TOM WARD - Taxpayers win if DOJ allows Google $$ in R.I. Foundation

TOM WARD - Taxpayers win if DOJ allows Google $$ in R.I. Foundation

Last week, my column touched upon my hope that North Providence leaders might consider placing some of its "Google Money" award of more than $60 million in a foundation so that a good slice of that money might benefit the town's taxpayers forever. It was merely a suggestion of the obvious in my fiscally conservative mind.

As it turns out, Mayor Charles Lombardi has been thinking the same thing and working on it since last fall, quietly gathering information with the Rhode Island Foundation on creating a permanent stream of money - about $800,000 or more each year - that would go for Police Department use forever.

The mayor and Chief Paul Martellini asked for exactly that in a Nov. 20, 2013 letter to the Brian Boykin, the U.S. Department of Justice's Equitable Sharing Program manager.

Just last week, on Jan. 27, in a letter from Alice Dery in DOJ's Asset Forfeiture and Money Laundering Section, Lombardi and Martellini were told a foundation was "not permitted" under current policy.

Of course, DOJ originally said the same thing for refilling the pension fund, so perhaps they will consider a new policy here.

Just to repeat a little background, Google was made to pay the town of North Providence about $60 million for its police investigative work regarding Google's participation in a Canadian drug/Internet scheme a few years ago. The town is not allowed to spend the money willy-nilly, and has to get DOJ approval on spending. About one-third of it, $21 million, was allowed to fill the shortfall in the police pension fund, a worthy idea that will bring peace of mind to retirees as well as savings for years to come for taxpayers who no longer have to make up the shortage. Google money has also been spent on new police cruisers and other needed equipment. So far, so good.

So now what? With a bit more than $30 million in Google money remaining, the police and town leaders are considering a new public safety complex that includes police near the center of town. Lombardi would prefer to instead take $20 million off the table and have it managed by the Rhode Island Foundation.

So what is the difference? Frankly, taxpayers win either way. One is short term, and the other more long lasting. Consider these two possibilities:

* For those who prefer short-term gain, using the remaining money to build a public safety building means that the town gets a new facility without any debt. There is no "mortgage" to pay on it for the next 20 years or so.

* For those who prefer the longer view, putting the money with the Rhode Island Foundation would give the town a permanent stream of about $800,000 or more, each year, forever. In this case, the foundation may even create a blended option that pays for the new police/fire building over time, and have some left over when the building is paid for.

This is exactly what I was imagining when I made the suggestion for a foundation to manage the town's resources.

The non-profit Rhode Island Foundation was established in 1916, and currently manages more than $700 million in assets for more than 1,300 groups. The "North Providence Law Enforcement Group" would just be another fund. The Rhode Island Foundation would charge the town a reduced rate of .5 percent, or about $100,000 each year, to manage the funds, according to the Nov. 20 letter. In an email to Lombardi from the Rhode Island Foundation's Jim Sanzi on Jan. 30, its rate of return during the past 15 years averaged more than 8 percent, with a huge 18 percent boost last year, as the stock market went higher. Might this careful stewardship of this once-in-a-lifetime Google gift to North Providence be a valuable idea?

Or as Mayor Lombardi asked me: "If the money was given to you and your family, would you just spend it all right away?" Most of us would not, so why is the DOJ asking the town to act so carelessly?

The DOJ reconsidered its decision and ultimately allowed North Providence to refill the police pension fund. I hope it will also reconsider this decision and allow the Rhode Island Foundation stewardship of $20 million to benefit the town, the taxpayers, and the police force for many, many years to come.

Ward is publisher of The Valley Breeze newspapers