Header, the Administration of the Honorable Lincoln C. Almond
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  2002 Signature
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June 10, 2002


In accordance with the provisions of Rhode Island General Laws § 43-1-4, I am transmitting herewith, with my disapproval, 2002-H 8179, Substitute A, "An Act Relating to the Convention Center Authority."

This bill would increase the borrowing capacity of the Rhode Island Convention Center Authority (the "Authority") by $30 million dollars (from $323 to $353 million), with the increased bonding capacity intended to be used to allow the Authority to subsidize one or more hotel projects in proximity to the Convention Center. Prior to any such borrowing, however, the bill makes clear - in a provision that I added - that the Authority would need the approval of the Governor or the Authority and the House and Senate of a so-called "Kushner" resolution detailing the project pursuant to R.I. Gen. Laws §35-18.

Let me first state that I agree that there is a substantial need for additional hotel rooms near the Convention Center to support convention business. I also agree that, under the right circumstances, a particular hotel developer proposal to borrow some Authority money might make sense to achieve that end. The State should not approve any increased debt capacity until and unless it has a loan proposal deemed worthy of approval. Since this bill puts the taxpayer cart before the horse, I oppose it.

Last year, a similar bill was introduced that would have increased the bonding capacity of the Authority (albeit by less than this bill), but would also have exempted any project subsidized by the Authority from any further legislative approval (although my Administration and apparently the Senate were told otherwise at the time). That bill died before reaching my desk. This bill, at my insistence, does expressly require "Kushner" approval, but, in my view, still represents a flawed policy.

First, "Kushner" approval means that the next Governor or the Authority can seek legislative approval. Since the Authority appointees will not be appointed by the new Governor, the Governor will have little effective control over the Authority's action on a given project. Moreover, a "Kushner" resolution can be buried in the budget (just like this year's resolutions are). As such, under this bill, it is possible that a $30 million dollar state hotel investment could be made against the wishes of the next Governor and without meaningful legislative debate.

Second, there is no compelling reason to increase the bonding capacity of rhe Authority by $30 million in the absence of any approved project. In my view, a prudent determination of whether any additional Authority bonding is necessary can be made only in rhe context of a particular proposal or proposals - not in a vacuum as this bill does. The State has no idea at this time whether any Authority loan is essential to entice any particular hotel development. Indeed, at least one developer appears 10 be ready to go forward in the absence of any State loan, but advised that if one were given to a competitor, that could kill ITS proposal due to the competitive disadvantage.

To determine whether any taxpayer-backed loan is advisable, the Authority should consider, among other factors, the need for the loan, its effects on other proposals, the amount of the loan, the taxpayer risk (if any) associated with it, proximity to the Convention Center, the number of hotel rooms, and circumstances surrounding the proposal.

The best reason I have heard for this bill is that it would show developers that the Authority is serious about lending money to jump-start a hotel project. That rationale is undercut by rwo factors: one, even without this legislation the Authority has received numerous proposals for hotel financing in response to its request for them; and two, even with this bill, any developer will know that no loan can occur without further legislative approval. In short, the bill does not appear necessary to entice the marketplace to submit proposals.

Finally, perhaps because of the fiasco last year, this bill remains fraught with controversy. That controversy is fueled when the bill's sponsor takes to the floor ro explain how the proposal before the Authority involving the Fogarty building - proposed by a former representative - is clearly the best one, deserves a State-backed loan, and that this bill will make that proposal a reality. The proposed Fogarty deal involves government land (owned by the Providence Redevelopment Authority "PRA") in which a private developer was given an exclusive option to develop the property as a hotel without any form of competitive bidding.

The fact that the location of that site may well make it the best one for Convention Center purposes coupled with the possibility that other developers could potentially make a more taxpayer-friendly loan proposal for a hotel at the site, render the present Fogarty site proposal unacceptable as far as I am concerned. The PRA and/or the Authority should solicit proposals on that site, just as I have done with the governmentally-owned Masonic Temple.

For all of these reasons, I disapprove of this legislation and respectfully urge your support of this veto.


Lincoln Almond