2013 -- S 0718 SUBSTITUTE A

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LC02041/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - ECONOMIC DEVELOPMENT

CORPORATION

     Introduced By: Senators Sheehan, Walaska, Felag, Goodwin, and Jabour

     Date Introduced: March 13, 2013

     Referred To: Senate Commerce

It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 42-64-1.1, 42-64-8, 42-64-9.9, and 42-64-31 of the General Laws

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in Chapter 42-64 entitled "Rhode Island Economic Development Corporation" are hereby

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amended to read as follows:

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     42-64-1.1. Change of name. -- (a) Whenever in any general or public law, reference is

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made to the "department of economic development" or the "Rhode Island port authority and

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economic development corporation", or the "Rhode Island economic development corporation",

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the reference shall be deemed to refer to and mean the "Rhode Island economic development

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corporation" "Rhode Island commerce corporation", which may also be referred to as the

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"economic development commerce corporation".

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      (b) Whenever in any general or public law, reference is made to the "director of the

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department of economic development" or the "executive director of the Rhode Island port

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authority and economic development corporation" or "the executive director of the economic

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development corporation", the reference shall be deemed to refer to and mean the "executive

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director of the Rhode Island economic development commerce corporation".

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      (c) Whenever in any general or public law, reference is made to the "economic

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development council" or "the board of directors of the Rhode Island economic development

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corporation", the reference shall be deemed to refer to and mean the "board of directors of the

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Rhode Island economic development commerce corporation".

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     42-64-8. Directors, officers, and employees. -- (a) The powers of the Rhode Island

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economic development corporation shall be vested in a board of directors consisting of thirteen

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(13) fourteen (14) members.

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      (1) The governor shall serve as a member of the board and as chairperson, ex-officio,

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who shall vote only in the event of a tie.

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     (2) The chairperson of the governor's workforce development board, or his or her

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designee, shall serve as a member of the board.

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     (2)(3) In addition to the governor and the chairperson of the governor's workforce

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development board, or his or her designee, the membership of the board shall consist of twelve

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(12) public members to be appointed by the governor.

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      (3)(4) Each gubernatorial appointee shall be subject to the advice and consent of the

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senate and no one shall be eligible for appointment unless he or she is a resident of this state. The

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membership of the board shall reflect the geographic diversity of the state. Four (4) of the public

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members shall be owners or principals of small businesses doing business in this state which are

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independently owned and operated and which employs one hundred (100) or fewer persons. One

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other of the public members shall be a representative of a minority-owned company. One other of

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the public members shall be a representative of organized labor. One other of the public members

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shall be a representative of higher education. One other of the public members shall be appointed

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on an interim basis by the governor when a project plan of the corporation situated on federal

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land is disapproved by the governing body of a municipality in accordance with section 42-64-

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13(a)(4). The member shall be the mayor of the municipality within whose borders all or a

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majority of the project plan is to be carried out, or in a municipality, which has no mayor, the

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member shall be the president of the town or city council. The appointed interim member shall

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have all the powers of other members of the board only in its deliberations and action on the

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disapproval of the project plan situated on federal land and within the borders of his or her

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municipality. Upon final action by the board pursuant to section 42-64-13(a)(5), the interim

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member's term of appointment shall automatically terminate.

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      (4)(5) It shall be the responsibility of the corporation to conduct a training course for

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newly appointed and qualified members and new designees of ex-officio members within six (6)

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months of their qualification or designation. The course shall be developed by the executive

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director of the corporation or his or her designee, be approved by the board, and conducted by the

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executive director or his or her designee. The board may approve the use of any board or staff

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members or other individuals to assist with training. The training course shall include instruction

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in the following areas: the provisions of the entirety of chapter 64 of this title and of chapters 46

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of this title, 14 of title 36, and 2 of title 38 of the Rhode Island general laws; and the board's rules

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and regulations. The director of the department of administration shall, within ninety (90) days of

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July 15, 2005, prepare and disseminate materials relating to the provisions of chapters 46 of this

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title, 14 of title 36, and 2 of title 38.

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      (5)(6) Public Members members of the board shall be removable by the governor,

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pursuant to the provisions of section 36-1-7 and for cause only, and removal solely for partisan or

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personal reasons unrelated to capacity or fitness for the office shall be unlawful.

