October 20, 2014
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We have the minds to rethink the EDC, let’s do it
John Hazen White, Jr.

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 Rhode Island 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-plus 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 in 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 under-performing local economy and chronic 10-plus 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 ended 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.

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 Rhode Island 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 Rhode Island, 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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