08:17 AM EDT on Wednesday, June 23, 2004

BY W. ZACHARY MALINOWSKI
Journal Staff Writer

The measure would force the Convention Center Authority to help finance a private project advanced by developer Vincent Mesolella Jr., a former legislator from North Providence.

PROVIDENCE -- A controversial bill that would force the Convention Center Authority to subsidize a downtown hotel with $17 million in state bonds breezed through the House Finance Committee yesterday.

Among the 13 legislators who attended the hearing, only two, Victor G. Moffitt, R-Coventry, and Carol A. Mumford, R-Cranston and Scituate, cast dissenting votes.

In a brief exchange before the vote, Moffitt asked House fiscal adviser Michael O'Keefe whether he could ever recall the House Finance Committee approving legislation that "forced" the Convention Center Authority to finance a private project.

"I honestly don't recall one way or the other," O'Keefe said.

The prime benefactor of the bill is developer Vincent Mesolella Jr., a former legislator from North Providence, who has been trying to transform the site of the vacant John E. Fogarty Building at 111 Fountain St. into a hotel with about 250 suites. The proposed hotel, which would cost about $52 million, would be connected to the convention center with a walking bridge over Sabin Street.

David A. Duffy, chairman of the Convention Center Authority, has been a leading critic of the legislation, arguing that it could jeopardize another major project: renovating the Dunkin' Donuts Center with about $25 million in state bonds. The Dunk is the largest venue in the state for concerts and sporting events.

Yesterday, Duffy was dismayed at the news that the legislation had passed House Finance.

"It's the most egregious land grab since Attila the Hun," he said.

Two weeks ago, the board of the Convention Center Authority deadlocked 4-4 on the proposal, meaning that it did not endorse the project. Despite the tie, the General Assembly could still approve the financing.

A lawyer for the Providence Biltmore hotel also addressed the Convention Center Authority board, saying that the state-subsidized Mesolella hotel could be the death knell of the Biltmore, a landmark in the city's downtown for more than 80 years.

The lawyer said the Biltmore may have to be transformed into condominiums or residential apartments.

Governor Carcieri, who appointed Duffy to the Convention Center Authority, has also remained steadfast in his opposition to state financing of the proposed hotel.

Yesterday, spokesman Jeff Neal said the governor believes that this is another bad deal for Rhode Island taxpayers being rammed through at the last minute; that the developer has still not come forward with any financial commitments; and it is not clear that any due diligence has been performed on this $17-million project. By ordering the Convention Center Authority to issue this new debt, Neal said, the governor believes the General Assembly is turning the regular process on its head. The Convention Center Authority's job is to solicit bids for hotels and to make recommendations to state government.

Carcieri has also questioned the 2-percent developer's management fee that Mesolella would collect if the hotel is built.

Mesolella has argued that the fee, which often reaches 6 percent, is customary for any major development project.

Yesterday, Representative Mumford questioned O'Keefe, the house finance fiscal adviser, about Mesolella's developer's fee. O'Keefe said he did not know what the former legislator's cut would be.

On Feb. 14, 2002, the Providence Redevelopment Agency named Mesolella's firm, Capital Hotels LLC, as the "sole developer" of a hotel on the property across the street from the Convention Center.

In recent testimony before the House Finance Committee, Mesolella testified that he has the rights to the property until he cries "uncle."

James McCarvill, executive director of the Convention Center Authority, said the Providence Redevelopment Agency could break the agreement if a better offer came along. So far, no one has stepped forward with a proposal to privately finance a hotel on the site.

Mesolella's proposed hotel would feature 18,000 square feet of meeting space, a 150-seat restaurant, pool and cafe. The proposed opening date is April 2006.

The legislation now advances to the floor of the House of Representatives for a vote, which could happen sometime tomorrow. If approved by the House, the legislation would move to the Senate for final passage. Carcieri could veto the bill.