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      (6)(7) The five (5) current members of the board of directors who were duly appointed

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and who have unexpired terms shall continue as directors of the corporation until February 1,

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2010, and thereafter until their successors are appointed and qualified. Upon passage of this act,

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the governor shall appoint seven (7) members to the board, with terms expiring as follows: three

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(3) members shall have terms expiring on February 1, 2011; three (3) members shall have terms

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expiring on February 1, 2012; and one member shall have a term expiring on February 1, 2013. In

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January 2010, the governor shall appoint five (5) members to the board with terms expiring as

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follows: two (2) members shall have terms expiring on February 1, 2013 and three (3) members

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shall have terms expiring on February 1, 2014. Beginning in 2011 and annually thereafter, during

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the month of January, the governor shall appoint a member or members to succeed the member or

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members whose terms will then next expire to serve for a term of four (4) years commencing on

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the first day of February and then next following, and thereafter until the successors are appointed

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and qualified. Beginning in 2011 and annually thereafter the governor shall appoint owners or

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principals of small businesses doing business in this state which are independently owned and

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operated, and which employs one hundred (100) or fewer persons. The members of the board

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shall be eligible to succeed themselves, but only upon reappointment and with senate advice and

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consent.

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      (7)(8) In the event of a vacancy occurring in the office of a member by death, resignation

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or otherwise, that vacancy shall be filled in the same manner as an original appointment, but only

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for the remainder of the term of the former member.

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      (b) The directors shall receive no compensation for the performance of their duties under

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this chapter, but each director shall be reimbursed for his or her reasonable expenses incurred in

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carrying out those duties. A director may engage in private employment, or in a profession or

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business.

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      (c) The chairperson shall designate a vice chairperson from among the members of the

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board who shall serve at the pleasure of the chairperson. A majority of directors holding office

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shall constitute a quorum, and, except as otherwise provided in section 42-64-13, any action to be

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taken by the corporation under the provisions of this chapter may be authorized by resolution

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approved by a majority of the directors present and entitled to vote at any regular or special

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meeting at which a quorum is present. A vacancy in the membership of the board of directors

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shall not impair the right of a quorum to exercise all of the rights and perform all of the duties of

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the corporation.

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      (d) The chief executive officer of the corporation shall be executive director of the

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corporation, appointed by the governor with the advice and consent of the senate. The executive

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director shall hold office for the term of three (3) years from the time of his or her appointment

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and until his or her successor is duly appointed and qualified. The director shall be eligible for

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reappointment, and shall not engage in any other occupation. The executive director of the

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corporation shall be entitled to receive for his or her services any reasonable compensation as the

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board of directors may determine.

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      (e) The board of directors shall appoint a secretary and such additional officers and staff

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members as they shall deem appropriate and shall determine the amount of reasonable

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compensation, if any, each shall receive. The board of directors may vest in the executive

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director, or the director's subordinates, the authority to appoint additional staff members and to

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determine the amount of compensation each individual shall receive.

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      (f) No full-time employee shall during the period of his or her employment by the

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corporation engage in any other private employment, profession or business, except with the

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approval of the board of directors during an open meeting.

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      (g) Notwithstanding any other law to the contrary, it shall not be or constitute a conflict

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of interest for a director, officer, or employee of any financial institution, investment banking

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firm, brokerage firm, commercial bank, trust company, building-loan association, architecture

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firm, insurance company, or any other firm, person, or corporation to serve as a director of the

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corporation, nor shall any contract or transaction between the corporation and a financial

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institution, investment banking firm, brokerage firm, commercial bank, trust company, building-

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loan association, architecture firm, insurance company, or other firm, person, or corporation be

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void or voidable by reason of that service as director of the corporation. If any director, officer, or

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employee of the corporation shall be interested either directly or indirectly, or shall be a director,

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officer, or employee of or have an ownership interest (other than as the owner of less than one

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percent (1%) of the shares of a publicly-held corporation) in any firm or corporation interested

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directly or indirectly in any contract with the corporation, that interest shall be disclosed to the

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corporation and set forth in the minutes of the corporation, and the director, officer, or employee

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having that ownership interest shall not participate on behalf of the corporation in the

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authorization of that contract. Interested directors may be counted in determining the presence of

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a quorum at a meeting of the board of directors of the corporation, which authorizes the contract

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or transaction.

