Tall ship group seeks state help

FLOATING CLASSROOM: Promet Marine Service Corp. workers are preparing the hull of the planned three-masted tall ship Oliver Hazard Perry. A nonprofit has raised more than $1 million so far. /
FLOATING CLASSROOM: Promet Marine Service Corp. workers are preparing the hull of the planned three-masted tall ship Oliver Hazard Perry. A nonprofit has raised more than $1 million so far. /

Bartlett Dunbar has big plans for the steel hull that sits in the shipyard at Promet Marine Service Corp. in Providence, and he’s looking for the state to give him a helping hand.
Dunbar, a prominent Newport businessman, is attempting to transform that hull into a 200-foot-long, three-masted tall ship based in Rhode Island that will carry crews of tuition-paying students to Bermuda and the Caribbean, or take people on day trips on Narragansett Bay.
The price tag for the project: about $6 million.
The ship already has a name, the Oliver Hazard Perry, and the nonprofit that Dunbar is leading says it has raised more than $1 million in donations and pledges to get the venture off the ground.
But a legislative move to make Oliver Hazard Perry Rhode Island Inc. eligible to receive a $1.7 million loan guarantee from the state has some raising objections similar to those voiced last year when the R.I. Economic Development Corporation approved a much bigger guarantee for Curt Schilling’s video game company, 38 Studios.
Some lawmakers and a local lender question whether it’s worth the gamble, with the state backing a loan for a ship that will leave Rhode Island waters frequently and will have a limited resale value if the nonprofit fails.
“This is a startup with so much risk, it’s not even funny,” said Henry A. “Bud” Violet, president of Ocean State Business Development Authority, a private, nonprofit alternative lender. “There isn’t a bank in the world that would do this transaction without a guarantee.”
Indeed, last year the project’s supporters came before the Industrial-Recreational Building Authority, an EDC-affiliated agency, carrying a loan agreement with BankNewport that said the bank would provide $1.7 million in financing, if the loan was guaranteed through IRBA’s insurance program that covers up to 75 percent of tourism-related, recreation projects.
But the nonprofit was turned away because IRBA’s statutes required eligible projects to be “land based.”
That’s what led Dunbar – who owns the popular waterfront retail center Bowen’s Wharf in Newport – to appeal to Aquidneck Island’s General Assembly delegation, which includes Senate President M. Teresa Paiva Weed. It worked.
Sen. Louis DiPalma, D-Middletown, submitted legislation earlier this year that allowed IRBA to guarantee mortgages for large ships such as the Oliver Hazard Perry that are at least 150 feet long, displace at least 450 tons and have a hailing port in Rhode Island.
The measure passed both chambers in June, but not before some lawmakers raised objections, including Rep. Joseph A. Trillo, R-Warwick, who said the state couldn’t afford to extend guarantees to ships.
Nevertheless, Gov. Lincoln D. Chafee signed the changes into law last month.
The change in IRBA eligibility doesn’t necessarily clear the way for Oliver Hazard Perry Rhode Island Inc. to secure the guarantee, DiPalma said. “It’s just enabling legislation,” he told Providence Business News. “This will allow IRBA to at least entertain discussions about the project.”
That said, DiPalma made it clear he believes the guarantee should be extended to the Oliver Hazard Perry. “This should be Rhode Island’s tall ship,” he said. “I’m not a sailor – I prefer to be on land – but I think it’s the right thing to do, from an economic-development perspective and a historic perspective.”
Now Dunbar is preparing to return to IRBA.
“This comes at a very crucial time for us right now,” Dunbar said. “We’ve had a great deal of success of late, and we need to keep the momentum going. We literally have $700,000 in the bank.”
It’s far from a certainty that IRBA will OK the Oliver Hazard Perry’s application the second time around, according to IRBA officials.
“The board has never considered a ship as a project. The task of the bond counsel will be to determine how they will evaluate the risk,” said Judy Chong, the EDC spokeswoman who also handles communications for IRBA. “This is all new.”
Dunbar likes the group’s chances. He’s garnered support from Education Commissioner Deborah Gist and administrators at the University of Rhode Island. In fact, URI held a symposium recently to develop ways the Oliver Hazard Perry could be used for experiential lessons, a university spokesman said recently
The project has been several years in the making, since the Tall Ships visited Narragansett Bay in 2007. “We wanted very much to have a sailing-school vessel,” said Dunbar, who is a member of the American Sail Training Association. “It’s crazy in this state not to have any kind of vessel related to our marine trades and history.”
In 2008, Dunbar organized his group and purchased a steel hull from the creditors of a Canadian group that had failed build a replica of the HMS Detriot, the British ship that Oliver Hazard Perry, a Rhode Island native, captured in the Battle of Lake Erie in 1813. Dunbar himself loaned the group more than $250,000.
The hull has been in Providence ever since. Because of the economic downturn, raising money has been a struggle. Now the nonprofit says it has gained momentum. At one point, the group sold naming rights to planks on the ship’s deck, raising about $200,000.
Promet is still installing the mechanical systems, such as the engines. Plans call for the ship to move down to Newport next year while rigging and other features are installed. Dunbar wants the Oliver Perry to be commissioned by Independence Day 2013.
Dunbar’s business plan is for the sailing vessel to be chartered by schools such as URI that will offer marine courses that will include a trip to Bermuda or the Caribbean.
The Oliver Perry’s size will be an advantage in making the numbers work, Dunbar said. The vessel will be licensed to carry 49 passengers offshore and a professional crew of 13.
“The fact that this ship is as big as it is and is made of steel and can carry as many people as it can versus the expense is what makes the business plan positive,” Dunbar said.
Violet remains unconvinced that the state should be on the hook if the venture folds.
“We should not be giving guarantees to a nonprofit,” he said. “They can walk away from this deal if things go bad. … This goes far beyond the mission of IRBA.” •

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  1. Another preposterous RI request from Newportian Dunbar and his group and even more disturbing support from Paiva Weed and Diponti who wouldn’t know a viable economic development if it hit them in the butt! Even after having allegedly raising $4.3 mill in equity, Bank Newport would never consider funding the remaining $1.7 mill without the IRBA guaranty because of the attendant risk associated with this type of venue. Even worse, Dunbar will not provide a personal guaranty to IRBA to secure the loan. What this means folks is that in the event of a default,, Dunbar walks, Bank Newport is made whole, and RI taxpayers bite the bullet. If this is such a great deal, why shouldn’t Dunbar be required to personally guaranty IRBA and pledge his Bowen’s Wharf property as collateral if needed. Of course this multi millionaire would never do this as long as his political connections allow him to access this taxpayer funded program never intented for this type of project. In order to give this project credibility, he has the temerity to use the Dept Of Education and Deborah Gist as champions of his project. This is all well and good except they lack financial acumen. IRBA should regect this project period . It is a bad deal.