Economic Development Commission Executive Director Keith Stokes "sent me a letter and he said the taxpayers will never be on the hook for these bonds" for 38 Studios.
One of the hot-button issues of the 2013 General Assembly session was whether the state should repay the bonds sold to help finance 38 Studios, the now-bankrupt video-game company founded by former Boston Red Sox player Curt Schilling. One state representative who has argued against repayment is Charlene Lima, a Democrat from Cranston. She told the House on June 26 that, before the bonds were sold in November 2010, she had been promised by the executive director of the Rhode Island Economic Development Commission (RIEDC) that taxpayers would not have to foot the bill if the deal with 38 Studios didn't live up to its promise. "When I was complaining to the former director, Keith Stokes, he sent me a letter and he said the taxpayers will never be on the hook for these bonds, for this money," Lima said. "How was this properly vetted by these people if they were saying the taxpayers wouldn't be on the hook? And guess what. Today they ARE on the hook." We're not going to get into the merits of the state’s controversial decision to start paying the cost of the "moral obligation" bonds, but we wondered whether Stokes, who resigned after 38 Studios collapsed, really had made a specific pledge in writing. We called Lima and she quickly forwarded a copy of an Oct. 4, 2010 letter from Stokes in which he complained that Lima had offered an "inaccurate characterization of this investment and the RIEDC's degree of concern for Rhode Island taxpayers" in a news release she had authored. At the time, the bond sale had been approved and the bonds themselves were about to be sold. Stokes wrote, "In the unlikely event that the company is not able to meet its debt obligations," the state would have first crack at 38 Studio's assets. "These collateral assets, in addition to the debt repayment reserves, would be used to pay back the loan before the application of any public funds would be considered. "This ensures that under no circumstances would taxpayers be asked to repay $75 million." As Lima now notes, taxpayers are being asked to pay the money. (The $8.2-billion state budget, which the General Assembly passed and Governor Chafee signed, included $2.5 million for the first required taxpayer payment on the bonds. The total owed, with interest, is about $112.6 million.) To sum up, Lima said she received a letter in 2010 from then-RIEDC official Keith Stokes in which he insisted that Rhode Islanders would not be on the hook for the 38 Studios bonds. Lima earned a Pants on Fire last month for a comment she made about Rhode Island's failure to pass the Constitutional amendment authorizing the federal income tax. "If my pants were on fire," she said, "what is he? A towering inferno?" We don't have varying levels of conflagration. And in this case, we're simply judging the claim Lima made on the House floor. She has the evidence and we rate her statement True. (If you have a claim you’d like PolitiFact Rhode Island to check, e-mail us at politifact@providencejournal.com. And follow us on Twitter: @politifactri.)
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