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      (h) Any action taken by the corporation under the provisions of this chapter may be

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authorized by vote at any regular or special meeting, and each vote shall take effect immediately.

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All meetings shall be open to the public and all records shall be a matter of public record except

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that if a majority of the board of directors decides that it would be in the best interests of the

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corporation and the state to hold an executive session in private, then the board of directors is

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authorized to transact any business it deems necessary at that executive session in private, and the

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record of the executive session shall not become a matter of public record until the transaction

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discussed has in the opinion of the board of directors been completed. The corporation shall be

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subject to the provisions of chapter 42-46 ("Open Meetings") and chapter 38-2 ("Access to Public

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Records").

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      (i) The board of directors may designate from among its members an executive

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committee and one or more other committees each of which, to the extent authorized by the board

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of directors, shall have and may exercise all of the authority of the board of directors, but no

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executive committee shall have the authority of the board of directors in reference to the

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disposition of all or substantially all of the property and assets of the corporation, amending the

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by-laws of the corporation, exercising the condemnation power conferred upon the corporation by

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section 42-64-9 or taking actions described or referred to in section 42-64-13(a).

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      (j) Any action required by this chapter to be taken at a meeting of the board of directors,

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or any action which may be taken at a meeting of the board of directors, or committee of the

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board of directors, may be taken without a meeting if a consent in writing, setting forth the action

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to be taken, shall be signed before or after that action by all of the directors, or all of the members

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of the committee, as the case may be.

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      (k) (j) Employees of the corporation shall not, by reason of their employment, be deemed

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to be employees of the state for any purpose, any other provision of the general laws to the

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contrary notwithstanding, including, without limiting the generality of the foregoing, chapters 29,

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39, and 42 of title 28 and chapters 4, 8, 9, and 10 of title 36.

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     42-64-9.9. Public access to information. -- Any permit, permit application or effluent

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data shall be available to the public for inspection and copying. The Rhode Island economic

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development corporation shall treat as privileged any information, which would, if made public,

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divulge methods or processes entitled to protections as trade secrets of the person or entity. in

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accordance with chapter 38-2 ("Access to Public Records"). Confidential or privileged materials

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may be disclosed or transmitted to other officers, employees or agents of the corporation.

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     42-64-31. Other statutes. -- Nothing contained in this chapter shall restrict or limit the

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powers of the Rhode Island economic development corporation arising under any laws of this

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state except where those powers are expressly contrary to the provisions of this chapter; provided,

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however, that the corporation shall not have any power to create, empower or otherwise establish

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any corporation, subsidiary corporation, corporate body, any form of partnership, or any other

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separate entity, without the express approval and authorization of the general assembly. Except as

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otherwise provided, this chapter shall be construed to provide a complete additional and

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alternative method for doing the things authorized hereby and shall be regarded as supplemental

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and in addition to the powers conferred by other laws. The issuance of all bonds, notes, and other

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obligations of the corporation under the provisions of this chapter need not comply with the

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requirements of any other statute applicable to the issuance of bonds, notes and obligations, and

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contracts for the construction and acquisition of any project undertaken pursuant to this chapter

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need not comply with any provision of any other state law applicable to contracts for the

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construction and acquisition of state owned property, except that the provisions of section 37-13-

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1 et seq. (prevailing wage); section 37-16-2 et seq. (public works arbitration); and section 37-12-1

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et seq. (contractors' bonds) for the construction and acquisition of state or municipally owned

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property shall be applicable. No proceedings or notice of approval shall be required for the

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issuance of any bonds, notes, and other obligations or any instrument of security except as

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provided in this chapter.

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     SECTION 2. Chapter 42-64 of the General Laws entitled "Rhode Island Economic

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Development Corporation" is hereby amended by adding thereto the following sections:

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     42-64-8.2. Role and responsibilities of board members. – (a) Board members of the

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corporation shall:

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     (1) Execute direct oversight of the corporation and the chief executive and other

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management in the effective and ethical management of the corporation;

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     (2) Understand, review, and monitor the implementation of fundamental financial and

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management controls and operational decisions of the corporation;

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     (3) Adopt a code of ethics applicable to each officer, director and employee of the

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corporation that, at a minimum, includes the standards established in chapter 36-14 ("Code of

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Ethics");

