Brett Smiley today released the first piece of his economic development
plan for Providence: reforming the structure of the Providence Economic
Development Partnership by moving its revolving loan functions into a new,
independent program. This puts the loan-making decisions in the hands of
qualified underwriters while allowing the business and civic leaders who
sit on the board to use their expertise to shape our city's economic
policies.
Cronyism and inefficient business practices have squandered the PEDP's
ability to strengthen Providence's economy, and through the reforms Brett
Smiley proposes, the Partnership will be better able to fulfill its mission
of growing businesses and industries.
In the plan, Smiley notes, "City Hall still remains a place where you need
to 'know a guy' in order to get something done, and PEDP is a shining
example of this breakdown in fairness. Everybody should have an equal
opportunity to gain access to PEDP loans regardless of their personal
connections to City Hall."
Smiley also adds, "Those who serve on the PEDP loan board are political
appointees, and while they are often well-respected local leaders, few
possess banking or loan underwriting experience. Instead of being asked to
advise on broad economic policy, they are asked to rubber stamp staff
recommendations on loans. This mismatch of expertise and expectation is the
foundation of PEDP's inefficient business practices."
According to an October report, of the 136 current PEDP loans that have
been granted, over one third are more than 121 days past due, leaving the
city on the hook for over one million dollars in expenses. These loans are
intended to be an investment in the city, not a gift to city businesses. No
city, and especially Providence, can afford to dole out millions of dollars
and never get repaid.
Smiley's solution of separating the policy-making and loan-granting
functions of the Partnership has several key advantages:
*1. **It allows for qualified underwriters to manage the loaning
process.*
*2. **It protects the city's economy from unpaid debts and prevents
leniency in missed payments as a result of personal relationships with
those in city government.*
*3. **It ensures equal access to loans, particularly for minority- and
women-owned businesses that are disadvantaged by the current system.*
*4. **It allows those who sit on the Partnership's Board of Directors to
advise on economic development strategy rather than make loan decisions
outside their expertise.*
*5. **It would include expanded offerings, such as a focus on
micro-loans accompanied by training and technical assistance.*
Smiley's new approach is based on large measure on the best practices
exhibited in Seattle, Washington. Since 1997, a neutral body called
Community Capital Development (CCD) has offered loans, as well as technical
assistance and training programs, to local small businesses based on
business practices rather than political connections.
Smiley concludes, "By taking the politics out of these loan award
decisions, we will refocus the Providence Economic Development Partnership
on its true mission - helping to set the economic development direction of
the City of Providence and making fiscally responsible loans that provide
businesses and key industries with job-creating and growth potential with
the capital they need to thrive."
Brett Smiley is running in the September 2014 Democratic primary for Mayor
or Providence.
