Search results: wexford
wexford-providence-featured

Big Wexford Deal, Big Exaggeration on Jobs

Kate Nagle and the GoLocalProv news team have dipped into a topic that has likely nagged at a lot of Rhode Islanders who follow the news:

Governor Gina Raimondo has repeatedly claimed that the $32 plus million in public subsidies will create 1,000 new permanent jobs in Rhode Island [at the I-195 Wexford development]. After weeks of requesting information about tenants, rents, and job creation, GoLocal was finally able to secure actual job numbers for the project and then fact check those claims.

In fact, actual jobs created will be closer to 80 to 90, at a cost of more than $32 million.

The two tricks of the higher estimate (which might even make the 80-90 projection high) are:

  1. The jobs are estimated based on square footage, and a key tenant, Cambridge Innovation Center (CICO), will actually just be renting out space to start ups, which may or may not utilize the space in accordance with the rule-of-thumb guest.
  2. Many of the claimed jobs, from Brown University and CIC, would have been created whether or not taxpayers gave Wexford such heavy subsidies, simply in other spaces.

I recently described how the Wexford-Brookings-CIC package is being sold for taxpayer handouts around the country.  GoLocal’s review of the jobs claims certainly advances the impression that Rhode Island has merely bought into a pitch.  If that’s the case, the next question is whether progressive Democrat Governor Gina Raimondo was duped or is in on the scam.

justin-katz-avatar-smiling

Nursing Education Center and Rhode-Island-Style Innovation

Take a moment to consider the import of this paragraph, from Ted Nesi’s report of the opening of a new combination URI/RIC nursing center and Brown University administrative center in Providence:

“This was a power plant across the street from the vibrant Jewelry District,” [Democrat Governor Gina Raimondo] said. “The economy is changing, and we’re not standing still. We’re changing with it. The New York Times just called this area, quote, ‘a busy hive of invention and collaboration.’ And so we’re changing the narrative of our whole state.”

In the past… the private market made Rhode Island a hub for a particular industry.  Now… the government collects $85 million from productive areas of the state’s economy to renovate a building vacated as the economic tide went out from the Ocean State and use it for bells and whistles at government-run universities and a wealthy tax-exempt non-profit.

Honestly, I don’t want to sound that cynical, but come on.  Now throw this into the mix:

The developer of South Street Landing was CV Properties LLC, a Boston-based firm led by Dick Galvin. Earlier this year, real-estate company Ventas Inc. paid nearly $130 million to buy the facility and a new 750-space parking garage being constructed next door from Blackstone Group LP. Ventas is the parent company of Wexford Science + Technology LLC, the developer building a high-profile innovation campus on the vacant 195 land in the same part of the city.

As I mentioned when I detailed the suspicious interconnections of the bigger Wexford deal, Ventas CEO Debra Cafaro and her husband are substantial Raimondo donors, located in the governor’s notable fundraising hot spot of Chicago.

Yeah, for the general public, renovated buildings make for nicer scenery than abandoned ones, but that doesn’t mean we should accept the surface story every time politicians proclaim the advance of public-sector-focused crony deals.  Somebody’s got to lose out, and we can be reasonably certain that it’s us.

justin-katz-avatar-smiling

Moving the Goal Posts and Dropping the Ball on 195

Old claim that government made to push debt for bonds on the land freed up by moving I-195:

The commission, and ultimately the state, is expected to use proceeds from the sale of individual parcels to pay back the principal and interest on those bonds.

New claim that government is making, as it prepares for the bond payments to escalate with not a single parcel of land having been sold, rather than given away:

[Peter McNally, executive director of the I-195 Redevelopment District Commission,] expects the Wexford project to be done sometime in 2019. By that time, he thinks developers will be clamoring for a piece of the land where the highway once stood.

We all know the next step.  The Wexford project sucked up some free land and millions of dollars in concessions to the company with the argument that it would spark additional development.  Instead, every developer who comes to the commission interested in land will want it for free as a bare minimum of the government’s concession in negotiations.  More likely, buyers will want tax gifts, too.

Remember this moment, though, so we’ll have grounds to complain when an “unexpectedly” slow start to the Wexford-driven economic explosion can’t be denied.  At that time, we’ll once again have reason to restate the simple principle that government shouldn’t impose “a very specific vision” for development, as Kim Kalunian puts it in her article (second link above).

Let the land sell as the market values it.  If the government wants to take action to make it more valuable, it should make all land in Rhode Island more valuable by reducing taxes and eliminating regulations.  Instead, we get this toxic mix of crony deals and the vanity of central planners who want to experiment on a statewide scale with our money and our lives.

justin-katz-avatar-smiling

The Governor’s Inappropriate Blurring of Roles with DACA Initiative

A larger percentage than I’d like of recent posts, in this space, have to do with the actions of Democrat Governor Gina Raimondo, but the hits just keep on coming, as they say.

