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April 8, 2013
Coming up in Committee: All of the Economic Development Corporation Bills Being Heard on Tuesday, April 9
1G. H5746: Limits the Economic Development Corporation's total liability for loans, bonds, guarantees and other financing instruments to $1B, unless a larger amount is authorized by a General Assembly joint resolution. (H Finance; Tue, Apr 9)
1F. H5268: Caps EDC loan guarantees to any one entity at $10M. (H Finance; Tue, Apr 9)
1E. H5745: Caps the amount of loans, bonds, guarantees or other financing instruments involving any single entity at $5M, unless a larger amount is authorized by a General Assembly joint-resolution. (H Finance; Tue, Apr 9)
1D. H5463: Caps EDC loan guarantees to any one entity at $0, i.e. "Rhode Island economic development corporation shall not guarantee any loan or obligation, nor shall it pledge the faith and credit of the state or any of its subdivisions". (H Finance; Tue, Apr 9)
1C. H5639: "Notwithstanding the provisions of this section, neither the corporation nor the general assembly shall use and/or appropriate any moneys relating to the redemption and/or payment of the principal of and/or the interest on any bonds, notes or other obligations of the corporation pertaining to the 38 Studios loan unless and untilthe identity of all entities and/or purchases of same shall be made public by the filing of a complete list with the finance committee of the house of representatives". (H Finance; Tue, Apr 9)
1B. H5643: "The state shall be prohibited from paying any interest on the 38 Studios bonds. Only the amount of the initial investment shall be paid". (H Finance; Tue, Apr 9)
1A. H5888: "The [Economic Development Corporation], the state and any subdivisions of the state shall not make payment on the moral obligation bonds related to 38 Studios". (H Finance; Tue, Apr 9)
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"Caps EDC loan guarantees to any one entity at $0"
This is the best option for the state at this point. Central economic planning has been a proven failure in Rhode Island and everywhere else it has been tried. Capping the loan size at any nonzero amount is not a principled position, although it is a convenient cop out for progressive-types who want to object to the 38 Studios loan in hindsight while not acknowledging any of the fundamental problems that caused it to fail. Regardless of whether you are gambling on the nickle slots or the $100 machines, the house always wins in the end. Just shut it down - it's caused more than enough bad press for the state already.
Posted by: Dan at April 8, 2013 4:28 PM"I commend the RIEDC Board for its EXTENSIVE DUE DILIGENCE and for taking this significant step to bring jobs to Rhode Island" Don Carcieri THE MAN WITH THE VETO PEN said the night the agency approved the loan to Carcieri's fellow small government, conservative Republican Curt Schilling.
EXTENSIVE DUE DILIGENCE ! ...LOL
Rhode Island's director of revenue said she "was not in favor" of the 38 Studios deal and and expressed those concerns DIRECTLY to then-Gov. Don Carcieri.
Posted by: Sammy in Arizona at April 8, 2013 7:42 PMthe "missing link" Gov Chafee was also opposed to the 38 studios scheme
"The state shall be prohibited from paying any interest on the 38 Studios bonds"
I am completely unfamiliar with the loan guarantee, but it would seem strange if it did not guarantee interest. I wonder if this will hold water.
Posted by: Warrington Faust at April 8, 2013 7:59 PM"the "missing link" Gov Chafee was also opposed to the 38 studios scheme"
Yes, he was, Sammy. And he did exactly zero oversight of the loan guarantee and of 38 Studios when he got into office, despite the fact that he had extensive oversight tools at his disposal as stipulated by the loan guarantee contracts. This was a very serious lapse by him and his administration.
In fact, if 38 Studios' lawyers were smart, this is one of the first things that they would bring up in the pending litigation. "Why did Gov Chafee not avail himself of the oversight tools at his disposal, as soon as he got into office? By failing to do so, did he contribute to the failure of 38 Studios?"
Chest-beating condemnation (in this case, of the 38 Studios guarantee) amounts to nothing if you're not willing to use the authority and tools at your disposal to actually address the situation.
Posted by: Monique at April 9, 2013 5:45 PM