ABC6 News Investigates More Questionable EDC Business Deals - ABC6 - Providence, RI and New Bedford, MA News, Weather


ABC6 News Investigates More Questionable EDC Business Deals

Posted: Updated:

by Mark Curtis, ABC6 Chief Political Reporter  

The state of Rhode Island loaned "38 studios" 75 million dollars, only to watch the company collapse. A 5 million dollar loan to Capco Steel also went bad. Both deals were made by the state's Economic Development Corporation - the EDC.


Lawmakers are fuming. State Rep. Doreen Costa said, "I think the EDC should be fully investigated. If not, abolished."


And ABC6 News found another questionable EDC deal. TD Bank, one of the nation's largest, was offered a half–million dollars in tax breaks, just to move into Rhode Island. This despite the fact that TD Bank worth over 200 billion dollars.


Moderate Party Founder Ken Block said, "I was at the meeting where they voted to do this deal. And I left shaking my head going how it is possible that we are providing this kind of incentive for a retail bank."


Block, who ran for governor two years ago, is not the only one who is steamed.


The owners of "Custom House Coffee" in Portsmouth were furious when they learned about the EDC tax breaks for TD Bank.


Mark Libby, the co–owner said. "A tremendous slap in the face. A bank doesn't need more money. Especially from the State of Rhode Island. Why would a bank need more money? I don't understand."


Custom House owners are mad because they went to the EDC, seeking a $250 thousand dollar loan, so they could open up more locations.


Co-owner George Doumaney said, "It was around that time frame, we got turned down for our loan. They issued 38 studios the $75 million dollars." Reporter: How did that make you feel? "Very, very upset. Very upset!"


ABC6 Reporter Mark Curtis said, "The owners of Custom House Coffee had a relatively simple goal. Open as many as 8 more restaurants, hiring 20 employees apiece. That would put 160 Rhode islanders back to work."


George Doumaney and Mark Libby were told that the food service industry has too many failures, but if they were in high–tech or manufacturing, they'd have a better chance for an EDC loan.


Doumaney said, "It feels like if you're a small business trying to grow, trying to make it in this state, it's just not going to happen with state assistance."


TD Bank officials declined interview requests from ABC6 News. A spokesman did say in an email, that TD Bank has yet to collect the half–million dollars in Rhode Island tax breaks.


Governor Chafee also declined comment, as did EDC staff members.


But one person who did speak out was EDC board member Karl Wadensten.

He thinks the TD Bank deal was a good one for Rhode Island.


Wadensten said, "Construction jobs to build the 12 branches. You are going to hire, I think it was, 167 people that they had on this. So they are going to pay sales tax, they are going to pay property tax."


If Wadensten's name is familiar, it's because he was the only EDC member to vote against "38 Studios." While he supports the TD Bank deal, he also says the EDC must do a better job helping small businesses.


Karl Wadensten said, "Rhode island has customers. People that are entrepreneurs that are looking to start businesses. People that are looking to grow businesses in this state and we need to listen to the voice of those customers."


The owners at Custom House Coffee agree. George Doumaney said,  "At the end of the day it's the small business in the State of Rhode Island that's keeping us afloat. It's not ‘38 studios.' It's not TD Bank."


Right now, 56 percent of workers in Rhode Island are employed by small businesses.


Powered by WorldNow

10 Orms Street Providence, R.I. 02904

All content © Copyright 2000 - 2014 WorldNow and WLNE.
All Rights Reserved.

For more information on this site, please read our Privacy Policy and Terms of Service.