We can offer wry quips, as John Loughlin deftly did, about Raimondo’s initiative to pay the $495 filing fees of applicants for federal Deferred Action for Childhood Arrivals (DACA) status.  Loughlin imagines the governor paying off the minimum corporate tax for small businesses in the state as an alternative.  Put aside, though, the specific policy (and questions about why the governor wants to create more incentives for illegal immigrants to locate in Rhode Island) and look at the process.

Data point 1: As Kim Kalunian reports on WPRI, the governor announced this program with at least the trappings of her official office, holding a PR event in the State Room of the State House, at a government podium.  Additionally, in a fundraising appeal (see below), Raimondo blends this initiative with various official programs of the State of Rhode Island as if they’re of the same nature.

Data point 2: The governor’s statement notes that “the Rhode Island Foundation is coordinating contributions and making grants to community agencies that have stepped up to do this work.”

Data point 3: A fundraising appeal for the initiative that the Providence Journal’s Kathy Gregg tweeted out was sent courtesy of the PAC, Friends of Gina Raimondo.

This blurring of public and private sector is absolutely inappropriate, but it’s a regular practice of Raimondo’s.  Recall, for example, the overlapping interests of Wexford Science and Technology (of I-195 Redevelopment fame), Raimondo, the RI Foundation, and the Brookings Institute.  Or consider her “hiring” of a chief innovation officer for her cabinet one step removed from government by being housed in the RI College Foundation.

It would be one thing if the governor were merely expressing support for some private-sector initiative, but instead, she’s acting through a shadow government serving unknowable interests and a far too obvious ideology.

justin-katz-avatar-smiling

Observations of Political Scene on Out-of-State Raimondo Fundraising

Let’s dispense with the minor observation of today’s Political Scene in the Providence Journal:

Rhode Islanders contributed [to Gina Raimondo’s campaign fund] more than any other geographic group — a total of $440,557 between Jan. 1 and June 30 to Raimondo’s anticipated bid for reelection, according to her most recent filings with the state Board of Elections. She banked another $23,025 from Rhode Island-based PACs, such as the RI Laborers PAC and the Hospital Association of Rhode Island.

Isn’t this kind of expected?  In fact, isn’t the more-newsworthy point something that Katherine Gregg never mentions: namely, that Raimondo has received roughly 60% of her donations, this year, from people out of state?  I can’t help but feel that if Raimondo were a Republican the Providence Journal’s question would be the same as mine:  Whom is this woman serving?  A big majority of Raimondo’s political income, so to speak, comes from people out of state.  How central can the state’s interests actually be to her?

The more-intriguing observation (which may help to answer the first) comes from this:

Also among Raimondo’s first-quarter contributors is Peter G. Peterson, a one-time U.S. Commerce secretary and CEO of prominent companies including Lehman Brothers before founding the private equity firm Blackstone Group, which he grew “into a global leader in alternative investments,″ according to his online biography.

This may be mostly a story about how small the world of investment elites actually is, but as I’ve detailed before, Blackstone purchased the parent company of Wexford — of I-195-subsidy fame — in 2015 and spun off the Wexford component in 2016.  It would go beyond the scope of my resources to investigate the amount of profit these transactions created and sort out the timing of Raimondo’s Commerce RI dealings with Wexford, but it’s telling nonetheless.

Regardless of the specifics, one could easily summarize that the governor Rhode Island receives a substantial majority of her political donations from people outside of the state that she governs, and some not-insignificant number of her donors are conspicuously connected to deals that she makes as the governor.  These associations sure ought to raise more questions than those posed by a weekly political-interest column.

monique-chartier-avatar

Booze Confirms: Sales Tax Sauce for Art Is Sauce for Everything Else

In case you (especially my fellow tea-totallers) hadn’t heard: in 2013, RI removed the sales tax on wine and spirits.

Coincidentally, that was also the year, at the urging of then-Senate President Teresa Paiva-Weed, the state removed the sales tax on art; more specifically, “original and limited edition works of art sold in the State of Rhode Island” were made exempt from state sales tax.

justin-katz-avatar-smiling

What Are Raimondo Campaign Donors Buying from Out of State?

Shortly after adding the certification of school bus drivers to my running list of tasks at which Rhode Island government is failing, my morning reading brought to my attention multiple articles about Democrat Governor Gina Raimondo’s big fundraising take in the first quarter of this calendar year.  Here’s WPRI’s Ted Nesi:

Raimondo continues to demonstrate a fundraising prowess rarely seen in Rhode Island politics, having raised nearly $3 million since becoming governor and millions more before that when she was general treasurer. The state’s last two-term governor, Republican Don Carcieri, had about $275,000 on hand at the same point during his third year in office.

