|By Andrea L. Stape, The Providence Journal, R.I.|
Knight Ridder/Tribune Business News
Mar. 1, 2005 - PROVIDENCE -- The Rhode Island Convention Center Authority board of directors voted yesterday to sell the state-owned Westin Providence to The Procaccianti Group, rejecting a personal request from Governor Carcieri to halt the sale.
The board voted 7 to 1 to sell the hotel to the Cranston company for $95.5 million. The only dissenting vote came from Chairman David Duffy, a Carcieri appointee who said he supports the governor.
With the vote, the board -- which oversees the four-star hotel and the connected Rhode Island Convention Center -- finalized a sale process it started last fall. The sale is expected to officially close by the end of this month. As part of the deal, The Procaccianti Group will also build a 200-room hotel tower next to the Westin by July 2007.
Carcieri recommended 18 months ago that the board put the hotel on the market, but a spokesman said last week that Carcieri had concerns about selling the Westin to The Procaccianti Group. The authority picked the company as top bidder in December.
The board planned to vote on the final sale last Thursday, but postponed the meeting to give Carcieri time to make his concerns public. Carcieri's wife underwent quadruple bypass surgery last week.
Carcieri, who appointed three members to the board, made an unusual, surprise visit to the board's monthly meeting. Sitting at the board room table, he asked the authority to stop and think about what a sale to The Procaccianti Group would say about the state's business climate. James Procaccianti, president of the company, and businesses related to him were some of the largest borrowers from the state's credit-union crisis from the early 1990s. They defaulted on 11 loans for $14.7 million, according to the state.
Procaccianti paid the state $6.53 million last week to settle a lawsuit the state had filed over one of the loans. The other loans weren't paid back and the state can no longer legally collect on the debts, said Carcieri.
Carcieri said the Convention Center Authority needed to consider the moral and ethical issues surrounding the sale. He said selling the hotel to The Procaccianti Group would send the wrong message to taxpayers.
"I do not feel that the authority should go forward with this transaction," said Carcieri, who has no official authority over the board and cannot revoke its decision.
"I got into this business for only one reason: to uplift people's image of this state -- to send a new message and new direction," he said.
Carcieri said he had nothing personal against Procaccianti, and that he had spoken to the businessman twice over the weekend. But he added that it is "entirely inappropriate" to sell the hotel to the company, considering its president's "depth of involvement in what will certainly go down as the worst financial disaster in the history of the state."
Then he asked the board members to follow their hearts.
"Because I have talked to many of you one on one, I know a lot of you feel a lot of angst and a lot of concern and are really wrestling with this issue. Stop for a moment. Think. Look inside your heart," Carcieri said. "If you've got that much angst and worry about it, it can't be the right thing. It cannot be the right thing."
Over the weekend, Carcieri personally appealed to four board members -- Dale Venturini, president and chief executive of the Rhode Island Hospitality & Tourism Association; Gerald Massa, an investment adviser with Wachovia Securities; Brad Waugh, former CEO of Watch Hill Partners, a Providence consulting company; and Joseph Judge, controller at Rhode Island Resource Recovery -- according to Jeff Neal, a spokesman for the governor.
Carcieri's remarks didn't sway the board.
George Nee, a board member and secretary/treasurer of the state AFL-CIO chapter, said Carcieri was holding The Procaccianti Group to a higher standard than other companies in the state. Nee said the state had done business with law firms and other companies that were involved in the credit-union crisis.
Michael Mello, a board member and chief of staff for Providence Mayor David N. Cicilline, asked to hear Procaccianti's side of the story. At Mello's urging, Richard MacAdams, a lawyer for Procaccianti, told the board that Procaccianti's companies were significantly harmed by the collapse of the state's credit unions. He also said that business entities involved in the Westin sale were not involved in the state's financial crisis.
Matt Kenney, a real-estate adviser with Boston's Pinnacle Realty Investment who was hired by the authority to evaluate the bids, recommended that the board approve the sale. He said The Procaccianti Group worked willingly over the past two months to meet the authority's demands and is ready to put up the hotel tower -- a key piece of the deal -- by 2007.
With the governor gone and the arguments for and against laid out, the board members cast their votes.
Nee, " yes."
Duffy, " No. In respect to the governor."
Besides Duffy, Carcieri's appointments to the board are Massa and Dave Gavitt, who was absent from the meeting because of illness.
After the vote, Carcieri's spokesman released a statement: "Governor Carcieri is hugely disappointed by the results of today's vote. The governor continues to believe that selling this valuable state asset to an individual who continues to owe such large unpaid debts to Rhode Island is inappropriate."
With the sale approved, the authority still has some details to iron out, according to James McCarvill, executive director of the Convention Center Authority. The authority must determine which of the public bonds that were issued to pay for the hotel will be paid off with the proceeds from the sale. The City of Providence and the state must agree to separate the hotel from the connected parking garages and the convention center, and approve other zoning and easement issues. (The state is not selling the convention center or the garages.)
The authority is also working out the official development agreement on the 200-room tower that will be attached to the Westin, said McCarvill. The Procaccianti Group will have to pay a $10-million penalty if it doesn't build the tower. In order to book larger conventions, the state needs more hotel rooms, according to the authority. So the 200-room tower -- and the hotel and sales tax revenue it will create -- is an important part of the sale, according to the Convention Center Authority.
McCarvill expects the sale to close March 31.
In addition to the tower, Procaccianti said last week that the company is ready to make other major investments in Providence. The Procaccianti Group also owns the Providence Holiday Inn and has plans to turn it into a high-end Hilton and add a tower of condominiums to the hotel. The company is also considering developing two other residential buildings downtown.
Procaccianti declined through a spokesman to be interviewed yesterday, but did release this statement:
"I am pleased that the Convention Center Authority has finalized the selection of our bid today, and I am grateful for their support. Every one here at The Procaccianti Group is now ready to move forward. . . We will have cranes in the sky this summer."
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