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Costco developer accuses Cranston mayors of ‘political interference’

Target 12

CRANSTON, R.I. (WPRI) – The developer trying to build a new shopping complex anchored by Costco Wholesale Club is seeking up to $46 million in damages from Cranston, claiming its current and former mayors purposefully scuttled the project to benefit an influential political supporter.

Coastal Partners II LLC filed a demand letter for damages with the city on Monday, arguing former Mayor Allan Fung and current Mayor Ken Hopkins “had been openly working to kill” the development project known as Cranston Crossings at the Mulligan’s Island site on New London Avenue.

The developer claims the city’s top political leaders instead tried “to steer Costco to a different – and vastly inferior – site on Sockanosset Cross Road owned by Carpionato Group, a long-time political supporter of and donor to both administrations,” according to Coastal’s lawyer, Robert Corrente.

“This sort of political interference and favoritism is antithetical to any notion of open, honest and transparent government,” wrote Corrente, who formerly served as the Rhode Island U.S. attorney. “It is also patently unlawful and actionable and, in a very real sense, now threatens to cost the taxpayers of the city real money.”

After reviewing the demand letter, Fung fired back at the developer, calling the allegations “outrageous” and “over-the-top.”

“I’m extremely disappointed,” Fung told Target 12. “We treated the development project and the developer with the upmost respect and it’s truly disappointing to read those ridiculous allegations.”

Asked if he or his administration ever steered the proposed project toward Carpionato, Fung said, “not at all.”

The developer “has been difficult and unwilling to listen since day one,” Fung added. “It doesn’t surprise me he’d take a scorched-earth approach like this and make up some allegations against my administration.”

Carpionato is a well-known Rhode Island developer and its executives have been longtime political donors to both Republican and Democratic campaigns throughout the years. More recently, the company has received public attention for its effort to redevelop the now-defunct Benny’s locations and last year it received a lucrative no-bid contract to host one of the state’s field hospitals during the pandemic.

Campaign finance records show Carpionato principals have donated upward of $10,000 to Fung since 2010 and just $500 to Hopkins in 2018. During the 2018 election, Target 12 revealed that Carpionato had previously provided Fung with a rent-free campaign headquarters.

Carpionato spokesperson Gregg Perry told Target 12 the company entered into negotiations with Costco back in 2017, but the two sides couldn’t finalize an agreement and both walked away from the deal a year later. Since then, Perry added, Carpionato has had nothing to do with Costco and he rejected the idea that his development company was somehow involved in the city’s pushback to Coastal.

“Carpionato has nothing to do with that, nor did it ever ask anybody to carry any water for them regarding that,” Perry said. “That’s between the city and developer. We have nothing to do with it.”

Hopkins, who took over the city’s corner office from the term-limited Fung this year, declined to comment through a spokesperson.

“Under advice from the city’s legal counsel, the mayor has no comment at this time,” spokesperson Steven Paiva said in a statement.

But last month, after the City Council Ordinance Committee rejected Coastal’s attempt to restart a zoning process to build on the Mulligan’s Island property, Hopkins made it clear he didn’t support that location and wanted to see the development go elsewhere in the city.

“While I always maintained that the Mulligan’s Island site was not the appropriate location for Costco, I would welcome the opportunity to work with Costco officials to identify a better, more suitable location in our city,” Hopkins said in May 21 statement. “We have other possible sites in Cranston that Costco should consider and I have directed my administration to reach out to company officials.”

Corrente said in an interview that “a number of other towns have already expressed a high degree of interest in the project.”

“If I am resident in Cranston, that is not a good result,” he said.

The developer estimates the Costco project would have added hundreds of jobs, and brought in roughly $800,000 in annual tax revenue for the city.

In its demand letter, Coastal argues its original application filed last year received an “overwhelmingly favorable analysis” from the city’s Planning Department, which was subsequently ignored by the City Plan Commission. The commission on Dec. 9 informed the City Council it would forward a “negative recommendation,” saying only that the development didn’t satisfy the city’s comprehensive plan, according to Corrente.

“That suggestion is squarely contradicted by the Planning Department’s finding that Coastal’s application did satisfy the Comprehensive Plan,” Corrente wrote, adding that the rejection “seemed inexplicable” at the time.

“However, Coastal has since learned that its application was not denied based on the merits of the application and was instead denied based on the blatant and unlawful influence of the previous and current mayoral administrations and their longtime political and financial supporter, Carpionato Group LLC,” he continued.

Coastal estimates the city’s “tortious interference” has resulted in it suffering damages totaling between $30 million and $46 million, including the loss of a 20-year, $12 million lease agreement with Costco and the project’s overall market value of roughly $34 million over 40 years.

“The city’s denial of Coastal’s application has succeeded in driving Costco out of the city, leaving some other municipality to reap the benefits of enhanced tax revenue and hundreds of good jobs,” Corrente wrote. “Coastal is left with no alternative but to pursue its rights in the courts, to be made whole for the damages this shameful conduct has caused and will continue to cause.”

Cranston now has 40 days to respond to the demand letter, which the developer is legally required to provide the city ahead of filing any legal challenges in court.

Tim White (twhite@wpri.com) is the Target 12 managing editor and chief investigative reporter at 12 News, and the host of Newsmakers. Connect with him on Twitter and Facebook

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for WPRI 12. Connect with him on Twitter and on Facebook

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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