Records: Officials sharply lowered job, investment targets for troubled Element TV

August 17, 2018

Investigative Reports

Print Friendly, PDF & Email

By RICK BRUNDRETT

Element TV, which announced last week it will close its television assembly plant in Fairfield County, had to create far fewer jobs than originally promised under a $1.3 million state grant, records obtained this week by The Nerve show.

The Minnesota-based company hadn’t maintained even the reduced job target as of last week. But it won’t have to repay any of the grant, according to a state Department of Commerce official.

Under an amended incentives agreement that took effect Sept. 7, 2017, Element TV had to create a minimum of 200 full-time jobs and invest at least $2.5 million – much lower than the initially required 500 full-time jobs and $7.5 million investment – to avoid repayment of the grant, which was used toward the purchase of the Winnsboro plant building.

The Nerve on Wednesday obtained copies of the original and amended contracts from the Department of Commerce under the S.C. Freedom of Information Act. The Nerve on Monday reported about $2.1 million in up-front incentives offered for the project, including the state grant.

The announced plant closing made national news after company officials blamed their financial woes on recently imposed tariffs by the Trump administration on imported Chinese television parts used in Element televisions.

Asked Wednesday by The Nerve if the state plans to seek repayment of the $1.3 million grant, Commerce spokeswoman Adrienne Fairwell said in an email, “Since the incentive went toward the purchase and upfit of the building, which is still owned by Fairfield County, no repayment is necessary since the county still owns the asset.”

And why did state and Fairfield County officials agree last year to lower the job creation and investment requirements by 60 percent and 66 percent, respectively?

“The decision was made because it was better to have 200 full-time jobs in a Tier 3, high-unemployment rural county than no jobs at all,” Fairwell said.

Asked how often job creation and investment targets are lowered in amended state incentives agreements, Fairwell estimated that fewer than five grants have been “modified” since Jan. 1, 2015. As with the Element incentives documents, she directed The Nerve to submit a formal open-records request for those agreements.

The Nerve in 2010 reported about a number of South Carolina companies that had closed after receiving taxpayer-backed incentives, including Mack Trucks, which operated a truck assembly plant in Fairfield County from 1987 to 2002, employing about 1,500 workers at its peak.

The county suffered another large economic blow a year ago when South Carolina Electric & Gas and state-owned Santee Cooper abandoned the V.C. Summer nuclear construction project, costing the jobs of more than 5,000 workers.

Element TV hadn’t maintained its reduced job target as of Aug. 6 when it formally announced to the state Department of Employment and Workforce that it would close its plant starting on Oct. 5, laying off about 126 out of 134 total full-time workers in phases. The company’s current full-time workforce represents a little more than 25 percent of the originally promised jobs.

Under the original and amended agreements between the Element Television Company, Fairfield County and the S.C. Coordinating Council for Economic Development, which is composed of the heads or board chairs of 11 state agencies including Commerce, the company would have to repay a percentage of the state Rural Infrastructure Fund grant, based on a formula, if it didn’t hit the job creation or investment targets.

Both agreements called for the job creation and investment targets to have been met by Aug. 1 of this year and Aug. 1, 2019, respectively.

The amended contract would have allowed the county to transfer the title to the approximately 312,000-square-foot building to Element if the company during the “maintenance period” certified that it had created 325 full-time jobs and invested $3 million, and sustained those levels for at least two years.

Ty Davenport, the county’s economic development director, told The Nerve last week the plant employed about 300 workers at most since its opening, and estimated the initial investment, including machinery and equipment, at $3.5 million to $4 million.

When the Element Electronics project was first publicly announced in August 2013, the county had committed to kicking in $600,000 – on top of the $1.3 million state grant – toward the purchase of the plant building, according to records obtained later by The Nerve. Davenport said the county offered Element an “incentivized lease rate” and a fee-in-lieu-of-taxes agreement that typically provides significant property tax savings, though he couldn’t immediately provide details.

Davenport on Thursday directed The Nerve to submit a Freedom of Information Act request for records related to county incentives offered to the company.

The Nerve in 2013 revealed, citing state records, that the estimated total public cost of the project over 15 years was nearly $14.8 million, including about $9 million in projected tax credits. Fairwell, Commerce’s spokeswoman, said the company couldn’t claim job development credits before meeting job creation and investment requirements.

Brundrett is the news editor of The Nerve. Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

Comments are closed.