Critics Blast Raimondo Administration for $1 Million Waste on Johnson & Johnson Buildout

Critics Blast Raimondo Administration for $1 Million Waste on Johnson & Johnson Buildout

A GoLocal investigation uncovered that the Raimondo administration will waste $1 million for incentives building out space for Johnson & Johnson. 

The monies go to the private developer Wexford and in two years, Johnson & Johnson will leave to move into another Wexford space — which is receiving $40 million in incentives.

Reaction to the news was swift and damning.

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“As Treasurer and now as Governor, Gina Raimondo has overseen an unprecedented transfer of Rhode Islanders' tax dollars to Wall Street interests,” said former Governor Lincoln Chafee. He has become a tough critic of fellow Democrat Gina Raimondo's economic development policies (see Video).

“Taxpayer-funded corporate subsidies are labeled as ‘senseless’, ‘foolhardy’ and ‘shortsighted’ by the New York Times, but a [public policy] that the Providence Journal continues to endorse. It is a scandal and a sad state of affairs for our struggling state,” added Chafee.

The investigation was sparked after Raimondo announced that Johnson & Johnson would move from One Ship Street -- the space that has already received $1 million in state funds via the I-195 Commission -- to the Wexford Campus.

“Rhode Island doesn’t have in-house due diligence, which makes our planning and development policies primitive. If fiscal accountability is also absent, as might be the case here, we essentially become far too reliant on ‘dumb luck’ for success,” said URI Economic Len Lardaro.

Former RI Director of Administration Gary Sasse echoed Lardaro’s comments. “Spending one million taxpayer dollars to build out space that Johnson & Johnson will occupy for only two years exemplifies a bigger public policy concern.  That concern being the transparency and accountability of how CommerceRI awards tax subsidies and grants to certain businesses,” said Sasse, who heads the Hassenfeld Institute at Bryant University.

The Johnson & Johnson deal announced last December is one of the most generous of the packages provided to corporations to bring jobs to Rhode Island.

"This crony Johnson & Johnson and Wexford deals are part of a failed corporate welfare strategy, as designed by the Brookings Institution. Instead of improving our state's dismal business climate for all employers, taxpayer money is being handed out to and benefiting just a few insider corporations. Suspiciously, Rhode Island is not the first state where a Brookings report has led to massive taxpayer subsidies for Wexford; a repeated quid pro quo arrangement we believe warrants further investigation,” said Mike Stenhouse of the RI Center for Freedom and Prosperity.

GOP Candidates Were Equally Critical

More questions about the economic development strategy of RI Commerce Corp from a range of voices. 

“This is just another insult to hardworking Rhode Islanders. The Governor and her Commerce Corporation staff have bent over backwards to take care of Wexford.  Already taxpayers have pledged more than $40 million from CommerceRI programs, given money for a $45 million parking garage that Wexford demanded and provided them with tax treaties in Providence,” said House Minority Leader Patricia Morgan, who has announced that she will be running for Governor in 2018.

“Now it appears this private company will be the beneficiaries of $1 million of renovated office space in the Ship Street building they own.  Added together, this is a large package of taxpayer subsidies.  On top of that Johnson & Johnson is receiving another $6 million for a mere 75 promised jobs,” added Morgan.

“It doesn't matter how book smart someone is, what matters is there is competency to navigate crisis and make sound decisions for long-term success.  It doesn't surprise me at all that a short-term view is sacrificing our taxpayers once again, because we lack proven leadership.  Leaders lead...they are not led,” said Giovanni Feroce, CEO of BENRUS. Feroce has been his own financial challenges recently — losing his Newport Mansion and working to build his company.

Secret Leases

Raimondo has continued to refuse to release -- or force the release -- of the leases between the taxpayer-subsidized Wexford campus and the tenants — Brown University, CIC, and Johnson & Johnson.

In January, a GoLocal investigation found that the permanent job claims for the Wexford project by the Raimondo administration were inflated. 

Raimondo had repeatedly claimed that project will create 1,000 new permanent jobs in Rhode Island. After weeks of requesting information about tenants, rents, and job creation, GoLocal was finally able to secure actual job numbers for the project and then fact check those claims. 

In fact, actual jobs created will be closer to 80 to 90. This was prior to Monday’s announcement that Johnson & Johnson would move to the Wexford campus - increasing the job creation from 90 to 165.

“Even more troubling is the Governor's unwillingness to release or even discuss the specifics of the plan and the leases. Given the history of misinformation and dodging, it is important for taxpayers to know if the spaces are being rented at market rates or another sweetheart rate.  The Governor refuses to divulge that information on the basis that Wexford is a private company, but they are taking our public’s money.  The Governor and Wexford can’t have it both ways: too much taxpayer money is on the line,” added Morgan.