New chief in a hurry to shake up EDC

Keith W. Stokes, the new executive director of the R.I. Economic Development Corporation, has a big to-do list for the next few months and beyond.
Stokes plans to meet with local leaders in the state’s 39 cities and towns to learn of their needs. He also wants to somehow improve access to capital for small businesses, overhaul the state’s regulatory and tax structures, and assist with the restructuring of the EDC.
Gov. Donald L. Carcieri says that level of activity and familiarity with the Ocean State was exactly what he was hoping to get from Stokes, a longtime EDC board member and executive director of the Newport County Chamber of Commerce, by appointing him after a national search ended with the top choice withdrawing her name.
Carcieri and Stokes recently spoke with Providence Business News about the appointment and their vision of the future for the beleaguered EDC.

PBN: Oftentimes, with a new boss comes reorganization. With a one-year appointment, do you feel comfortable making those types of changes?
STOKES: Absolutely. The purpose of my appointment is to maintain the momentum that’s already been established. I’ve been a member of the [R.I. Economic Development Corporation] board for 15 years, the treasurer for seven. I’ve been intimately involved with the governor and his administration over the last year, setting the stage to restructure the agency. … We don’t have any time to wait. … The legislation, which was only passed this fall … gave us an opportunity to … create a board, and then an organization that will be fast afoot and will focus on what I call the “game changers.”
The governor has talked about Deepwater Wind and the importance of that as an intermediate and long-term investment strategy.
The second piece is going to be a predictable, uniform tax environment. … The third game changer will be the very identity and brand of Rhode Island, which is going to lead to initiating a public-private partnership for a business-attraction strategy. Those are the game changers that will take some time.
But in the immediate, and most important in my mind – at least over the next 60 to 90 days – is to begin the restructuring of the EDC board, to have the right entity in place that can lead these initiatives. … The challenge is economic development has not been properly capitalized or organized for many years. It’s not been a priority, not been of value.
Today it is because of the economy, because people see the job losses, the unemployment rate.
CARCIERI: We put together that task force to look at the whole EDC. We’ve been doing the same thing since the old Port Authority evolved into the EDC. The board was pretty much the same kind of board that existed at the Port Authority. And we had been doing it the same way, and doing some things well. But like anything else, you sit back and take a look at it. And when the task force came back with a series of recommendations, we began to get some momentum. … I don’t want to lose that. … When we got word [that Ioanna Morfessis was dropping out], Keith was my first call. I think he has a unique set of expertise and experience with the EDC and also being part of the process of reviewing the whole thing. My plan is to have the [names of the new board members] to the Senate [this] week, since it’s with advice and consent of the Senate. … With Keith, there’s a little bit of confusion – is it interim or acting? No, I’m asking the Senate to confirm him as the director. That will be his call – or the new governor’s – whether he wants to stay next year. I can’t think of anyone better to keep this ball moving.

PBN: Mr. Stokes, are you open to staying on after a year?
STOKES: One of the things I’d like to do over the next 60 to 90 days is to get out to the 39 cities and towns to understand what their economic priorities are, what their concerns are, what role we can play to build capacity in their corporate parks, their main streets. We need to get out of the office; we need to be into the communities. A lot of great economic-development activities are going on in Westerly, in Woonsocket. Those are things I’m looking to do which are practical, very dynamic and tied to old-fashioned, good communication.
At the end of the year, if it’s done right and we’re moving in the right direction, we’ve got an opportunity for further growth and leadership in the next governor. I always have the great opportunity to come back to my Chamber. … [As to whether he’d liked to stay after a year] I’ve thought this through very carefully, and it’s not an easy [answer].

PBN: The search committee stressed that the EDC director needs to be an economic-development professional with national connections and perspectives. Do you feel you fit that bill?
STOKES: My role is not to fit that bill at this point. My role is to continue the momentum; it’s to set the stage for the next governor. [Gov. Carcieri] said … he’s going to put forth the names of the next leadership of the EDC. Those men and women are going to forge ahead with the [task force’s] recommendations. If anything, it’s an advantage to have someone such as myself who wants to come in with passion, with energy, with existing communications and connections with a variety of constituencies to move that mission forward.
CARCIERI: I think it’s the best of both – [Stokes’ appointment] doesn’t foreclose [getting someone with a national perspective]. That’s a decision [for] the next governor. I agreed with that assessment [that the EDC needs a national candidate] because that’s the process we went through. I started the process, I commissioned the task force, they came in with the recommendation, and I said go. And they did that. Unfortunately, we got to where we were. But I made the decision that we could not go through that process again. We’ve got to get this ball moving.

PBN: Is the search committee now disbanded?
CARCIERI: The search is stopped; it’s over. There is no further search going on.