Want a fun fact?  According to the helpful spreadsheets that one can download from the state’s campaign finance search tool, so far in 2017, only 31% of the $570,110 the governor has raised came from people with addresses within Rhode Island.  That does represent a little bit of a change.  Going back to 2009 (the earliest available for her) brings Raimondo’s in-state percentage up to 51%.  Over those seven-plus years, by the way, the governor of Rhode Island has averaged a $541 donation from people out of state, but only $406 from donors in the state.

For comparison’s sake, Cranston’s Republican Mayor Allan Fung, presumed to be Raimondo’s most likely GOP challenger in 2018, has collected 99% of his $30,109 campaign donations so far in 2017 from people with in-state addresses.  If it seems unfair to compare a governor with a mayor, turn to the fundraising record of former Republican Governor Donald Carcieri.  He raised 89% of all of his campaign money from people in Rhode Island, and Rhode Island donors gave him an average $427 donation, versus $397 from each out-of-state-donor.

So what are Raimondo’s out-of-state donors buying with their money?  I’m sure their motivations are manifold, but I can’t help but notice that Wexford Science & Technology is back in the news, having received approval for $13.5 million in taxpayer incentives to do business in RI.  As I highlighted back in December, the interactions of Wexford, the Brookings Institution, and other private organizations are certainly, let’s say, interesting, as is the overlap with Raimondo’s donor base.

justin-katz-avatar-smiling

The Partnership Model of Oligarchy

One wonders: If it weren’t for the heavy government-centric packaging and cover of the left-wing Brookings Institution, wouldn’t so-called progressives be highly skeptical of efforts like the Partnership for Rhode Island?

This is about CEOs addressing large societal issues and figuring out how money and expertise might advance certain efforts, said [Neil] Steinberg, president and CEO of the Rhode Island Foundation, one of the nation’s oldest and largest community foundations.

For a refresher, refer back to my piece on the “Wexford-Brookings Franchise.”  This is about business magnates working with government insiders and non-profit profiteers to shape our society more to their liking.  (We can trust that they like being wealthy and elite, by the way.)

We’re watching every socio-political lesson from history and fiction take shape before our eyes, and so many people are caught up in low-level political squalls and identity politics that we’re strolling right along with it.

The RI Center for Freedom & Prosperity has been placing more emphasis on the need for “civic society” institutions — that is, moving authority and decision making away from government and toward other institutions by which we interact, like business, churches, non-profits, and so on — but we mean something substantially different.  In our vision, people work together to solve their problems, forming organizations as necessary.

In the Wexford-Brookings-RI Foundation model, the people who already hold all the cards in our society essentially interweave government throughout our institutions to use them as leverage in their centralized goals.  That’s not freedom; it’s subjugation, however friendly a face they manage to put on it at first.

mike-stenhouse-avatar

Corporate Welfare – Are We Being Played?

For years, the insiders have conspired to create the cronyism rampant in the Ocean State. In their zeal for headlines, does the political class ever question the value of these corporate welfare deals? Just this week, we saw the results in questions surrounding the Governor’s claims in the Wexford deal. The tone-deaf Brookings report lays the ground work by recommending that we can achieve better results if, instead of taking the arbitrary approach to 38 Studios-style corporate cronyism that has dominated Rhode Island public policy for decades, we take the same approach in a more targeted and strategic manner. Nonsense.

monique-chartier-avatar

No More Blind Eye – General Assembly Must End Corporate Welfare Scam

In light of GoLocalProv’s blockbuster expose Friday that the Wexford job creation claim is off by nine hundred, the General Assembly needs to immediately defund all corporate welfare – and request that the Governor claw back much if not all of the taxpayer subsidies currently earmarked for Wexford.

justin-katz-avatar-smiling

Decorating the Governor’s Office with Red Flags

This paragraph from Ted Nesi’s weekend column, Saturday, deserves reading and clipping for future reference:

Tapping unusual funding sources to pay for public initiatives has become a hallmark of Gina Raimondo’s political career since she took office five years ago, and this was the week it backfired on her rather spectacularly. Raimondo has always had an easy time harnessing cash, as was widely noted as far back as 2010, when she set a blistering fundraising pace in a sleepy campaign for treasurer. Then in 2011 she courted controversy by encouraging anonymous donors – later revealed to include the hedge-fund billionaire John Arnold and his wife – to drum up support for her pension overhaul through EngageRI. Soon after she became governor, Brown created a new policy shop to advise her office, funded with nearly $3 million from Arnold. Then there was the Brookings study, commissioned by Raimondo to guide public policy but paid for by private donors (including Rhode Island native Mark Gallogly, whose old firm, Blackstone, just bought Wexford Science + Technology). And now there’s the contretemps over tapping the RIC and URI foundations to pay for, respectively, a chief innovation officer and a trip to Davos. In each case, Raimondo allies say she’s saving taxpayers money while doing things that are good for Rhode Island. But continuing to go the non-traditional route will also continue to raise questions about whether Raimondo’s methods skirt normal rules and accountability.