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     (4) Adopt a mission statement expressing the purpose and goals of the corporation, a

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description of the stakeholders of the corporation and their reasonable expectations from the

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corporation, and a list of measurements by which performance of the corporation and the

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achievement of its goals may be evaluated. The corporation shall at least once every three (3)

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years publish a self-evaluation based on the stated measurements;

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     (5) Adopt and periodically update an indemnification policy which shall be set forth in

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the bylaws of the corporation;

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     (6) Establish quantifiable performance measurements for all programs of the corporation

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and its subsidiaries that will assist the board in evaluating program effectiveness and inform

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policymaking and resource allocation decisions;

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     (7) Establish an access to capital advisory committee and appoint at least seven (7) public

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members representing diverse interests; and

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     (8) Perform each of their duties as board members, including, but not limited to, those

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imposed by this section, in good faith and with that degree of diligence, care, and skill which an

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ordinarily prudent person in like position would use under similar circumstances and ultimately

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apply independent judgment in the best interest of the corporation, its mission, and the public.

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     (b) Board members of the corporation shall establish and maintain written policies and

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procedures for the following:

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     (1) Internal accounting and administrative controls in accordance with the provisions of

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chapter 35-20 ("Public Corporation Financial Integrity and Accountability Act of 1995");

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     (2) Travel, including lodging, meals, and incidental expenses, provided that no

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reimbursement shall exceed the allowable state employee reimbursement amount per day;

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     (3) Charitable and civic donations and/or contributions, provided, however, that all such

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donations or contributions shall be voted by the full board during an open meeting and the vote

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shall be recorded in the minutes of the meeting, together with:

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     (i) The citation to the specific state statute authorizing the action;

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     (ii) An explanation of how the donation or contribution relates to the mission of the

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corporation;

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     (iii) The identity of each board member or employee of the corporation that will receive

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any benefit from the donation or contribution including, without limitation, tickets to events,

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meals, and golf;

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     (iv) Any disclosure required by chapter 36-14 ("Code of Ethics"); and

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     (v) Each such donation or contribution shall be clearly identified in the financial

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statements of the corporation.

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     (4) Credit card use, provided, that pursuant to section 35-20-10, no credit card shall be

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used for personal use;

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     (5) Employee reimbursement, including requests by management for business expenses,

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and expenses classified as gifts or entertainment;

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     (6) Personnel, including hiring, dismissing, promoting, and compensating employees of

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the corporation, and provided that no employee of the corporation shall be compensated for sick,

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vacation, or other leave time to an extent greater than state employees;

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     (7) Severance pay;

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     (8) Marketing expenses; and

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     (9) Lobbyists' expenses.

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     (c) The written policies and procedures required by this section and any additional

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written policies and procedures that the board may adopt shall be approved by the board during

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an open meeting and the vote shall be recorded in the minutes of the meeting.

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     (d) Any board member who fails to attend more than fifty percent (50%) of all meetings

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held during any calendar year shall be deemed to have resigned, unless the board member

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requests, in writing, to the chairperson to serve the remaining term of his or her appointment,

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setting forth the reason or reasons for the absences, and the majority of the board members

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approve the request in an open meeting.

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     (e) No board member shall serve in a paid or voluntary capacity as an officer, employee,

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or consultant of the corporation.

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     42-64-8.3. Executive compensation. – (a) The corporation shall establish a committee

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on executive compensation which shall meet independently of management and which shall:

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     (1) Recommend to the full board the compensation packages of the executive and senior

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management of the corporation. The compensation package of the executive officer shall be

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based on a comprehensive and objective analysis of comparable compensation of similar officers

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of state government, other authorities, quasi-public corporations, and private-sector employees

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with similar functions and responsibilities. The committee may retain a consultant to assist in the

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comparability study. When calculating compensation, the committee shall consider the value of

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the retirement plan in the overall compensation package;

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     (2) Prepare clear written job descriptions and clear written expectations of job

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performance for the executive officer and senior management;

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     (3) Conduct the job performance review of the executive officer at least annually; and

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     (4) Negotiate the employment contract of the executive officer which shall be approved

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by the full board during an open meeting.

