Costco developer demands $46M, alleges ‘political interference’ from Cranston mayors; Johnston location still an option

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Alleging “political interference and favoritism” on the part of both the current mayor and his immediate predecessor, the developer behind the proposed Costco-anchored Cranston Crossing project at the current Mulligan’s Island Golf & Entertainment property is seeking $46 million in damages from the city.

The accusations, and the dollar amount, are included in a “demand letter” dated June 7. Attorney Robert Clark Corrente of the firm Whelan Corrente & Flanders LLP prepared the document on behalf of Coastal Partners LLC and its managing partner, Michael DiGuiseppe.

The “demand letter” is a procedural precursor to a lawsuit, required by the section of state law that covers claims against cities and towns. The letter indicates a suit will be filed if the city does not meet the compensation demand within the statutory timeframe of 40 days.

At the heart of the complaint from Coastal Partners is its allegation that Mayor Ken Hopkins and his predecessor, Allan Fung, “unlawfully interfered” in the review process for a zoning change needed for the project to proceed.

Their supposed goal? Steering Cranston Crossing – and, as a result, Costco – away from the Mulligan’s Island property on New London Avenue and toward a different location on Sockanosett Cross Road, one owned by Chapel View developer Carpionato Group.

The demand letter reads: “Specifically, in December 2020, Coastal became aware that former Mayor Fung and his newly-elected successor, Mayor Hopkins, had been openly working to kill the [Cranston Crossing] Project and to steer Costco to a different – and vastly inferior – site on Sockanosset Crossroad owned by Carpionato Group, a long-time political supporter of and donor to both administrations.”

It adds: “This sort of political interference and favoritism is antithetical to any notion of open, honest, and transparent government. It is also patently unlawful and actionable and, in a very real sense, now threatens to cost the taxpayers of the City real money.”

During a brief conversation Monday, DiGuiseppe said other communities, including Johnston, have expressed interest in housing Costco since a Cranston City Council vote last month halted a new review of the Cranston Crossing plans. He suggested Coastal Partners had no choice but to pursue a legal remedy as a result of the city’s handling of the situation.

“They sort of backed us into this, unfortunately,” he said.

Dating back to last year’s election campaign, Hopkins has been among the leading opponents of the proposed Cranston Crossing development at the Mulligan’s site. He has said he favors, and that his administration has worked to find, an alternative location for Costco within the city, although DiGuiseppe has indicated the wholesale club would only consider the Mulligan’s property if it comes to Cranston.

The mayor has also indicated he wants to see the Mulligan’s site preserved for some kind of recreational use, perhaps as the home of a new recreation center.

On Monday, the Hopkins administration declined to comment beyond the following statement: “In accordance with the advice of legal counsel, the Administration has no comment at this time.”

Reached Monday, Fung, who left office as mayor in January, described the complaint letter as “absolutely ridiculous,” “unfounded” and “from left field.”

“Mr. DiGuiseppe has not listened from day one, in the couple of meetings that I’ve had with him, and now wants to take a scorched earth approach with ridiculous allegations,” Fung said.

Gregg Perry, a spokesman for Carpionato Group, also rejected the accusations in Coastal Partners’ demand letter.

“That’s ridiculous,” he said of the allegation that campaign contributions to Fung and Hopkins played any role in the Cranston Crossing review process. “We certainly never asked anybody to do that, never would ask anybody to do that.”

Perry also pointed to the bipartisan nature of the recent vote that put a halt to new consideration of the Costco project at Mulligan’s.

“Those are the representatives elected by the people of Cranston, and clearly, that’s what the people of Cranston are indicating their thoughts are,” he said.

The Cranston Crossing project was the subject of a lengthy public hearing process in 2020, and the debate over the proposal arose again in recent weeks. Throughout the process, the residents’ group Cranston Neighbors for Smart Development has actively advocated against the project.

Last summer, Coastal Partners, which had reached an agreement to purchase the roughly 55-acre Mulligan’s property, formally sought a major amendment to the Mixed Use Planned District, or MPD, zoning that currently governs the site. That zoning, which is more specific and restrictive than more general zoning districts, was adopted roughly two decades ago to allow for the transformation of the site from the undeveloped, state-owned “Cornfields” to its current use.

