Construction is under way at the Wexford Innovation Complex in the I-195 District in Providence. Rhode Island Governor Gina Raimondo calls the project a game-changer for the state’s economy. But is the governor’s optimism justified?
Upbeat rhetoric was in the air during a ceremony marking the start of construction last month at the Wexford Innovation Complex. Rhode Island Commerce Secretary Stefan Pryor was the MC for the event. The complex will be the first major development on land once covered by Interstate 195. Pryor called it a renewal of the capitalist spark from when the Jewelry District was a hub of manufacturing.
"Is this is a fantastic day for a groundbreaking, a groundbreaking that signals a new day in Rhode Island?" he asked. "Ladies and gentlemen, we know that Rhode Island can be a fount of innovation again."
Once the Wexford development is built, the tenants will include startup incubator Cambridge Innovation Center, Brown University’s School of Professional Studies, and an office of consumer products giant Johnson & Johnson. Governor Gina Raimondo says this adds up to a powerful message: “It is a symbol to the rest of the world that Rhode Island has momentum in this 21st century innovation economy."
Building the Wexford complex will require close to one thousand workers. Raimondo said the project is expected to create hundreds of permanent jobs, from janitors to executives in corner offices. And it could set the stage for two additional phases of development, with more buildings and more companies.
But it took about $32 million in state incentives to set the Wexford complex in motion. So is that a good use of taxpayer dollars?
Former Governor Lincoln Chafee says the answer is, no. He calls incentives a political tool that can make it seem like good things are happening without addressing deeper issues.
Chafee points to a New York Times editorial to argue that incentives are the wrong way to spark economic growth.
"Here’s the language from it," he said. " ‘It’s a foolhardy, short-sighted race to attract companies. That money could go a long way to improving education, transportation, and other public services that would have a far better shot at promoting economic growth.’ That’s The New York Times saying that. "
The New York Times might be saying that. But Governor Raimondo said other states use subsidies to attract businesses. And she said Rhode Island can’t afford to be on the sidelines after struggling for decades to reinvent the state’s economy.
"Our goal is use as little subsidy as possible to create the most number of jobs," Raimondo said during a news conference last year announcing the Wexford project.
She pointed to a lack of tangible progress up to that point in the I-195 District, an area long envisioned as an economic catalyst.
"We’ve been talking about this for years and it hasn’t happened," Raimondo said. "So we knew it required a reasonable amount of incentive to make it happen."
But defining a reasonable amount of incentives is pretty subjective.
Still, the Baltimore company developing the innovation complex, Wexford Science and Technology, is getting a lot of money in incentives, about $32 million from a I-195 construction fund and a separate tax credit program. Wexford is also being given land valued at $4.5 million as part of the innovation complex.
Critics like state Republican Chairman Brandon Bell say these kinds of carrots are the wrong way to spark economic growth. Bell said the state would be better off focusing on things like cutting taxes and improving public schools.
"I’m glad something is getting done. I just don’t think that the corporate welfare, the crony capitalism here, is the way to go," he said.
Construction of the Wexford complex will continue next year against the backdrop of a gubernatorial race. That will allow Raimondo to say she’s delivered some of the growth she promised as a candidate.
During the recent groundbreaking at the I-195 land, Cambridge Innovation Center founder and CEO Tim Rowe pointed to Wexford’s success in sparking innovation sectors in other cities. Rowe said startups are making up for job losses in mature industries by injecting fresh vitality into the American economy.
Rowe acknowledged that the recipe for what makes a successful startup is a bit mysterious.
"What we know less about is this process of innovation, what actually causes it to happen," he said. "What makes it possible for a city to go from being a small place to a big place on the back of substantial new changes, new companies, new technologies."
But Rowe said universities are a key to innovation, and that with colleges like RISD and Brown, Providence has the assets to build a series of promising startups.
The first phase of the Wexford Innovation Complex is expected to be completed in two years. But determining the actual impact of the compex – and whether it’s truly a game-changer for Rhode Island’s economy – will take a lot longer.