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     42-64-8.4. Transparency requirements established. – The following shall be public

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record, available to the public upon request and posted directly and not via link, on the website of

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the corporation:

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     (1) Job descriptions of the executive director and management;

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     (2) Employment contracts of the executive director and management;

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     (3) Executive and senior management compensation studies pursuant to section 42-64-

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8.3;

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     (4) Monthly financial statements;

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     (5) Capital improvement plans;

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     (6) Operating budgets;

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     (7) Strategic plans;

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     (8) Agendas and minutes of the open meetings of the board of the corporation and the

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boards of the corporation's subsidiaries, provided, however, that this posting provision shall not

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apply to the Quonset development corporation, the Rhode Island airport corporation, the I-195

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redevelopment district and the East Providence waterfront district;

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     (9) Quarterly reporting required by section 42-90-1;

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     (10) All regulations of the corporation;

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     (11) Enabling legislation;

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     (12) Mission statement and board self-evaluation required by subdivision 42-64-

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8.2(a)(4);

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     (13) Board members;

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     (14) Organizational chart;

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     (15) Bylaws of the corporation;

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     (16) All reports and audits required by this chapter; and

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     (17) Within ten (10) business days of execution, a copy of each contract for legal,

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medical, accounting, engineering, or any other professional, financial, technical, or consultant

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services for the corporation, consistent with the provisions of chapter 38-2 ("Access to Public

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Records Act").

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     42-64-31.1. Rules and regulations. – When issuing rules and regulations or any

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amendments to rules and regulations or when adopting bylaws or amendments to bylaws, the

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corporation shall be subject to the provisions of chapter 42-35 ("Administrative Procedures").

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     42-64-36. Loan and loan guarantee programs. – (a) No later than September 1, 2013,

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the corporation shall adopt regulations that establish financing principles and guidelines,

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including risk assessment, for all loans and guarantees awarded by the corporation or its

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subsidiaries, provided, however, that this provision shall not apply to the Quonset development

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corporation, the Rhode Island airport corporation, the I-195 redevelopment district and the East

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Providence waterfront district. The corporation shall, prior to the award of a loan or guarantee,

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document that each loan or guarantee complied with these regulations.

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     (b) On or before January 1 of each year, the corporation shall issue a report on all loans

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and loan guarantees issued by the corporation. The report shall include at a minimum:

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     (1) With respect to loans, a list of each loan, a description of the borrower, the amount of

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principal and interest outstanding on the loan as of the date of each report, and a summary of the

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collateral securing the repayment of the loan.

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     (2) With respect to loan guarantees, a list of each loan guarantee issued, a description of

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the borrower on behalf of which the guarantee was issued, the lender or lenders that made the

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loan and the amount of the loan to the borrower, the amount of principal and interest outstanding

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on the loan as of the date of each report, and a summary of the collateral securing the repayment

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of the loan for which the guarantee was issued.

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     (3) With respect to loan and loan guarantees, a summary of the economic impacts made

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by each borrower as a result of the loan or loan guarantee, including, but not limited to, the

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number, type, and wages of jobs created by the borrower, any impacts on the industry in which

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the borrower operates, and an estimate of income taxes for the state of Rhode Island generated by

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the employees of the borrower and the borrower itself.

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     (4) Copies of each report shall be submitted to the chairpersons of the house finance

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committee and the senate finance committee.

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     42-64-37. Audit of the corporation. – (a) Commencing July 1, 2013, and every three (3)

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years thereafter, the corporation shall be subject to a performance audit conducted in compliance

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with the generally acceptable governmental auditing standards, by the bureau of audits or a

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certified public accounting firm qualified in performance audits.

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     (b) If the audit is not directly performed by his or her office, the selection of the auditor

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and the scope of the audit shall be subject to the approval of the chief of the bureau of audits.

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     (c)  The audit shall be conducted in conformance with subsections 35-7-3(b) through (d). 

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     (d) The results of the audit shall be made public upon completion, posted on the websites

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of the bureau of audits and the corporation.

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     (e) The corporation shall be responsible for all costs associated with the audit.

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     SECTION 3. This act shall take effect upon passage.

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LC02041/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT - ECONOMIC DEVELOPMENT

CORPORATION

***

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     This act would change the name of the economic development corporation to the Rhode

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Island commerce corporation and would also establish transparency and accountability provisions

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with respect to its operations and governance.

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     This act would take effect upon passage.

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LC02041/SUB A

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