Miley Study Touts Boeing Incentives

June 10, 2010

Investigative Reports

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The NerveState Senate Finance Committee Chairman Hugh Leatherman must be the sensitive type – at least when it comes to the General Assembly funneling several hundred million dollars worth of state bonds and tax breaks into an incentives package, wrapping a nice, big, pretty bow around it and gifting it to the Boeing Co.

Leatherman, R-Florence, played a key role in luring Boeing to South Carolina to build a 787 Dreamliner assembly plant in North Charleston.

As Finance chairman, he is an important part of many if not all state incentives packages such as the one the Legislature served up last fall for the Boeing facility, which is under construction.

But Leatherman apparently doesn’t cotton to folks questioning his dealings in such matters.

Six days after the May 20 release of a glowing study about the 787 project and the incentives for it, Leatherman took to the podium on the Senate floor to offer what in the decorum of the chamber is called an expression of personal interest.

That gave him five minutes to talk about more or less whatever he wanted.

Leatherman began his remarks by holding up a Greenville News editorial about the study and telling his all-male colleagues in the Senate that there was a copy of it on their desks.

He then proceeded to delve into the details of the study by way of the editorial and praise the author of the report, Columbia economist Harry Miley.

What Leatherman did not tell senators is who was behind the report – a group whose board of directors has deep ties to state government’s role in economic development, and whose opinions on incentives mirror Leatherman’s.

Stepping to the podium in a light-colored suit, Leatherman said, “After we were able to attract Boeing to South Carolina we heard all kinds of misinformation about what the state’s giving away and why it was such a bad deal for the state.”

He then read several passages from the editorial citing findings of the study.

The 787 project will produce a direct investment by Boeing of more than $1 billion; nearly 10,000 direct and indirect jobs from construction of the plant; and 3,800 new, permanent full-time employees at the facility, according to the study.

Plus millions of dollars in local taxes and tens, if not hundreds, of millions for the state’s coffers.

In the long run, using a BMW manufacturing hub in the Upstate as a comparison, the study says, “If Boeing grows at the same pace as BMW, there will be 9,500 direct jobs at the facility and Boeing’s investment will be almost $10 billion.”

One can almost imagine an exchange between Leatherman and critics of the incentives:

Leatherman: “Do you like apples?”

Critics: “Yeah, sure.”

Leatherman: “Well, I’ve got a study showing that the Boeing incentives were worth it many times over. How do you like them apples? How you like me now!?”

Granted, there’s little if any doubt that the 787 plant and all that goes with it will have an enormous positive impact on South Carolina’s economy.

But whether it was necessary or wise for the Legislature to pony up an estimated half-billion dollars or more in giveaways to Boeing for the facility on behalf of South Carolina taxpayers is an entirely different matter.

That’s where the forces behind the study come into play.

It was commissioned by a group called the Alliance for South Carolina’s Future.

The alliance is a relatively new organization that has undergone two name changes since it was originally chartered in the Secretary of State’s Office in April 2009: first as South Carolina Action for Jobs, then as Conservative.SC.

Now registered as the Alliance for South Carolina’s Future, the alliance bills itself on its website as a “pro-business” nonprofit “established to promote economic growth across the state of South Carolina.”

As a 501(c)4, the alliance can engage in lobbying and political activity.

The alliance’s registering entity was N.P. Corpserv SC, a limited liability corporation that recorded its address in the Secretary of State’s Office as 1230 Main St., Suite 700 in Columbia.

That’s the same address as the headquarters of the go-to economic development law firm in South Carolina – Nexsen Pruet.

In addition, the registered agent for N.P. Corpserv was Nexsen Pruet attorney Susan McWilliams.

It gets more interesting, though. Guess which law firm Boeing retained to represent the company with the state?

“Our attorneys negotiated the incentives package on behalf of the Boeing Company,” says Nexsen Pruet’s website.

Then there are the board members of the alliance: Bill Stern, Bob McAlister, Ed McMullen, Larry Wilson and John Russell.

Stern, chairman of the alliance board, is also chairman of the S.C. State Ports Authority board.

McAlister is president of McAlister Communications and served as chief of staff to former Gov. Carroll Campbell. McAlister says he was part of Campbell’s negotiating team that brought BMW to South Carolina.

McMullen is president of McMullen Public Affairs, which lists “economic development” first among its areas of expertise.

McMullen’s bio on the site says he “recently served two terms as chairman of the S.C. Endowed Chairs Research Centers board working closely with the state’s three research universities to attract private sector investment in the state’s growing knowledge-based economy.”

He also served on three state tax study committees and New Carolina – South Carolina’s Council on Competitiveness, “a public-private partnership working with partners to increase per capita income and drive the movement towards a New Carolina – a South Carolina with a brighter future and a competitive, winning economy,” according to the New Carolina website.

Wilson, meanwhile, is on the board of the S.C. Research Authority, a state-created research, development and commercialization services company.

And Russell is a former state lawmaker.

On May 20 when the alliance released the study, McAlister, McMullen and Miley held a news conference at McAlister Communications in downtown Columbia. Three reporters, two from The Nerve, attended.

When The Nerve asked about the cost of the study, McAlister said they would not disclose it. “The alliance funded it,” he said, “and Dr. Miley, as part of his agreement with us, does not want us to talk about his fees, and so we won’t.”

Asked about the alliance changing its name twice, McMullen said the board simply couldn’t agree about what to call the group. “That’s all it was,” he said.

The first section of the study, almost as long as the part that addresses Boeing’s economic impact on the state, is titled “Why We Need Incentives” in South Carolina.

Reach Ward at (803) 779-5022, ext. 117, or eric@scpolicycouncil.com.