PBN: For the next governor, who comes in next January, a search for a new director is going to take some time. CARCIERI: Not necessarily. I supported [a national search] because I felt it was time for us to cast the net out there. But people have different views.
PBN: But Mr. Stokes could be asked to stay longer than a year, as the new governor conducts his own search.
STOKES: It’s possible. Building any good organization, you want a little bit of both. You want local, connected, well-versed talent. You want to bring in national perspectives. And that’s your team. The EDC needs to focus on what’s the right team.
CARCIERI: And we need to get everybody on the team. That’s the idea with expanding the board, and merging what used to be the Economy Policy Council. And get the chambers [of commerce] and everybody engaged in this.

PBN: What about J. Michael Saul, who has served for a year as the interim EDC director?
CARCIERI: My conversations with Mike are that he wants to stay engaged. … I think there’s an important role there [for him].
STOKES: This is a team approach. Mike … is going to be … alongside me and other critical … team members.

PBN: Some in the small-business community think the EDC spends too much time trying to reel in the big fish and neglects existing businesses. What will EDC’s philosophy be?
STOKES: That’s going to be part of the restructuring strategy. You do both. Clearly, 90 percent of the businesses in this state are small businesses. That represents about 25, 30 percent of our entire work force. We have to sustain and grow the small-business community. … You focus on the existing small-business base, but you also develop a sustainable business-attraction program.
CARCIERI: This business of the EDC just concentrating on reeling in the big ones – that’s a perception, not the reality. If you look at what’s approved at the EDC board meetings, most of what they do is mundane stuff for small and medium-sized businesses. The truth is that with 30,000 small businesses, only a small number are actually interacting with [the EDC].

PBN: Will appointing Stokes instead of resuming a search for a permanent director delay the state’s effort to recover?
CARCIERI: My view is we’re not going to miss anything. We’re not going to miss a beat. I’m thrilled that Keith has agreed to do this.
We had two choices: You go back out and start the search process again, and in my judgment that would have just meant that everybody would have went “Ugh, it’s going to drag out.” … I felt a good sense of energy because we’ve had so many people engaged.

PBN: Can the EDC identify small businesses with growth potential? Do you want to develop that?
CARCIERI: Some of this is technology related. When I created the Science and Technology Advisory Council and the Research Alliance, the whole notion there is not to have me pick them. The council has a sense of the technology out there and through the Research Alliance [funds] some of these things. Take a shot, not big amounts of money, and see. … Are we geared to identify them and support them? It’s one of those things you can always be better at. We see a lot of them at the EDC board that are some interesting companies. Where the Research Alliance is putting research money into real startups, we’re [providing] the innovation tax credit. We’re … putting in not big amounts of money – $100,000, $200,000 in terms of the tax credit. There’s a lot of that going on that you don’t see, and there has got to be more.

PBN: Is the effort to help these innovative startups capitalized enough?
STOKES: That’s the issue. The Slater Fund and our innovative tax credit capabilities are undercapitalized. The other key issue to encouraging entrepreneurs to grow and prosper is the incubators, the space they occupy, particularly in the early stages. Is it affordable? Is it flex space? That’s going to tie very carefully into some of the development opportunities we’re looking at with the Jewelry District and the moving of [Interstate] 195. So we have those programs and resources, but they’re a bit fragmented and certainly undercapitalized. And that’s going to be a real task of the EDC board, to identify those critical projects, those programs. Then come before the legislators and other supporters so we can recapitalize and move those programs.

PBN: Governor, how do you feel about Mr. Stokes’ recent suggestion that the state should seek a $50 million bond referendum for economic development?
STOKES: Let me step in to give you a feel for why I did that. We need – it could be federal sources, state sources, bond sources, public-private partnerships – we need access to capital credit. We need to recapitalize and re-energize our guarantee programs for small businesses, micro-lending program, our traditional small-business programs, the opportunity to further engage the SBA in their 7(a) and 504 programs. Where those sources of proceeds come from is not as important as the General Assembly, the cities and towns, the businesspeople, the people of Rhode Island [realizing] that the future of any good economy is the investment in existing small and mid-sized businesses.

PBN: So would you push for a referendum?
STOKES: It was more a rhetorical statement [about a bond referendum]. Why not do that for economic development? Why are we not taking that lead? If the legislators want to support that as a process, I think the governor would support that, if it brings capital to the table.
CARCIERI: The tricky thing is what you … do with it. … At the end of the day, unfortunately – but I understand it – it’s the cynicism of the public. Millions of dollars to do what? They understand if you’re going to build housing, or if you’re going to build a sewage-treatment plant, or you’re going to buy land for conservation purposes. It’s how you articulate what you’re going to do with it that is the key. If you say give me $50 million or whatever it is, without being clear exactly what you’re going to do with it, the chances of that, frankly, aren’t as great. •