in a gross $650,000.

A recent RIPEC study ordered by RI Gov. Lincoln Chafee recommended complete restructuring of the agency and turning the quasi-public agency into a state agency as part of a larger Office of Commerce in the Governor’s Office.

The lawsuit now filed by the RIEDC in the Rhode Island Superior Court throws the book at everyone involved, from Wells Fargo Securities which it claims received a $500,000 hidden commission to the lawyers, the EDC board and Stokes for not doing their fiduciary duties to assess whether the company could complete the game it was making.

Gov. Chafee put out a video statement along with a copy of the complaint filed in the court.

In the statement, Gov. Chafee says that with the goal of minimizing loss of taxpayer dollars, “we engaged Max Wistow, a seasoned attorney with decades of experience in complex litigation matters, including financial restitution and settlements. Over the past four months, Mr. Wistow and his team have thoroughly examined the 38 Studios situation and the state’s position. In executive session of the Economic Development Corporation Board, we received an extensive briefing from Mr. Wistow on his findings. In that meeting, the Board voted without opposition to authorize legal action.”

A lawsuit against Curt Schilling and other 38 Studios executives was to be expected. But it might have been a bit of an overreach to haul so many of the EDC’s own people to court. It sends the wrong message that if an economic development project in Rhode Island goes wrong, then agency officials and consultants may literally have to pay for it out of pocket.

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Many of the leaders in the state of Rhode Island want to make the region much more business friendly.

A report was conducted in which economic development issues were discussed. The leaders also agreed that a clear plan has not been formulated yet. A spokeswoman named Christine Hunsinger elaborates on how the Governor feels that it is very important to ultimately improve the business climate in the state of Rhode Island.

The Governor still does not know the exact changes that are going to be made to the Economic Development Corporation in the state. Many of the legislative leaders ultimately concluded that the EDC lacks focus and should be brought under the control of the government.

A representative named Donna Walsh elaborates on how the development committee has to move in a rapid manner in order to get things organized. The representative wants momentum to ultimately pick up so action can take place with the economic development department.

The report focused on many key issues such as:

1. Broad overhaul of many economic development efforts
2. Creating a new commerce office within the Economic Development Corporation
3. Mandating a comprehensive economic development plan by January
4. Improving the business climate by drafting the economic development package

Many of the lawmakers still do not know how much of the economic report will be supported. New proposals might also be drafted up into the new development document. The fall of 38 Studios had a major impact on the entire state of Rhode Island and they will need to slowly recover. The President of the Chamber of Commerce pinpoints that economic development must be the main focus as the state moves forward. Many of the leaders in Rhode Island don’t have the time to wait as many people are struggling.

Overall, the refocus on economic development will benefit the community immensely.

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Back in May 2012, when the RIEDC-38Studios mess became public, Rhode Island Governor Lincoln D. Chafee asked the Rhode Island Public Expenditure Council (RIPEC) to conduct an independent analysis of the structure and operations of the Rhode Island EDC.

RIEDC (Photo – ri.gov)

After conducting 75 interviews with more than 100 individuals in the public and private sectors, RIPEC has now handed over its report to Gov. Chafee and the recommendations go a long way beyond simply making changes to the RIEDC.

RIPEC has recommended that the RIEDC, which is currently a quasi-public agency, should be restructured and become a state agency named the Rhode Island Commerce Corporation (RICC). The new agency would be part of a larger Office of Commerce in the Governor’s Office.

They do not recommend disbanding the current RIEDC. Rather, the report suggests that the board, or what remains of it, should be retained and it would still have its own executive director. But the RICC would report to the Secretary of Commerce, who would be in charge of the economic development efforts.

The Secretary of Commerce would be a cabinet member with the authority to coordinate economic development efforts across multiple agencies. Furthermore, the wide-ranging report suggests that the Rhode Island Department of Labor and Training (DLT), Department of Environmental Management (DEM), Department of Business Regulation (DBR) and the Office of Regulatory Reform should all be moved into the secretariat along with the newly restructured RICC.

They suggest piling the RICC, DLT, DEM, DBR and ORR together under the control of the Commerce Secretary will make it easier to coordinate, approve and monitor economic development projects. The Commerce Secretary will be appointed by the Governor and will be a cabinet member, but will not require confirmation from the RI legislature.

As for the internal restructuring of the current RIEDC, the report leaves alone their financing for now, but completely guts their decision making capability and delegates most of the work to other agencies or newly created councils.

A Council of Economic Advisors will provide economic analysis and serve as a repository of economic related data.

A Commerce Board chaired by the Commerce Secretary would handle financing, metrics and internal policy development. The Commerce Boards would be filled with representatives of the state agencies would work with the Executive Office, Statewide Planning and the Governor’s office to coordinate and focus economic development efforts across agencies.

The RICC would be left with “concierge” functions, directing business development queries to state and EDC financing entities or to Advisory and Mentoring services.

Read a detailed overview of the RIPEC report on the Rhode Island EDC – Download (pdf)

It’s not like the Rhode Island Economic Development Corporation (RIEDC) staffers and board don’t have enough to worry about. But their cup might just flow over if RI Gov. Lincoln Chafee accepts a proposal that has been submitted to disband the RIEDC and distribute its functions to three separate entities.

RIEDC (photo – senedia.org)

The report suggesting the revamp of the state’s economic development efforts has been put together by Gary S. Sasse, Scott A. Gibbs and Marcel A. Valois.

Sasse is director of the Bryant Institute for Public Leadership. Gibbs and Valois are respectively president and vice president of the Economic Development Foundation of Rhode Island.

They propose to break up the agency into three components:-

-         Create an “Office of Strategic Development and Economic Policy” within the office of the Governor.

-         A university-led research department to provide real-time and accurate data.

-         A new board of directors to administer programs.

The report suggests the strategic office attached to the office of the Governor would provide the direction and vision, and coordinate with various state departments to ensure everyone was on the same page.

The university think tank would be funded by the state and through private contributions. They would collect data, monitor trends, benchmark performance and provide the Governor with the accurate data and analysis required to make informed decisions.

The new board would be a public-private board, charged with managing the state’s reputation, forming partnerships with the private sector and supervising development projects undertaken.

After the 38 Studios debacle that left the state stuck with a $75 million loan for which the RIEDC provided a guarantee, Gov. Chafee asked the Rhode Island Public Expenditure Council (RIPEC) to conduct an analysis of the RIEDC and figure out what could be done to make it work better.

RIPEC plans to hold a forum in September called “Make it Happen RI” where key policymakers, business leaders and non-profits will be knocking heads together trying to figure out a way forward.

Meanwhile, Sasse, Gibbs and Valois, authors of the aforementioned report, met with the RIPEC leadership and submitted their report. Sasse is the former head of RIPEC, which he lead for three decades. They also sent the report to the Governor’s office, but Gov. Chafee has not commented on it as yet. Valois is a former head of the Rhode Island EDC, which he lead in the 1990s.