Clockwise from top left: Gov. Gina Raimondo, Karl Wadensten, Gary Sasse, Stefan Pryor
Rhode Island Commerce Corporation board member Karl Wadensten is calling on the agency to take a closer look at its standards of who it does business with, following the investigation by GoLocal unveiling that controversial California developer Lance Robbins is being awarded $3.6 million.
"Should they have standards? Somebody should - that would be like letting a felon having a gun," said Phyllis Arffa, who had owned Blaze at Hope Artiste Village before the business went under - and Robbins' threatened to bankrupt her. "I'm sure [Robbins] sold them a bill of goods that he'll do all these great things, that he'll do this and that. I can't say what he'll do under the microscope."
Now, Wadensten -- who was the only EDC board member to vote against 38 Studios -- is cautioning the Commerce corporation to think closely about who it does business with -- and others are as well.
Commerce's Wadensten on Record
"We're grateful that we have these opportunities, these grant and loan tools from the legislature and Governor, and that we're trying to attract and strengthen existing business and new business to Rhode Island. It's a competitive environment, to grow economies from other states," said Wadensten, who owns Vibco.
"When we do this, besides just the financials and the empirical data that we pass the merit of a deal by, we need to ask ourselves, 'What are the core values and characteristics of the organization, the soft side?' That might be harder to measure or grade, it's an intangible that has more value than that of just success and defeat -- it's the intangible that makes people take pause," said Wadensten.
"I abide by golden rule and I start to question, 'Is this person I want to be involved with?' I think that in Rhode Island, that we have values. And we need to be clear on what those values are and which ones we want so desperately to be characterized with," said Wadensten.
"As a business leader and hearing feedback from business community, the question is, 'What do we stand for?' Rhode Islanders are proud people. We're not immune to our own shortcomings by any stretch -- but we need to ask who we want to be associated with and what's important to us, and how will this define us going forward and be part of the 100 year plan," said Wadensten. "The ecosystem of Rhode Island is evolving and is fragile, and needs conscious effort in its creation. 'Culture eats strategy for breakfast' - I believe that strong culture can be one of your best competitive tools to set you apart."
Government, Business Leaders Weigh In
URI Distinguished Professor of Business Edward Mazze spoke to how financial decisions are made - and what needs to be considered.
"It is critical that Commerce conduct a complete due diligence for each proposal before the proposal is submitted to others for consideration and approval such as its Finance/Loan Committee or the Board," said Mazze.
"In banking, the borrower’s character is more important than the borrower’s capacity to pay back the loan," continued Mazze. "Commerce must apply the similar standards to what financial institutions use in approving loans. Commerce has a fiduciary responsibility and a duty of care to make recommendations that are based on a “solid” list of criteria [which should be made available to anyone seeking funds] that includes a comprehensive list of business questions starting with the background of the management team of the organization seeking the funds/credits. Proposals with questionable management teams stop at that point. Commerce’s standards must be high since public funds are being used."
Former Rhode Island Director of Administration Gary Sasse, who founded the Hassendfeld Center for Public Leadership at Bryant University, was critical of Commerce's actions, in light of press reports in LA on Robbins.
"It is unthinkable that CommerceRI would award tax credits to a real estate or development entity with a record of code violations," said Sasse. "One should expect that in doing its due diligence the CommerceRI Board would receive a comprehensive report on the background of any business it was considering awarding publicly financed tax credits. The reputational risks of Rhode Island granting tax breaks to a developer who has a slumlord track record outweighs economic benefits of a project."
"Where there is smoke there may be fire," continued Sasse. "While I cannot comment on the standards that CommerceRI employs, serious questions have been raised about transparency and accountability in making preferential tax deals. To stop CommerceRI becoming Rhode Island’s invisible empire, the General Assembly should aggressively hold oversight hearings to get a better handle on CommerceRI’s decision-making process and Board governance."
