Governor McKee kills Armory/Scout deal

“Said simply, the current proposal for the Cranston Street Armory is not a good deal for statewide taxpayers..."

Governor Daniel McKee, right

"Today we are releasing the independent financial review of the proposal to develop the Cranston Street Armory,” said Rhode Island Governor Daniel McKee as he spoke to reporters gathered at the State House. With the Governor stood Department of Administration (DOA) Director Jonathan Womer and Office of Management and Budget (OMB) Director Brian Daniels. “My administration requested this outside review as part of our due diligence process to determine if the proposal is financially feasible and in the best interest of the Rhode Island taxpayers. Our team has reviewed this report. It became clear that the proposal put too much risk on Rhode Island taxpayers and not enough on other sources.

"I want to highlight some of the concerns that the independent reviewer identified in their report. First, under the proposal, the state and taxpayers would lose a minimum of $10.5 million on their investment. Second, the state and taxpayers would bear a hundred percent of the financial risk of any construction or operating cost overrules. And third, while the state is being asked to invest, at a minimum, $60.9 million in taxpayer funds to make the project viable, the developer is investing $0 in the project, which I was never comfortable with.

“The financial review concluded that is not in the best financial interest of the state or its taxpayers. Further complicating the development is the fact that the Armory property currently has two owners. The City of Providence owns the parking lot and the adjacent park, and the state owns the Armory building.

“Said simply, the current proposal of the Cranston Street Armory is not a good deal for statewide taxpayers and ultimately the state needs to make decisions based on what's best for Rhode Island taxpayers statewide. Redeveloping is an important project for the Providence community. This project has the possibility of invigorating the neighborhood and bringing much-needed economic stimulus to the West End community. We stand to continue to work with Providence to make good things happen for their community and the state, just like we are with other important projects, that should help support the center.

“After seeing all the information, we've come to the conclusion that this is a local community project, not a state project, which is why we've begun high-level conversations with Mayor [Brett] Smiley and this team about the possibility of transferring the ownership of the building to the city. I'm pleased the mayor and his team have shown initial interest. The goal is to come up with a mutually beneficial strategy to develop the Armory in a way that protects taxpayers statewide while enriching the local economy and the West End community. These discussions are ongoing and we're also open to exploring other options as well.”

Reporters had questions

Question: I assume if the city was going to take ownership, they would need state money to be able to develop it. So isn't that the same thing? What is gained by simply saying, "You own it now, we don't, but here's our money to do it?"

Governor McKee: That's part of the conversations that we're having with the City of Providence in terms of what the state involvement would be in the transfer of the property. We're working with the city right now to determine whether that's a possibility in their minds and also what it would entail if the state potentially had some level of involvement.

Money will definitely be part of the equation of transferring ownership of the Armory to Providence.

“Any transaction would necessitate a provision for adequate capital improvement funding to ensure effective rehabilitation of the facility, which is critical to [the] future development of the site,” wrote Josh Estrella, Press Secretary to Providence Mayor Brett Smiley, in a statement.

Question: Did this have anything to do with the two former [state] directors, no longer employed by the state, and their ill-fated visit with Scout in the spring?

Governor McKee: No, absolutely not.

Steve Ahlquist: The community around the Armory spent about six years developing this plan. Do you have any words for the people who put in a lot of blood, sweat, and tears to get this to happen? What do you tell them?

Governor McKee: The point is that we're going to continue to try to make something happen there and we're going to continue the conversation to make sure that we're doing everything we can to help that part of the city of Providence achieve a use for the property that makes sense to the city. And that's why this is a city project and not a state project.

Steve Ahlquist: Can I ask about city projects versus state projects? What is the demarcation, because we have the Superman building, we have a soccer stadium, we have all these state projects that are basically community projects, right? Why do we differentiate here and say we don't want cost overruns on [the Armory] project, but these other projects which are also downtown neighborhood or Pawtucket neighborhood [projects], they are not [neighborhood projects]? I don't understand the distinction.

Governor McKee: We've made a commitment on those two projects to invest a certain amount of dollars. Remember that the overriding majority of the investment is being made through private funding [in the case of the two projects you mentioned.].

Steve Ahlquist: If Scout sues on this, do you expect the Attorney General will be defending the state or will that be a private attorney?

Governor Spokesperson: It's a question for [the Attorney General].

When asked, the Attorney General had no comment.

Watch the video of the press conference here:

City officials were circumspect in their responses

“We are in ongoing discussions with the state regarding a transition in ownership of the Cranston Street Armory property and what that could look like. Any transaction would necessitate a provision for adequate capital improvement funding to ensure effective rehabilitation of the facility, which is critical to [the] future development of the site,” writes Josh Estrella, Press Secretary to Providence Mayor Brett Smiley, as noted above.

"As the city councilor representing the Armory property, I am committed to helping repurpose this historic building for the betterment of our residents and city in a manner that respects the many years of neighborhood input,” said Providence City Council President Rachel Miller in a statement. “There is a future for the Armory, and I look forward to working with Mayor Smiley and the State on exploring a transition that makes financial sense for Providence taxpayers."

A less delicate statement was jointly issued by Senator Sam Bell (Democrat, District 5, Providence) and Representative Enrique Sanchez (Democrat, District 9, Providence), who represent the Cranston Street Armory in the General Assembly. In their statement, they decried the McKee Administration's decision to cancel the contract with the Cranston Street Armory vendor, Scout, after Scout had reported extortion and sexual harassment by McKee Administration officials. They also separately report that the McKee Administration has broken their commitment [to hold] a community meeting with the neighborhood around the Armory.

“Retribution on this scale makes my stomach churn,” said Senator Bell. “The culture where state contractors got extorted for kickbacks and would lose the contract if they even dared to speak up about it was one of our state’s greatest shames. That it continues to this day embarrasses not just Governor McKee but the state as a whole.”

“McKee’s retribution blows me away,” said Representative Sanchez. “I constantly hear from my constituents how important this project is to them. To be so close to a great redevelopment and then to have Governor McKee try to stop it is such a slap in the face to the whole community. That it was for retribution for reporting extortion and sexual harassment makes it so much worse.”

“There was a time not so long ago when even the appearance of retaliating against victims who had reported sexual harassment was seen as unacceptable behavior. Have we lost that in the McKee Administration?” asked Senator Bell.

“If pressed, I’m sure Governor McKee would pretend retaliation is not his motive,” continued Representative Sanchez, “but McKee cannot hide from his decision to make such a public spectacle of his retaliation, to so clearly send the message that this is what happens if you speak out about extortion or sexual harassment in his administration. He could have simply continued to block funding for the project. Canceling the contract was unnecessary. It sends a clear message. He cannot run from the decision to send this message. Unfortunately, all of Rhode Island will pay the consequences.”

An email on June 2 from Interim Director Brian Daniels delayed a promised community meeting until after the JLL report was released. Back in March, Director James Thorsen had promised, both in public and in private, to talk to the community in May. Today, McKee Administration officials informed Representative Sanchez and Senator Bell that the promised meeting would not be happening.

“Now that the report has been released, that excuse has passed. It was time to finally schedule this long-delayed community meeting,” said Representative Sanchez. “Canceling it is yet another insult to every Rhode Islander who cares so deeply about this project.”

 “The commitment of a May community meeting mattered,” emphasized Senator Bell. “Canceling it only deepens our concerns about the appearance of impropriety. If you don’t have anything to hide, why run and hide?”