PROVIDENCE – A dozen companies – half of them out-of-state businesses looking to relocate to the Ocean State – are lining up to take advantage of the same controversial loan-guarantee program that drew Curt Schilling’s video game company, 38 Studios LLC, to Providence.
Keith W. Stokes, executive director of the R.I. Economic Development Corporation, told the EDC board Monday about the 12 companies as board members were preparing to take a final vote on overhauling the $125 million Job Creation Guaranty Program.
The companies are requesting loan guarantees totaling $66 million and, combined, would create 636 jobs.
Because the EDC approved a $75 million loan guarantee for 38 Studios last year, only $50 million is left for guarantees.
On paper, some of the businesses appeared to be the type that economic development officials want to attract to Rhode Island, particularly to Providence’s Knowledge District.
One out-of-state company, an information technology services firm, requested a $10 million loan guarantee. In exchange, the company promised to create 200 jobs over the next five years, each with an average $100,000 annual wage.
That company and the 11 others were briefly described in information given to the EDC board, but none were identified by name. The businesses are mostly a mix of IT, advanced manufacturing, bio-medical and life sciences firms.
Not everyone was impressed.
EDC board member Stanley Weiss, a downtown Providence property owner who has opposed several incentive proposals since joining the board earlier this year, questioned whether the program was worth it.
Figuring the $66 million of guarantees in the pipeline would potentially create 636 jobs — that would work out to 10 jobs for every $1 million of taxpayer-backed guarantees, he said.
The board’s top two members — Gov. Lincoln D. Chafee, who serves as EDC chairman, and Vice Chairwoman Helena B. Foulkes — also sounded notes of caution.
“This is a high-risk area,” said Foulkes. “I’d rather be putting this money into existing companies.”
Chafee, noting that all the companies looking for guarantees were founded after 2000, said he’d like to see a Hasbro-type company — the Pawtucket toy maker was established in 1923 — on the list, too.
“Those are the ones I’d like to invest in,” Chafee said.
But Stokes said the Job Creation Guaranty Program is intended to assist “emerging knowledge-driven companies.”
“This program might be the right program to find the future Hasbro out there,” Stokes said.
Still, Chafee expressed exasperation that the companies he has heard are interested in relocating to Rhode Island are all looking for incentives.
“There’s always an ask,” he told EDC board members. “Because of 38 Studios, the word has spread: There’s money in Rhode Island.”
The board moved forward on approving changes to the program Monday, limiting the size of future loan guarantees to $10 million. The board also set aside $5 million for smaller loans that would be combined with a loan program backed by the U.S. Small Business Administration, although the EDC said Monday that the SBA had yet to approve that arrangement.
Chafee was the biggest critic of the 38 Studios guarantee deal during the campaign last fall, complaining that the loan guarantee was risky, putting taxpayers on the hook for millions of dollars if 38 Studios – a largely unproven video game company backed by Schilling – fails.
Under the Job Creation Guaranty Program, the state has a moral obligation to pay off loans if the borrower defaults. Those payments will come from a special reserve fund set up by the EDC. If the fund can’t cover the payments, the governor will request the money from the General Assembly as part of his annual budget proposal.
If Chafee thinks that companies will come to Rhode Island on their own steam without incentives, he needs to look at the draw….educated employees? no lower taxes? no etc. etc. It’s a GOOD thing that Rhode Island is on the map as a potential location for new and emerging companies. And while I’m on my soapbox, there is much to be said about “emerging knowledge-driven companies” and their fast-paced growth. Most of them are guided by the best advisors with proven track records in the venture community. This is a NEW economy, and there is a brilliant, new thinking generation who have a better chance at navigating it with these advisors. Let’s get on board with this century, Rhode Island….fast forward to 2023….and think about choosing companies who will be successful then, not ones who got their start in 1923.
Sorry, Susan. It’s not going to happen as quickly as you or I would like. This state is way too infected with a low quality workforce. We need to keep the current white trash flight out of this state going strong. Only when we have purged the majority of locals out of the workforce will we see the kind of growth in new business you desire. Lucky for us, RI has the assets to replace them all. By the way, ALL states use incentives to attract business. This is not just a RI thing.
Steven, really, that’s your well thought out response? You’re right, we might need to do some purging. Sorry you missed the point of my comment.
As a business owner, Susan, YES that is my well thought out and hard learned response. It’s not just me. Ask any other business owner how hard it is to find quality help from the local population. You want high tech knowledge-based companies to come here? Good luck. Heck, I can’t even hire a local to be a competent secretary. The biggest problem with RI is not taxes, unions, the governor or the General Assembly. It’s the low education attainment of the local population and their ability to think that being a “clever” laborer (as I was told a while back by some low-quality local who made fun of me for having a college degree) is all you need for a state to succeed. RI has been doing that since the Great Depression in the 1930’s. How’s that plan working out?