Related Slideshow: Lance Robbins Controversies Through the Years
There are dozens of issues and hundreds of articles about Robbins controversies. GoLocal has broken down a dozen of the conflicts that have taken place across the country over the past 30 plus years.
Residents of a dilapidated building who say they regularly fight off armies of giant rats, swarms of cockroaches and youth gangs that roam their hallways have sued the building's owner for $10 million.
Attorneys for the Spanish-speaking residents related nightmarish stories of cockroaches biting sleeping children, a rat they said tried to drag a baby from its bed and another that allegedly attacked a man in the shower.
They said tenants feel rats crawl over them at night and some stand guard over babies all night, fighting off the rodents with brooms and slingshots.
The lawyers opened roach traps on the front steps of the South Union Street building near downtown to display dozens of huge cockroaches, some still crawling, which they said were caught in the building overnight.
The lawsuit, filed jointly in Superior Court by four private and public- interest law firms, accuses building owner Lance J. Robbins and his associates of refusing to make repairs, curb vermin infestation or provide reliable water, electricity or security in the 40-unit building, which houses large families in one-room apartments.
Robbins said Wednesday that none of his employees in the building have seen any rats and, ''I wouldn't be a bit surprised if a lot of this at the news conference was staged.''
Real estate broker and attorney, Lance Robbins, both owned and managed numerous "slumlord" apartments in the city of Los Angeles. This, as acknowledged by Robbins's attorney, was an extremely lucrative business. The record suggests, though, that Robbins took less than adequate care of the apartments under his control. Between 1985 and 1995, Robbins had been convicted of some 50 municipal building code violations. He was twice disciplined (1991 and 1994) by the State Bar for "facts and circumstances surrounding habitability violations in properties" that he owned.
In January of 2001, Robbins pleaded nolo contendere and was convicted of three misdemeanor violations of the fire protection and prevention provisions of the Los Angeles Municipal Code. He was fined $100 and placed on summary probation for 18 months. In March of 2003 the Department of Real Estate filed an accusation alleging that Robbins's convictions constituted cause for the suspension or revocation of his license as a broker.
Lauren Saunders of the National Consumer Law Center is one of the top tenant advocacy attorneys told GoLocal on Tuesday.
Robbins was one of the most dishonest and unscrupulous people I have come across in my career working for vulnerable tenants and consumers. I cannot imagine entrusting any city money to him.
Lance Robbins was the worst slumlord in L.A. history. The city's Slum Housing Task Force prosecuted him numerous times for horrible conditions at his buildings. He also ran up huge water bills at his buildings that he refused to pay, and the city was reluctant to shut off the water for fear of harming the tenants. I filed a False Claims Act case against him and he was forced to pay $1 million in back water bills.
He was also extremely ingenious about using a complex web of sham corporations to avoid liability. After the fines from his slum violations and his back water bills started adding up, he started foreclosing against himself and putting his buildings into receivership to escape accountability. His buildings were in numerous different corporations and partnerships and he put loans in other names against his own buildings, then started a foreclosure action. He then asked the court to appoint a "neutral" receiver who he chose who actually just let Robbins stay in control of the building. We detailed that in the same lawsuit.
Developer Getting $3.6M in RI Tax Credits Sued by N. Carolina Town for Backing Out of Project
Urban Smart Growth (USG), the developer who just received nearly $3.6 million in tax credits from Governor Gina Raimondo and the Rhode Island Commerce Corporation, was sued by the Town of Belville, North Carolina, in 2015 for backing out of a project, GoLocal has learned...
Robbins and USG stated on Monday that they are intending to utilize the Rhode Island tax credits to complete a $38.9 million project to develop 150 loft apartments at Hope Artiste Village in Pawtucket.
However, in North Carolina, a stalled USG project has led to the Town of Belville to seek arbitration, following its 2015 lawsuit against USG, who in 2007 had entered into a twenty-year agreement to develop a mixed-used project along the town's waterfront.
Not only did the project never come to fruition, press reports show that USG engaged in discussions with the adjacent town of Leland to annex Belville's downtown and undertake the project with them instead.