“Always had an easy time harnessing cash.” That’s something to watch in and out of government. In the ’80s, the design-the-world Greenhouse Compact failed when a required bond gave the people a vote, so now we get Raimondo funding her economic development schemes through a fancy debt refinancing deal and seeking to fund transportation infrastructure through a revenue bond based on tolls.

There was a time when even progressives and journalists were suspicious of the alchemy of creating money from air. Now, we get Rhode Island’s useless, navel-gazing, and corrupt Ethics Commission blithely noting that the chief innovation officer Raimondo hired through the private nonprofit Rhode Island College Foundation isn’t subject to its review because he doesn’t actually work for the state. Nesi hedges too much, because it’s absolutely clear that “Raimondo’s methods skirt normal rules and accountability.”

Remember, too, in this context, that certain legislators — notably Democrat House Whip John “Jay” Edwards and Republican House Minority Leader Brian Newberry — apparently believe the real threat to representative democracy in Rhode Island isn’t a governor who can bring a cauldron to a boil and produce a shadow government with private money, but regular Rhode Islanders who put down $100 over the course of a year to push back on the special interests that dominate local government.

justin-katz-avatar-smiling

Somebody Bites in I-195 District (Looking for Subsidies)

John Bender and Ian Donnis are reporting on RIPR that Wexford Science & Technology has signed a purchase and sale agreement for a couple of I-195 parcels:

Baltimore-based Wexford Science and Technology and real estate developer CV Properties have signed a purchase and sale agreement for two parcels of land and plan to develop a three-phase project on the vacant former highway land with research and development space, offices, hotel and residential space and other attractions. …

The cost for the parcels of land, (numbers 22 and 25) was about $6.6 million, according to Dyana Koelsch, spokeswoman for the I-195 Commission, the agency tasked with developing the land.

The company intends to request subsidies from the Commerce Corp.’s huge slush fund, created through a refinancing gimmick in Governor Gina Raimondo’s 2016 budget proposal. That detail, along with any tax deals from the city and state, as well as other details, will be important for evaluating whether the deal puts most of the cost and risk on the company or on Rhode Islanders. With construction initially expected to begin next year, it will also be awhile before the success of the business model is known.

With Wexford’s two lots gone, 14 of the original 18 parcels available on the land remain available. In total, Wexford’s purchase covers 27% of the land freed up by the highway rerouting, not counting that which is set aside for parks.

justin-katz-avatar-smiling

Excitement for the Wrong Direction for I-195 Land?

Rhode Island’s informderati is all atwitter (pun intended) with the news of a “life-sciences complex” proposed for the land formerly occupied by I-195:

A real-estate investment and development company that partners with universities and hospitals across the country to build research parks has submitted a joint proposal to build a multimillion-dollar facility on 5 acres of former highway land in Providence — drawing praise from Governor Raimondo, House Speaker Nicholas Mattiello, Senate President M. Teresa Paiva Weed, Providence Mayor Jorge O. Elorza and others. 

Wexford Science & Technology of Baltimore, a subsidiary of BioMed Realty Trust Inc. in San Diego, and CV Properties LLC, the Boston firm leading development of South Street Landing on Eddy Street in Providence, hope to build a life-sciences complex with lab space, academic research space, a hotel, and retail and residential space. Richard Galvin, founder of CV Properties, said it’s too early to pin down exact costs, but “it will be several hundred million dollars” to build.

The details are sparse, so far, and one question that will need to be made explicit is whether “partnership” with a bunch of non-profit organizations means tax exemption for the development once it’s done.  One can imagine a bunch of tax deals to get the thing built and then payments in lieu of taxes (PILOTs) once it’s operational.

Off the top of my head, the scorecard for that supposedly game-changing property is:

  • Student housing
  • A minor-league baseball stadium
  • A facility with no prospective clients, thus far, other than non-profit universities

These strike me as things that a state should seek when its people are thriving, not when they’re tapped out for taxes and leaving the state in despair.  But whaddayagonnado, I guess.

So far, developers that have submitted proposals are seeking tax-stabilization agreements with the city because Providence’s commercial property taxes are far higher than in other communities. Yet the city has not granted any such tax treaties yet.

It all comes back to an institutional mandate to maintain the power of government insiders.  Unless that changes, Rhode Island’s done.

Quantcast