Another Rhode Island Company in Trouble on its EDC Loan

by Mark Curtis, ABC 6 Political Reporter

   Capco Steel is a well known Providence firm in the construction trade. But now it is financial trouble, and may default on a 5 million dollars loan guarantee from the state Economic Development Corporation. Yes, that's the same EDC in trouble for its 75 million dollar loan to Curt Schilling's 38 Studios, before the video game maker went bust.

     State Rep. Larry Ehrhardt (R) Rhode Island said, “I just hope that there aren't any more skeletons in the closet. And really that's one of the first things I thing we have to look at and see what else is out there that might be at risk.”

     With 80 million dollars in bad loans issued just two years ago, some lawmakers want to have more oversight from Smith Hill, over the EDC. Capco Steel also received federal stimulus funds in 2010 to hire more workers.

     ABC6 Political Reporter Mark Curtis said, “Now the EDC issued a statement saying that any defaulted loans from Capco Steel would not be paid for by taxpayers, but instead they would be paid for by EDC reserve funds. But given the recent meltdown at 38 Studios, many taxpayers may not be so trusting.”

     Right now, the EDC is a joint public-private venture. But some lawmakers wonder if it might be more accountable if EDC was strictly public, as a department in the Governor's office.

     State Sen. James Sheehan, (D) RI said, “They are owned by the public, but they operate more independently of the public and without that oversight, sometimes I think things can go awry, and the public deserves better.”

     Both Democrats and Republicans now predict EDC reform bills will in the General Assembly next year.