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$20 million in State Tax Credits for Proposed Downtown Providence
 Convention Center Hotel Viewed as Fiscally Irresponsible
By Edward Fitzpatrick, The Providence Journal, R.I.
Knight Ridder/Tribune Business News

July 20, 2004 - PROVIDENCE, R.I. -- The Greater Providence Chamber of Commerce is backing Governor Carcieri's veto of a bill providing $20 million in state tax credits for the downtown hotel being developed by former state Rep. Vincent J. Mesolella Jr.

In a statement issued yesterday, the Chamber's board of directors said it does not dispute that more hotel rooms are needed near the Rhode Island Convention Center.

But citing "significant private sector interest in developing one or more hotels in Providence," the Chamber board said, "there is no need for the state to commit $20 million in income tax revenue for this purpose. That is money that could otherwise be used for badly needed municipal aid, to fund education or for social service programming."

The Chamber's statement comes as the General Assembly is preparing to reconvene on Friday, aiming to override Carcieri's vetoes of the state budget, a November casino referendum and the hotel bill.

Mesolella has proposed a $52-million hotel on the site of the vacant John E. Fogarty Building, with a sky bridge connecting to the Convention Center. The bill originally called for the Convention Center Authority to issue $15 million in state bonds, and that figure was later bumped up to $17 million. In the session's waning hours, legislators scrapped the idea of bonds and approved a plan that would give Mesolella $20 million in tax credits.

Carcieri vetoed that bill July 2, branding it "fiscally irresponsible" and saying, "The Vincent Mesolella hotel project is the most egregious case of inside dealing that I have ever witnessed."

In its statement yesterday, the Chamber said: "For the General Assembly to publicly subsidize this hotel when there is significant interest in financing a hotel from the private sector sends a terrible message to businesses considering an investment in Rhode Island. It leaves the impression that the state would rather use public monies and position themselves as competitors to private industry rather than support private investment in Rhode Island."

The Chamber took its stance on Friday, with 35 of the board's 50 or so members voting unanimously to support the governor's veto, said Bethany Costello, the Chamber's director of public relations and public policy.

"Why would they do that?" Mesolella asked yesterday. "Anytime the Chamber of Commerce takes a position against a project that would generate at least $6 million a year -- in income tax, sales tax, room tax and economic generation from 18 to 21 more Convention Center events a year -- you really have to question why. I'm begging the question."

Mesolella said the Chamber had supported the project several months ago and he attributed yesterday's statement to Chamber politics. "You have to look at the parties involved," he said.

Costello said the Chamber has always supported development of more hotel rooms in downtown Providence but has not taken stands on specific projects. "Our concern with this project is the financing," she said.

The House sponsor of the hotel bill, Rep. John J. McCauley Jr., D-Providence, attributed the opposition to Chamber members who own or develop hotels. "I just think it's a last-ditch effort by members of the Chamber who have a competing interest with this hotel," he said. "They're trying to sabotage the success of the project for their own self-interest."

McCauley said he expects plans for another downtown hotel to be announced as early as today. But he said developers have talked for years about developing downtown hotels without tax credits, and none are doing it.

Meanwhile, he said, the Convention Center is losing larger shows because of a lack of nearby hotel rooms.

McCauley said he expects the Assembly to override Carcieri's veto on Friday, but he said it'll be a close vote. "This is a tough issue that's not easily accepted by some people because of the name of the principal of Capital Hotels LLC -- Vincent Mesolella," he said. "Vinny is either black or white. He's not gray. Some people find him abrasive, while some people find him embracing."

In arguing for a veto override, McCauley said he is asking fellow legislators to focus on the project, not the developer. "I try to convince them on the merits," he said.

Carcieri's spokesman, Jeff Neal, argued that the hotel bill lacks merit, and he praised the Chamber's stance.

"This just shows that the business community understands that Mr. Mesolella's hotel is a bad deal for Rhode Island," Neal said. "They also know that the state should not be in competition with private investors to develop a hotel in Providence. Finally, they recognize that handing $20 million to a single individual to develop a hotel is unprecedented."

In its statement, the Chamber cited an analysis highlighting 11 local companies that have received tax credits since 1996.

"These companies -- Amgen, CVS, Fidelity, Electric Boat and others -- are some of the biggest names in Rhode Island," the Chamber stated. "They have invested hundreds of millions of dollars in our state and created thousands of good-paying jobs."

Together, the 11 companies have received a total of $27.46 million in tax breaks, the Chamber said. "Yet, the General Assembly is now considering giving $20 million to one individual who has never before developed a hotel," the Chamber stated.

"Members of the board of directors are now calling on the members of the General Assembly to sustain the governor's veto of this unnecessary and egregious legislation," the Chamber's statement concluded. "Their message?

That it is a bad deal for Rhode Island taxpayers and does not support private investment in our state."

-----To see more of the The Providence Journal, or to subscribe to the newspaper, go to http://www.projo.com.

(c) 2004, The Providence Journal, R.I. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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