"We need to bring [Robbins] to light. It's really a shame-- he goes and buys up cheap property and tries and hoodwinks the local city councils to fund this kind of development," said Peter Schardien, who is the husband of Belville Commissioner Donna Schardien, of Robbins. "He's an attorney, or he used to be, and he knows how to get around things. He's no good."
Former Business Partner of Robbins of USG Sued and Received $28M - and Warns RI
Frank Gamwell, a former business partner of Lance Robbins of Urban Smart Growth (USG), has said that he would "never do business with him again" after suing Robbins for $28 million and ultimately receiving the amount in arbitration.
Now, Gamwell is warning that Rhode Island should be doing its "due diligence" in dealing with Robbins.
On Monday, USG was awarded $3.6 million in tax credits from Governor Gina Raimondo and the Rhode Island Commerce Corporation to develop lofts at Hope Artiste Village.
"This Just Isn't Fair,” Says Restaurant Owner About Developer Robbins Getting $3.6M in RI Tax Credits
A former restaurant owner at Hope Artiste Village said that she "wished she had sued" Urban Smart Growth (USG), the management company that was awarded $3.6 million in tax credits from the RI Commerce Corporation this week.
Rosinha Benros, who had opened and owned the restaurant "Rosinha" at Hope Artiste Village, said she had a number of issues with USG -- including having had gas being turned off due to USG not having paid their National Grid bill.
"I opened that space, I created that place," Benros told GoLocal on Thursday, of the restaurant she ran for over three years. "I can't even drive by, I loved that place so much. It just breaks my heart."
Benros said that issues with the change in management, coupled with having problems with The Met being located next door, led in part to her closing the restaurant.
USG's CEO and principal is controversial developer Lance Robbins, who in California was cited with 105 health and building-code violations, piled up 32 convictions, paid a $1 million fine, to name a few of his legal problems, according to press reports.
RI Security Firm Says Developer Robbins of USG Won’t Pay $23K Bill
A former security services vendor for Hope Artiste Village is claiming that owner Urban Smart Growth (USG) never paid them $23,583 for services in a six-month span starting in 2013.
“We started services on December 13, 2013 and ended services on June 21, 2014. They paid a total of six invoices during our services,” said Karen Voisard with Metropolitan Public Safety, who provided the check stubs from USG. “As of current standing with the company we are owed $23,583.00 for eighteen overdue invoices. That doesn't include any of the late charges as stated in our contract.”
Former Owner of Blaze Restaurant: USG’s Robbins “Threatened to Bankrupt Me”
Phyllis Arffa, the originator and owner of the restaurant Blaze, said that Lance Robbins of Urban Smart Growth threatened to bankrupt her when her business was struggling at Hope Artiste Village.
Arffa, who owned and operated Blaze on Hope Street in Providence before moving to Hope Artist Village in 2015, said that she has had to go back to working in a kitchen to pay back $70,000 in debt that she accrued while trying to make Blaze work under Robbins, which she said she ultimately had to step away from due to financial and health reasons.
"I wish I never met [Robbins]. I had money in the bank, we were all set to relax for a little while," said Arffa after moving from Hope Street to the Hope Artiste village. "Now, I'm working 12 to 12 to just to pay back what I owe."
Arffa showed a text sent by Robbins threatening to bankrupt her.
The former owner of the Bread Lab at Hope Artiste Village, which is owned by controversial developer Lance Robbins, said she found him to be “morally bankrupt” as she was forced to close her operations in 2015.
Deana Martin, who had owned the Bread Lab with her husband, said that she battled with Robbins over a number of issues -- including the insurance money following the destruction of her bakery equipment due to the mill’s sprinklers going off one night.
“If you don't give him what he wants, he'll use whatever leverage he has to get what wants,” said Martin. “If it furthers his benefit, he'll take it from you, and the legal proceedings are just that — if he wins, he claims he’s not ‘guilty.’
