Sept 25 Rhode Island Governor Lincoln Chafee
said on Tuesday he would consider whether to overhaul the
state's economic development system following the collapse of 38
Studios, the video game company owned by Boston Red Sox pitcher
A report, commissioned by Chafee and published on Tuesday,
suggested that the quasi-public Rhode Island Economic
Development Corporation, which guaranteed a $75 million loan to
Schilling's company in 2010, be restructured.
It also recommended the creation of a new state office to
oversee broader economic policy and development because Rhode
Island is the only New England state to lack such an agency.
The analysis was conducted by the independent nonprofit
policy research organization Rhode Island Public Expenditure
"38 Studios was and remains an economic development crisis
for the state of Rhode Island," Chafee said in a statement. "I
will continue to digest the report over the coming weeks as my
administration works to put in place the best structure for
sustained and long-term business growth."
The EDC focuses on job creation and helping businesses
expand or relocate to Rhode Island. It issues bonds and serves
as a conduit for other state bonds. It also manages a revolving
small business loan fund and other financing programs.
The corporation further acts as the state's main development
agency for broader economic issues, but it lacks established
ways to measure outcomes, is understaffed and needs to be
restructured, the report said.
Under former governor Donald Carcieri, Schilling's company
won the taxpayer-backed loan guarantee as an incentive to move
his company's headquarters from Massachusetts to Rhode Island.
In May, 38 Studios failed to make payroll and was more than
two weeks late on a $1.4 million loan repayment to Rhode Island.
By June it had filed for a Chapter 7 liquidation bankruptcy,
leaving the state potentially on the hook to repay the bonds
used to fund the loan.
This month, Carcieri told local investigative reporters for
WPRI-TV that he took responsibility for pushing the loan
through, but he questioned whether 38 Studios received proper
oversight once he was out of office.
Rhode Island has struggled throughout the recession to
regain its economic footing, and its recovery has lagged behind
neighboring states and the nation. The state's unemployment
rate, which was 10.7 percent in August, is the second worst in