EDC likely to vote on 38 Studios Monday

PROVIDENCE, RI (AP) - Rhode Island’s five main gubernatorial candidates disagree on plenty of issues. But they each have concerns about a proposal from the state Economic Development Corporation to offer a $75 million loan guarantee to a game development company founded by former Boston Red Sox pitcher Curt Schilling.

The EDC is meeting Monday to discuss and likely vote on terms and conditions of a deal to bring 38 Studios from its current location in Maynard, Mass., to Rhode Island. Republican Gov. Don Carcieri, who cannot seek re-election because of term limits, chairs the EDC board.

The state is dangling the sizable loan guarantee as an inducement to the company, which says it could bring more than 400 well-paying jobs by the end of 2012.

But some business officials and political candidates see the deal as too risky and say it’s an overly large guarantee for a single company, especially one that lacks a proven track record and has yet to bring a product to market.

The $75 million offer represents 60 percent of the maximum $125 million loan guarantee allowed under state law.

The state itself would not be directly loaning the money, but would essentially act as a co-signer of the loan.

Schilling, a potential future Hall of Famer who won World Series titles with the Red Sox and the Arizona Diamondbacks, is a gaming enthusiast who founded 38 Studios in 2006. The company last week revealed its first title, “Kingdoms of Amalur: Reckoning,” a single-player fantasy game scheduled for release in the fall of 2011.

The campaigns of the five leading candidates expressed reservations in interviews about the proposal, with some conveying outright opposition.

“I would think it would be a more reasonable consideration to take that $75 million and look at providing loan guarantees to 1,000 existing small businesses in Rhode Island. That would seem to me to make more sense,” said Republican John Robitaille, a former top communications aide to Carcieri.

Democrat Frank Caprio, the state general treasurer, is still learning about the proposal but is concerned by the size of the loan guarantee, said campaign spokesman Nick Hemond.

“He’s not ready to give an endorsement of the project,” Hemond said. “It’s just a matter of reviewing the proposal more thoroughly.”

Lincoln Chafee, an independent candidate and former Republican senator, believes it’s “another example of Rhode Island making the wrong decision,” said campaign manager J.R. Pagliarini.

EDC executive director Keith Stokes has acknowledged that the investment is risky for the state but no more so than continuing to have a double-digit unemployment rate. He said the company was offering the kind of jobs that could help position the state as a tech-driven business climate.

But Moderate Party candidate Ken Block said during a candidates forum last week that he thought deals like the one being offered to 38 Studios were horrible economic development policies. He called them “specific inducements to special companies.”
“We can’t afford them. They’re putting all your eggs in one basket,” he said. “It’s the magic, big picture, silver-bullet approach to economic development, and it doesn’t work. We can’t afford it.”

Republican Victor Moffitt said he, too, was concerned the state would be on the hook if the company failed.

“I would just have to know more about the company and how the guarantee would work,” he said. “On the surface, I would be against it until I heard more information.”

Carcieri spokeswoman Amy Kempe said the governor supported the EDC entering negotiations with the company but said he would not discuss specifics until after a vote is taken.

“Anytime we can invest in a new growth industry and a company that is willing to commit jobs and commit to moving here—bringing jobs, growing jobs—it’s a sound investment,” Kempe said.