After some delays and hours worth of hearings across multiple months, the city’s Planning Commission in December voted 6-1 to issue a negative recommendation on Coastal Partners’ zoning change request. Planning Department staff, in a memo, had made no recommendation to the commission, indicating their belief that there was a lack of clarity over whether the project was consistent with the city’s Comprehensive Plan.

Then, later in December, just before the full City Council was set to vote on the matter, the developer withdrew the application.

The withdrawal initiated a two-year window in which the Cranston Crossing proposal could not be reintroduced without a finding of “substantial” changes, as prescribed in the city’s charter.

Earlier this year, Coastal Partners sought that finding, filing a petition that sought City Council approval for new consideration of an altered version of the Cranston Crossing plan. The Costco, and a fueling station, remained at the center of the revised plan, although a handful of auxiliary commercial spaces were removed.

The revised plan also left an 18-acre portion of the property currently used as a golf course untouched. Initially, Coastal Partners had proposed a residential development for that portion of the site. Subsequently, it sought to gift the land to the city for open space and recreational uses.

Last month, the council’s Ordinance Committee voted 5-1 against granting the “substantial” change finding, halting any new review of the Cranston Crossing zoning change. That set the stage for Monday’s letter from Coastal Partners and its attorney.

The letter outlines the case DiGuiseppe and supporters of the project have made throughout the review process. It touts the projected economic benefits of Cranston Crossing for the city, including “hundreds” of construction jobs, up to 450 permanent jobs, and an estimated $800,000 annual increase in property tax revenue. It also points to Costco’s reputation as a high-paying, high-quality employer.

Cranston Crossing, the letter states, would provide a “long-term, highly-productive use” of the Mulligan’s site. The owners of Mulligan’s have said the current operation at the location is unsustainable.

The letter also indicates that under Coastal Partners’ plan, 40 percent of the Mulligan’s property would remain undeveloped, well in excess of what the city’s ordinances require.

The letter outlines what Coastal Partners and its counsel view as the problems with the process to this point in Cranston. A number of the concerns raised during the review, it states, have either been addressed or would be during later stages.

In terms of the timeline of the review process, the letter alleges that the Planning Commission’s December vote for a negative recommendation was not based on the advice of Planning Department staff or the “merits of the application,” but “was instead denied based on the blatant and unlawful influence of the previous and current mayoral administrations and their longtime political and financial supporter, Carpionato Group LLC.”

It continues: “In doing so, the mayor’s office unlawfully interfered with Coastal’s existing contract with Costco and Coastal’s other tenants, and with its legitimate expectations for the completed development of the Project. In addition, the mayor’s office deprived Coastal of its fundamental right to a fair and lawful approval and permitting process, untainted by political favoritism.”

In terms of the dollar amount associated with the demand, the letter indicates Coastal Partners has estimated its “suffered damages” as a result of the project’s denial at between $30 million and $46 million. That includes the value of a 20-year lease, with multiple five-year options, for Costco, as well as the projected overall value of the project.

Costco has previously been linked to Carpionato Group. On Monday, Perry said the company had discussions with Costco in 2017-18 about bringing a store to Sockanosett Cross Road.

A letter of intent was signed and the permitting process began, Perry said, “but there was never a lease finalized … the two sides just couldn’t come to an agreement and walked away.”

Perry also pushed back against the idea that Carpionato was opposed to Cranston Crossing.

“It’s certainly no secret that the intersection of Route 2 and Route 37 is really the hub for retail in Rhode Island these days … Whoever builds in that area, we welcome that. What’s good for one is good for everybody,” he said.

In terms of the political connections among Fung, Hopkins and Carpionato Group, a check of campaign finance records shows both mayors have received contributions from the company’s principals.

Records show a $500 contribution to Hopkins from the late Alfred Carpionato in 2018. Fung, meanwhile, has received more than $10,000 in contributions from Carpionato and members of his family over a number of years, along with a $175 contribution from Kelly Coates, now president of Carpionato Group, in 2011.

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