The following disclosure appears at the end of a May 2016 essay by Brookings Institution Co-Director Jennifer Vey:
Editor’s Note: Wexford Science and Technology LLC, the developer of the Wake Forest Innovation Quarter, is a donor to the Brookings Institution. The findings, interpretations and conclusions posted in this piece are solely those of the authors and not determined by any donation.
No similar note appears in the economic development plan that the General Assembly allowed officially into Rhode Island policy a couple of months earlier, but perhaps it should have, because it, too, is a Brookings production. When state Senator John Pagliarini (R, Portsmouth, Tiverton) asked Brookings scholar Mark Muro why Rhode Island couldn’t simply cut taxes and deregulate, Muro pitched something centrally controlled: “You need to re-position the state’s economy in some of these higher return, high value industries.”
Muro was describing a very specific plan, and Wexford happens to fit the role as if it had been tailored to the development firm’s business model. Having first proposed its idea for “a major life-sciences complex” in May 2015, Wexford this month made official its plan for a $158 million project on land freed up for government sale with the move of I-195 through Providence. Exactly the sort of incentives that Muro encouraged are now on the table.
To help reduce its own risk, Wexford is seeking around $32 million in tax incentives, and the state appears prepared to give the company about $3 million in free land (perhaps with some stake in the profits that might pay the investment back). Other breaks mentioned for the development are sales tax exemptions for construction materials and a tax increment financing (TIF)–type arrangement involving the hotel tax, as well as any deals that the city itself decides to provide.
In the spring of 2016, the Brookings report was mainly providing cover for a strategy that Democrat Governor Gina Raimondo and Wexford had already put into motion. As part of the budget crafted during the 2015 session of the Rhode Island General Assembly, Governor Raimondo freed up around $85 million using an intricate refinance of existing debt, earmarking the cash mostly for the state’s quasi-public Commerce Corporation to use for the sorts of economic development incentives that Brookings would later recommend.
Gallogly in the Web
Wexford expressed its interest in Rhode Island in May 2015, and a few months later, a handful of donors to Democrat Governor Gina Raimondo gave the Brookings Institution $1.3 million to develop its economic development plan. Among the donors was Mark Gallogly, who captures neatly the connections involved between Raimondo, Brookings, and Wexford.
Prior to founding Centerbridge Partners, in which the Rhode Island pension fund has invested $65 million, Gallogly was the senior managing director for the Blackstone Group from 1989 to 2005. In late 2015, Blackstone purchased BioMed Realty Trust, which owned Wexford. This past July, Blackstone spun off Wexford to Ventas Inc. for $1.5 billion. (Incidentally, Ventas CEO Debra Cafaro is, along with her husband, Terence K. Livingston, another Raimondo donor and appears to have graduated in the same class at Notre Dame as Gallogly.)
Gallogly serves on the advisory council of Brookings’s Hamilton Project and is on the Board of Directors of the Partnership for New York City, a model for Partnership for Rhode Island, which launched just this week. Dan McGowan reports on WPRI that the Partnership was specifically recommended in the Brookings economic development report for Rhode Island. What’s more, Raimondo’s commerce secretary, Stefan Pryor, worked as a vice president for the New York organization.
In yet another connection, RI Foundation CEO Neil Steinberg is the treasurer of the Rhode Island group, and the RI Foundation was among the donors for the Brookings report. Steinberg himself has donated to Raimondo, as well.
The Wake Forest Model
All of these connections are circumstantial and prove only that an insular group of financial elites is dabbling in Rhode Island’s economy and politics. They provide localized context, though, for a pattern that is emerging for Brookings and Wexford. Most notable is the Wake Forest Innovation Center, in Winston-Salem, North Carolina, which is affiliated with the private Wake Forest University. In Providence, Brown University takes the higher education slot.
With Wake Forest, too, Brookings made an appearance in the public discussion, not explicitly connected with Wexford, and the state government provided subsidies, largely through tax credits.
A timeline of the Wake Forest project appears in a study that HR&A provided to the Commerce Corporation earlier this year regarding a “Providence Innovation and Design District.” Also prominently featured was another Wexford project, the Cortex Innovation Center in St. Louis. Once again, the Brookings Institution, specifically metro VP Bruce Katz, was out in public providing an intellectual foundation for the major investment.
A Rhode Island Plan or a Local Branch?
So, when Wexford’s Senior Vice President of Innovation and Economic Development, Thomas Osha, appears with Governor Raimondo to tout his company’s project, Rhode Islanders might find it interesting that he’s another advisor to the Brookings Institution. When representatives of a Wexford partner, Cambridge Innovation Center (CIC), then take the podium and we observe that the company has long been touted by Brookings, we might begin to wonder where one organization begins and the other ends. That CIC is also involved in a just-announced variation of the project in Philadelphia makes one wonder what arrangements the public doesn’t know.
To be sure, there is nothing intrinsically corrupt about researchers and writers’ finding donors who agree with what they want to do and are able to fund the work. Rhode Islanders should be aware, however, that what they’re helping to finance to the tune of tens of millions of dollars in their state has some of the qualities of a pre-designed package, and many of those involved make good money selling it.