Secrecy surrounds incentives info for Amazon HQ2 search, other S.C. projects

November 30, 2018

Investigative Reports

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By RICK BRUNDRETT

The S.C. Department of Commerce says it didn’t formally offer any taxpayer-backed incentives to lure Amazon’s second national headquarters to the Palmetto State, but instead provided general incentives information to counties if any of them wanted to compete for the project.

Commerce spokeswoman Adrienne Fairwell told The Nerve on Tuesday she didn’t know if any counties directly pitched Seattle-based Amazon for its second headquarters. And she declined to release the “general summary of state and local incentives” provided by Commerce to counties for the project, contending the record is exempt under the S.C. Freedom of Information Act.

After The Nerve pointed out that general information about incentives already is available on Commerce’s website and asked what specifically in the summary could be considered legally exempt, Fairwell replied in an email that the document can be withheld from the public because it is a “working paper,” adding, “We prefer consistency in this regard with regard to all project-related requests.”

Amazon recently announced it would split its second national headquarters between New York City and northern Virginia near Washington, D.C., creating a collective 50,000 jobs – after reportedly receiving promises of incentives totaling more than $2 billion.

The Upstate SC Alliance, a nonprofit economic-development organization that represents 10 counties in the state’s northwest corner, submitted a proposal after Amazon put out a national call last year for potential sites. The Charlotte Regional Partnership, which represents 16 counties in the Carolinas, including Chester, Chesterfield, Lancaster and York counties; and the Charlotte Chamber of Commerce also submitted a joint proposal.

But no details were publicly released then by those organizations about available incentives for the Amazon headquarters project. Contacted Wednesday, Jacob Hickman, director of business recruitment for the Upstate SC Alliance, told The Nerve that his organization presented no specifics on incentives, noting, “We never got that far, so it was nothing more than a pitch of the region.”

Commerce’s budget request for next fiscal year includes a collective $5 million for regional economic development organizations, including $750,000 for the Upstate SC Alliance – the same amount budgeted for this fiscal year, which started July 1.

Amazon, which has distribution centers in Lexington and Spartanburg counties, already is benefiting from S.C. taxpayers. The Nerve in 2013 reported, based on Commerce records received under the Freedom of Information Act, that the total estimated 10-year public cost of the Spartanburg project was $12.16 million.

Commerce typically maintains secrecy about projects – even in finalized incentives agreements, often blacking out basic information it contends is “confidential proprietary information” under the state’s open-records law.

The Nerve in September revealed, citing Commerce records, that since 2015, 14 companies that committed to locating or expanding in South Carolina collectively repaid nearly $7 million in state grants after failing to meet job creation or investment requirements.

In August, The Nerve reported the state had greatly reduced workforce and investment requirements under a $1.3 million grant benefiting Element TV in Fairfield County. Element earlier announced it would close its television assembly plant starting in October, laying off about 126 workers in phases. It canceled those plans in September after receiving notification that it was exempt from recently imposed tariffs by the Trump administration on imported Chinese television parts used by the company.

Contacted Tuesday by The Nerve, Ty Davenport, Fairfield County’s economic development director, estimated the plant currently employs at least 100 full-time workers, though he acknowledged that level is well below the promised 500 jobs over five years when the project was publicly announced in 2013.

“We’re hoping to hit their original business plan,” Davenport said, adding that “they didn’t lose any customers,” including Walmart, its primary client.

Fairwell earlier told The Nerve that the state didn’t plan to seek repayment of the $1.3 million Rural Infrastructure Fund grant to Element, noting it went toward the purchase and upfit of the plant building, which is owned by Fairfield County.

For the 2019-20 fiscal year, which starts next July 1, Commerce is requesting at least $9.9 million more in funding from state lawmakers, including $3.7 million for its “closing fund” used for economic development projects, according to documents recently filed with the state Executive Budget Office. Lawmakers budgeted $20.9 million for the closing fund last fiscal year and $4.2 million this fiscal year, records show.

Commerce’s total budget for this fiscal year, which includes state, federal and “other” funds, is $235.5 million. As of July 1, the agency had more than $49 million in general fund reserves, according to the state Comptroller General’s Office.

The closing fund, also known as the “deal closing fund” or the “governor’s closing fund,” are grants “generally awarded to assist with the costs of real property improvements or other road or infrastructure improvements,” according to Commerce’s website. Money from fund is doled out to counties by the state Coordinating Council for Economic Development, made up of the heads or board chairperson of 11 state agencies involved in economic development, including Commerce, and chaired by Commerce Secretary Bobby Hitt.

The council typically has met behind closed doors in Commerce’s headquarters in an office high-rise across from the State House to discuss various taxpayer-backed incentives for companies, as The Nerve has previously reported.

Asked the current balance of the closing fund, Fairwell in an email Monday said it was “minus $4.1 million,” though she added that because grants are “awarded and implemented over a period of many months or even years,” a “negative current balance does not equate to an overdrawn account.”

Fairwell said closing fund projects generally are “confidential based on the fact that the projects either haven’t announced” or “signed their performance agreement,” or have been “committed but not awarded.” She did not respond to questions about how many confidential projects currently are under consideration or have been approved for funding.

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.

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