The path from Jewelry District to Knowledge District took a detour this spring.
First a Providence budget crisis and fears of bankruptcy prompted the Greater Providence Chamber of Commerce to pull out of a public-private partnership to market the Capital City as a knowledge and research hub.
Then, Curt Schilling’s 38 Studios LLC collapsed, removing the city from the video game design landscape and ending hopes that the company’s success could attract a cluster of gaming-related activity in Providence.
The potential loss of $75 million, plus interest, on the taxpayer-backed loan used to bring 38 Studios here has sent Rhode Island’s public-sector economic-development efforts into retrenchment as Gov. Lincoln D. Chafee implements a more conservative job-creation strategy.
Even more recently, the future for the Rhode Island Center for Innovation and Entrepreneurship at One Davol Square was called into question after Brown University laid off staff as it seeks new funding partners.
And on the last day of May, House Democratic leaders cut a proposed University of Rhode Island-Rhode Island College advanced nursing center proposed for the Knowledge District from the fiscal 2013 budget.
Proponents of the nursing center had hoped that, in addition to helping alleviate a growing shortage of trained nurses in the state, the project would kick off development of the former Interstate 195 land, the future backbone of the Knowledge District.
“I do think it’s a blow, a missed opportunity,” said Interstate 195 Redevelopment District Commission Chairman Colin Kane about the nursing center. “I am a proponent of centering our medical-training resources in one place, where the hospitals are and where Johnson & Wales University’s new physician-assistant school will be. We always have next year.”
House Democratic leaders said the $65.2 million in borrowing in Chafee’s budget for the nursing center was left out because of confusion about whether it would involve a public-private partnership or straight taxpayer financing.
“We feel that it would have been a very bold development that would have solved a problem and provided an anchor in the Knowledge District,” White said.
“Economic-development in Rhode Island could theoretically be set back a generation from what happened this year,” White added. “We need to get back on the horse and have the private sector fill the void in the public sector and work on projects to grow the knowledge economy and help existing businesses grow and expand.”
Although the concept predates him, Chafee had embraced the Providence Knowledge District idea as part of his economic-development strategy of building on existing assets in the Jewelry District, Warwick Station and Quonset Business Park.
Over the winter, Chafee solemnly urged R.I. Economic Development Corporation board members to “reflect” on ways to tackle a statewide unemployment problem he described as unacceptable. He also appeared to be softening on job-creation incentives such as project-status sales tax breaks and the Jobs Development Act.
But 38 Studios’ implosion has caused Chafee’s conservative side to come out and prompted a re-evaluation of the state and R.I. Economic Development Corporation’s role in growing the economy.
“We have been scorched; we have been burned,” Chafee said about 38 Studios at a news conference last week to introduce three new members of the EDC board of directors. “There will be a full analysis before any investment is made and I am confident the new board members will reflect the same conservatism.”
Since Keith W. Stokes, architect of the 38 Studios deal, resigned as EDC executive director amid the controversy, not much has happened with taxpayer dollars at the quasi-state agency.
Since a $4 million investment in The Corporate Marketplace of North Kingstown in October, no new loans have been made under the state’s Job Creation Loan Guaranty program, the one used to back the 38 Studios deal. Last fall, the EDC said there were 14 companies in the pipeline looking for loan guarantees.
In the meantime, Chafee has purged members of the EDC board of directors who voted for the 38 Studios loan and replaced them.
The new board members, who still must be confirmed by the state Senate, have a distinctly small-business feel and lower profile compared with those who have left.
Gone is Helena Foulkes, a vice president at CVS Caremark Corp., and Timothy Babineau, president of Rhode Island Hospital and The Miriam Hospital, with no executives of similarly large organizations on the list of replacements.
Those replacements are: Dr. Pablo Rodriguez, chairman of the board of Woman and Infants’ Health Care Alliance; Marcia Blount, president and chief financial officer of Blount Boat Works Inc. in Warren; Alison Vareika, co-owner of William Vareika Fine Arts Ltd. in Newport; Roland Fiore, president of South County Sand & Gravel Co. in South Kingstown; Stephen Hardy, senior vice president of Bristol County Savings Bank and William Holmes, business manager of Rhode Island Carpenters Local 94.
The new board also features a smaller presence from the technology and medical fields at the center of the Knowledge District concept.
In addition to Babineau, who represents medical-giant Lifespan, the board has also lost Stephen Lane of Providence medical-device firm Ximedica.
Mark Higgins, dean of the University of Rhode Island’s College of Business Administration, said on top of adding small-business voices, Chafee’s new appointments showed a state economic-development strategy in flux.
“The state is risk-averse and 38 Studios is going to make it more-risk averse,” Higgins said.
The inability to secure funding for the nursing school was also puzzling, he said.
“If we are going to build this Knowledge District around health science, medical devices and technology, then why would you not put a building that will unite URI and RIC downtown as part of the centerpiece,” Higgins said.
Asked what impact the absence of knowledge-economy players would have on long-standing plans to build a new creative economy in Providence, Chafee said the I-195 Commission could handle that and he preferred to focus on education and infrastructure.
“What government does well is roads, bridges [and] schools and that’s what I like to keep government focused on,” Chafee said. “Loans were traditionally done by banks and equity is provided by going out to private-equity firms.”
Kane, of the I-195 Commission, said there was some good news in the budget for the Knowledge District in the form of $1.2 million for his board to hire a staff and accelerate work on building-out the former highway lands.
Kane, who last month turned down an offer from Chafee to lead the EDC, said ultimately where the members of the board come from is less important than whether they understand the fundamentals.
“People always think somehow technology is different,” Kane said. “Business is business. We should have an EDC that supports enterprise in whatever form it takes.” •
