| Dear Neighbors:
Let me begin by wishing a happy Easter to those of us who observe it, a happy conclusion to Passover (perhaps including a pizza dinner) to those of us who observe that holiday and a happy Earth Day this Tuesday to all of us. In this week’s letter, I discuss Senate Bill No. 316, which I introduced to reform the Commerce Corporation.
A. The Commerce Corporation’s Controversial Centerville Bank Stadium Vote
As we celebrate the expected opening of the Centerville Bank soccer stadium in Pawtucket this fall, we should consider the lessons we can learn from the controversial State financing to support the project. More specifically, as a result of one controversial vote, the Commerce Corporation agreed to fill a $27 million gap in funding with financing that ultimately will cost $132 million in payments. The Commerce Corporation’s decision was based on an uniquely close vote, which Bill S-316 can prevent from happening again.
1. The Narrow Voting Majority
The history behind this vote is as follows. On July 25, 2022, the Commerce Corporation voted to provide public funding to Fortuitous Partners to pay for the Tidewater Landing soccer stadium alone, without any ancillary commercial development. As reported in this Boston Globe article, the resolution was decided by a single vote, cast by the Governor in his capacity as Chair of the Corporation, with two abstentions. As noted in the article, the Governor’s intervention, while completely allowed, was unusual.
2. The Inefficient Financing
The financing for this project generated significant controversy. As reported in this Providence Journal article, the State originally planned to provide Fortuitous with $27 million in capital from a bond that would generate $37 million in financing costs. When the bond was finally sold, the principal amount was $54.3 million (still providing $27 million in capital) with a total of $132 million in financing costs. A WPRI report noted that a direct appropriation from the General Assembly could have avoided these financing costs, but the prospect of such approval was uncertain. The WPRI Report also noted that it was unclear whether the project revenues would pay for the public financing.
3. The Commerce Corporation’s Practice Of Consensus Voting
I decided to research the pattern of Commerce Corporation votes, to determine whether it was common for their votes to be as close as the July 25, 2022 vote for Tidewater. I reviewed Commerce Corporation minutes for the period of from January 29, 2021 through November 25, 2024. I screened out routine votes to approve minutes, all of which were approved without objection. That left the 203 substantive votes described in this vote summary.
I learned that the Commerce Corporation ordinarily operates by consensus. Every vote but two was decided either unanimously or with a single objection or abstention. One vote (No. 115) was decided by a 5-2 margin. The Tidewater vote was No. 62, with 6 in favor, 5 against and 2 absences/abstentions.
4. A Legislative Solution
At a Finance Committee hearing last year, I presented a version of this vote record data to the Director. I asked her if the Commerce Corporation should adopt an internal rule requiring a 2/3 supermajority for all major votes. I suggested that such an internal rule would not have affected any vote except for the July 25, 2022 vote on Tidewater. Such an internal rule would have made legislation unnecessary. The Secretary stated her belief that the Commerce Corporation lacked the authority to establish an internal rule or procedure.
While I do not agree with that conclusion, the Director’s statement provided the basis for proposing S-316, which would require a 2/3 supermajority for passage of all future Commerce Corporation resolutions. The Commerce Corporation’s votes on 202 out of its last 203 resolutions over a 4-year period met this threshold. The only vote that did not was the controversial Tidewater stadium vote. In this way, Bill S-316 offers a surgically precise solution to the problems raised by that vote. |
