New bill would prohibit EDC from loan guarantees

PROVIDENCE, R.I. (AP/WPRI) -- A bill introduced in the Rhode Island House would prohibit the state's economic development agency from guaranteeing loans like the one to Curt Schlling's now-defunct video game company.
  
Under Representative Joseph Shekarchi's bill, the Economic Development Corporation would not be able to guarantee any loans and obligations. The Warwick Democrat says it would provide greater financial protection for the state and its taxpayers.

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The EDC board approved a $75 million loan guarantee for Schilling's startup, 38 Studios, in 2010. The company later went bankrupt, and the state is likely on the hook for some $100 million related to the deal.

If the legislation is approved, Representative Shekarchi says it will not affect the way the EDC functions or restrict the job the agency does.

“They can still make contracts, make loans, execute lease agreements, acquire property, undertake planning and development of projects, and the like,” said Shekarchi.
  
Shekarchi says the bill isn't just about the former Red Sox pitcher's company, though the state learned a painful lesson.
  
The bill has been referred to the Finance Committee.