Chafee slams Raimondo on taxpayer money for Wexford 195 project

Gov. Lincoln Chafee and Gov.-elect Gina Raimondo speak to reporters after a meeting at the State House on Nov. 6, 2014. (photo: Susan Campbell/WPRI)

PROVIDENCE, R.I. (WPRI) – Former Gov. Lincoln Chafee on Sunday urged the state’s economic-development agency to reject his successor Gina Raimondo’s push to spend tens of millions of taxpayer dollars subsidizing Wexford Science & Technology’s development projects on the old 195 land.

Chafee made the argument in an open letter to the R.I. Commerce Corp. board, echoing his high-profile but unsuccessful effort to convince the same panel to reject the disastrous 38 Studios deal in 2010. The Commerce board on Monday is set to approve about $21 million in tax breaks for Wexford, part of nearly $40 million in incentives being directed to the Baltimore-based company.

In his letter, Chafee cited a 2012 New York Times editorial headlined “Race to the Bottom” that described state subsidies for businesses as “foolhardy,” “shortsighted” and “senseless,” and urged elected officials to instead spend money on education and transportation improvements.

“The Commerce Corporation would be wise to heed this advice and suggest redirecting the $40,000,000 to substitution of the anti-business truck tolls, or for lowering state college tuitions, or for helping the cities and towns lower the car tax,” Chafee wrote.

“Again, these are not my words: ‘foolhardy,’ ‘shortsighted,’ ‘senseless,'” he wrote. “Where have we heard this before?”

After declining to seek a second term as governor in 2014 and then embarking a long-shot run for president in 2015, Chafee has emerged on the public scene again in recent weeks to criticize Raimondo, a fellow Democrat with whom he has a famously frosty relationship. Asked last week whether he’s considering a comeback campaign in 2018, Chafee told Eyewitness News: “Never say never.”

The former Democratic governor and Republican U.S. senator has always been intensely skeptical of tax breaks and other incentives to spur economic development, while Raimondo has embraced them as part of her strategy to bolster Rhode Island’s tepid growth rate. Wexford’s proposed innovation complex is a pet project of the governor’s that she sees as central to her vision for capitalizing on the vacant former 195 land downtown.

Commerce Corp. spokesman Matt Sheaff pushed back at Chafee, and in doing so alluded to the economic conditions Raimondo inherited from him.

“In 2014, the year before Governor Raimondo took office, Rhode Island had one of the highest unemployment rates in the U.S. and no significant development was advancing on the 195 land,” Sheaff said in an email. “We’ve made a lot of progress since then.”

“Under Governor Raimondo’s leadership, Rhode Island businesses big and small are getting support and growing here, out-of-state businesses are investing and hiring here, our unemployment rate is the lowest it’s been since 2001 and is below the national average, we’ve gained back the private sector jobs lost during the recession, and there will soon be shovels in the ground in the 195 district,” he continued.

The project has defenders in the General Assembly, as well. “The Wexford project is an outstanding project,” Senate President Dominick Ruggerio, D-North Providence, said on WPRI 12’s Newsmakers earlier this month. “That will really be the highlight of what’s happening on that 195 land.”

At Monday’s meeting of the Commerce board, the panel is expected to authorize net Rebuild Rhode Island tax credits of $13.5 million for Wexford’s proposed innovation complex, as well as $7.5 million for the 174-unit River House student housing complex the company is going to build next door to the South Street Landing project. (Chafee championed South Street Landing, which includes a new state nursing school, as governor.) Wexford will also receive breaks on sales tax for construction materials.

The Commerce incentives would be on top of $19.5 million the I-195 Redevelopment District Commission already put up for the Wexford project last fall. The commission also gave Wexford land valued at approximately $4.5 million in exchange for “an interest in the profits of the project.” In addition, officials say a hotel on the site could get to keep some of the hotel tax revenue it generates, though that may be used to lower the amount of Rebuild Rhode Island tax credits provided.

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He writes Nesi’s Notes on Saturdays and hosts Executive Suite. Follow him on Twitter and Facebook