In the wake of the 38 Studios implosion and the realization
that long-suffering Rhode Island taxpayers are going to be paying the bill for
years to come, the spotlight has fallen on the RI Economic Development
Corporation and the competency of its roles in vetting the deal at the outset
and then overseeing the operations of 38 Studios through the critical period
after it began operating in offices in downtown Providence.
On both counts the EDC failed those tasks. We now know that
there was staff skepticism of the deal that was ignored by senior management
and the board of the EDC in the rush to award the $40+ million the company did
receive. The EDC also failed to effectively monitor the financial health of 38
Studios as it plowed through the money in quick time. As a result, EDC is a
shambles today, minus a director and missing most of its board members after
the forced resignations of all those (but one) who had voted in favor of the
loan.
Now there is serious talk of revamping the agency from top
to bottom, which is certainly justifiable and needs to be done. Apart from the
38 Studios situation, the EDC for years has been largely ineffective in its
mission to advance economic prosperity in Rhode Island, and the proof of that
can be seen in our underperforming local economy and chronic 10+ percent
unemployment rate. EDC’s wandering
mission, which for years focused on capturing big employers to come to the
state, did have some successes along the way: Amgen and Fidelity being the
biggest prizes.
But in doing so it neglected some very basic things, like
assisting and partnering with existing businesses to help them remain
competitive (many of which ending up leaving the state or went under as a
result); reducing business regulations and taxes in partnership with the
legislature, and, overall, in creating a level playing field here in Rhode
Island competitive with Massachusetts. The last big thing that EDC was touting,
during the Saul Kaplan directorship, was RI-Wins, a bold initiative to make RI the first state to have border to border mobile wireless infrastructure, which was seen as a boon to business. Unfortunately, the initiative stalled, in no small part because of opposition by a powerful carrier in the mobile wireless marketplace.
Despite ideas like RI-Wins, at the most basic level of economic development practice EDC
never came up with a unifying analysis and long term strategy for reforming the
state’s economy. It never had a vision to offer. It never was able to solve the
nagging question asked about every economic downturn the state has been subject
to, which is: why does the Ocean State fall into recession sooner than other
states and why is it usually one of the last states to come out of one?
Now is the time to rethink the mission of the EDC and rebuild
its operating and reporting structure, and blessed with a stroke of good luck
for once, we have three of the best economic development minds in the state
ready and willing to tackle the challenge: Gary Sasse, the former head of the
very respected RI Public Expenditure Council who has served both in state
government and worked for the city of Providence in recent years, Scott Gibbs,
the longtime economic development head for Woonsocket, and Marcel Valois, who
was the EDC director for a short period
during the 1990s before he jumped into the private sector for a while,
before eventually returning to the non-profit sphere with the Economic
Development Foundation of RI, a Cumberland-based real estate development firm,
which he now operates with Gibbs.
Sasse’s extensive public sector experience is matched by the
long tenure of Gibbs and Valois, who go back to the 1980s in experience and the
time of the ill-fated Greenhouse Compact (remember that?): Gibbs working in
Woonsocket and Valois with the 2nd Pawtucket Industrial Area
Development Foundation, which was associated with the two strong regional
chambers of commerce active at the time: the Blackstone Valley C of C and the
Greater Woonsocket C of C (since merged into the Northern RI Chamber).
The three are teaming up with the RI Public Expenditure
Council and the RI Foundation and are now ready to make public a plan to extensively
reorganize and refocus the EDC. Their set of suggestions will be rolled out for
further discussion and debate at a planned September open forum to be called
Make It Happen RI. Significant in their thinking is the need to engage
business, government, higher education institutions, and labor as critical
stakeholders in the effort.
A new EDC, not one in which just the window dressing has
been changed, is essential to our state’s future, and we should wish everyone
involved in the effort ample fortitude, energy and courage in bringing it to
fruition.
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