State Panel Secretly Approves Nearly $36 Million Grant for Tire Plant

August 4, 2014

Investigative Reports

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TiresMum’s still the word when it comes to S.C. officials doling out tens of millions of taxpayer dollars to select companies.

The Nerve on July 11 reported that the S.C. Department of Commerce wouldn’t release the official minutes of the June 5 meeting of the state Coordinating Council for Economic Development (CCED), at which, according to state and local officials, a nearly $36 million grant was awarded for the Giti Tire plant project in Chester County.

To put the state grant in perspective, it is larger than last fiscal year’s ratified budgets of 59 state agencies or divisions, as The Nerve reported in June.

Commerce spokeswoman Allison Skipper on July 3 – nearly a month after the CCED meeting – told The Nerve that the minutes had “not yet been prepared and must be reviewed and approved at its next quarterly meeting.”

The Nerve, which had requested the minutes under the S.C. Freedom of Information Act, pointed out in a follow-up response that the FOIA does not require formal approval of meeting minutes before they can be publicly released, and that the law says minutes “shall be available within a reasonable time after the meeting.”

The Nerve received no further response from Commerce until Thursday when Karen Manning, the agency’s chief lawyer, released a copy of the minutes – eight weeks after the meeting – saying in an email, “The draft minutes were finalized and signed this a.m.”

Manning added, however, “Please note that the minutes will not be reviewed and approved by the full Council until September’s quarterly meeting.”

The Nerve’s review of the minutes found no specific mention of the $35,775,000 “closing fund” – also known as the “governor’s closing fund” or “deal closing fund” – grant that Skipper and others have said was awarded for the Giti Tire project.

An entry in the minutes under a heading titled, “Economic Development Applications – Confidential,” noted only that Duane Parrish, a CCED member who heads the state’s tourism agency, “made a motion to approve funds” for an unidentified project in Chester County, which was seconded by CCED member Nick Odom, the board chairman of the S.C. Technical College System, and then approved by the council. The same action was taken for 14 other “confidential” grant applications, the minutes show.

The minutes said the CCED discussed the labeled confidential projects in a closed 29-minute session before returning to the public part of the meeting and voting to approve unspecified amounts of funds to the unidentified companies. Commerce Secretary Bobby Hitt, who chairs the CCED, requested the secret discussion; the projects were voted on together, according to the minutes.

The minutes also noted that CCED staff requested that $32.3 million be transferred from the state’s “Set-Aside Fund and the Rural Infrastructure Fund to the Governor’s Closing Fund,” though no specifics about the purpose were provided. Council member Hugh Weathers, the state’s agriculture commissioner, made the motion to transfer the funds, which was approved by the council.

As of June 5, Commerce collectively had “$142 million in the bank” among the set-aside, rural infrastructure and closing funds, according to the minutes.

The Nerve on Thursday sent follow-up written questions about the minutes to Manning but received no response by publication of this story. Besides asking about the Giti Tire project, The Nerve questioned, among other things, why Commerce won’t reveal even the amounts of awarded grants while keeping the identities of the recipient companies secret.

The Nerve previously has reported that the 11-member CCED, made up of the heads or board directors of state agencies involved with economic development, typically meets in secret in Commerce’s headquarters on the 16th floor of an office high-rise building across from the State House to discuss what companies planning to locate or expand in South Carolina will receive taxpayer-backed incentives – collectively totaling millions annually.

The Nerve first reported in March that the House Ways and Means Committee approved – at Hitt’s request – putting $37.3 million into Commerce’s closing fund, though Hitt was tight-lipped publicly about the reason.

The Nerve has requested state incentives agreements for the Giti Tire project under the FOIA, but was informed by Commerce last month that the documents couldn’t be released until they are finalized, which given the agency’s past responses, likely means the public release date is months away.

The purpose of the nearly $36 million grant for the Giti Tire project is to “offset the costs of land acquisition and real property improvements,” Skipper said in her July 3 letter to The Nerve. Longtime Chester County Supervisor Carlisle Roddey told The Nerve last month that although the county was required to sign the grant agreement with the CCED and Giti Tire, the tax dollars will go directly from the state to the company.

Gov. Nikki Haley on June 16 – 11 days after the CCED secretly approved the grant – announced that the Singapore-based company would locate a $560 million manufacturing plant in Chester County. She said 1,700 jobs would be created with the project, though it would be spread out over 10 years, which averages to 170 jobs per year.

Haley didn’t mention the grant in her public statements.

The grant is the single-largest known closing fund grant awarded by the CCED since a $43.5 million grant was awarded in October 2011 – which state officials kept secret then – to Sumter County for the Continental tire manufacturing plant, according to a grant list provided earlier this year by Commerce toThe Nerve under the FOIA. That list shows that the size of the grant was $8.5 million more than the figure provided by Commerce to The Nerve for a June 2012 story on the Continental tire project.

The minutes of this year’s June 5 CCED meeting indicate that Continental, which agreed to create 1,700 jobs over 10 years, was given a six-month extension to Dec. 31 of this year for its grant agreement, though no reason was listed. That question was included in The Nerve’s follow-up written request Thursday to Manning. The CCED at the meeting took various actions on 12 identified companies, including Continental, according to the minutes.

Contacted Friday by The Nerve, Kathryn Blackwell, Continental’s vice president of communications and marketing at the company’s Auburn Hills, Mich., office, couldn’t immediately answer why the grant extension was needed, but said she would check into the matter. No answer was provided by publication of this story.

The Nerve last week also attempted to contact Giti Tire officials about the $35.77 million state grant. A woman who told The Nerve Friday that she worked in the company’s marketing section at its U.S. division based in Rancho Cucamonga, Calif., said the position dealing with media questions is vacant, but that she would try to get a response. No answers were provided by publication of this story.

Reach Brundrett at (803) 254-4411 or rick@thenerve.org. Follow him on Twitter @thenerve_rick. Follow The Nerve on Facebook and Twitter @thenervesc.

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