By: Scott Spitler
December 20, 2001

NOTE: This copyrighted article originally appeared in the Rhode Island newspaper The Standard Times on 20 December, 2001. It is reprinted here with the permission of the publisher.

Monday's decision of the state Economic Development Corporation board of directors to deny the USS Saratoga Museum Foundation an extension on their conditional lease, by virtue of a 5 to 5 vote decided by chairman Governor Lincoln Almond, has left the future of the project up in the air.

At issue for the board was the perceived lack of collateral the Saratoga Foundation has and how that would potentially affect the state should the project fail and default on debt insurance. The foundation applied for debt insurance through a state agency, the Rhode Island Industrial-Recreational Building Authority (IRBA). The IRBA board took no action on the application, which requested $3 million in debt insurance, citing the possibility of federal national emergency reverter laws that would not allow the project to move forward. The Navy recently stated that the reversion statutes do not apply in this case.

Earl Queenan, of IRBA, told the EDC board that while the determination was made the project would not meet the statutorial requirements at this time, he invited the foundation to come back at a later date to address the issue of collateral. USS Saratoga Museum Foundation president Frank Lennon told the EDC that they were still reviewing the IRBA decision, since it was only received last Wednesday. Lennon also reminded the EDC that he was not asking for any money, only time. "We would not come to the state and ask for a line item in the budget," he said. "IRBA debt insurance is as much a psychological factor as it is a financial factor."

"Of all the things brought up here today, time is the issue here," said board member Rep. Melvoid Benson (D-45). The governor and the EDC board stuck with the debt insurance and financial line of questioning to Lennon. Governor Almond's concern that the state would be ultimately responsible for the Saratoga Foundation defaulting on IRBA insurance was reinforced by Queenan's statement that if IRBA had to pay on the default of a $3 million policy, he would ask the state to step in and come up with the money.

"I'm telling IRBA right now not to come to the state of Rhode Island asking for several million dollars," to bail the project out, said Almond.

Sensing the tide was turning against him, Lennon introduced attorney Joseph White, who is assisting the Saratoga Foundation with legal counsel, to try and set the record straight on collateral. "We will have assets to pledge," said White. "And we will not ask for more money (insurance) than we have assets." A number of Almond-appointed board members were concerned with the possibility of this project tying up the waterfront from other development. "Are we building ourselves a real trap for the future," asked board member George Schuster. "There is a certain chilling effect concerning the fact that the Saratoga may or may not be there," added EDC executive director Tom Schumpert.

Lennon and Benson pointed to condition #11 of the Saratoga lease. It allows the EDC to market the facility to other parties and to evict the Saratoga Foundation with 30 days notice during the conditional period. This should have put to rest fears of restricting development of the site, reasoned Benson and Lennon. The EDC board then refocused its questions on finances. To open the doors of the project, said Lennon; they will need to raise $8.5 million. At this time, he told the board, they have less than $1 million in unconditional guarantees and about $2.5 million in conditional pledges.

"Financing is not keeping up with the other advances of the project," said board member Leo Charpentier, acknowledging that most of the issues and conditions of the lease have been met. "We're tying their hands behind their back, literally," pleaded Rep. Bruce Long (R-95) for an extension of six months, less than the original request of 12. "I have a serious problem placing the state in a position to pick-up the debt on this project," said QP/D general manager George Prete. "Maybe they'll move at a better pace than they have over the past two years."

The EDC board voted unanimously in September 1999 to give the project the okay to proceed based on 13 conditions. Despite meeting most of the conditions to the satisfaction of the EDC, the board voted against extending the conditional lease for any period of time. The current lease expires on Dec. 31.

"We're all a little puzzled as to why it would turn out this way," said Lennon following the vote. "No question that it is a disappointment, we'll have to go back and evaluate our options." "I'm very disappointed that the other members could not see the value that it would bring to tourism," said Benson (D-45) who voted for the extension. "It doesn't make any sense," said Rep. Suzanne Henseler (D-44) a non-voting member of the Quonset Davisville Management Corporation board of directors, an advisory board to the EDC that recently voted 3 to 2 to support the extension. "I'll do whatever it takes to help Frank Lennon and the Saratoga project."

"It's significant that all four elected representatives at the Quonset board said if they had a vote they would vote to support," said Lennon, noting that all the elected officials, save Governor Almond, on the EDC board voted in favor of extending the lease. "I'm disturbed by the news," said Sen. James Sheehan (D-23). "It is yet another example of how the governor and the EDC are playing defense to keep projects out in deference to their sacred cow, the container port."

The vote is by no means the death knell for the USS Saratoga, said Lennon. The history of the ship and its role in recent world events such as, the capture of the Achille Lauro hijackers and its participation in Operation Desert Storm, as well as the memory of the men who served on her will be preserved, he said. "In light of Sept. 11 we are stunned there would not be a more receptive ear," said Lennon. "Long term the wave of patriotism sweeping the country would benefit a project like this, but in the short term it's difficult to raise money."

This battle may have been lost, but as far as Lennon is concerned the war is not over. Quoting the naval war hero John Paul Jones, Lennon said, "We have not yet begun to fight."

© The Standard Times 2001

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1/10/02