Taxpayer tab growing for ‘Boeing’ ag project

October 29, 2021

Investigative Reports

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By RICK BRUNDRETT

Hugh Weathers, South Carolina’s agriculture commissioner, dubbed the project as the “Boeing of agriculture.”

In touting the project in September 2020, Gov. Henry McMaster called it a “tremendous win for the local community and our state as a whole.”

Sonny Perdue, then-President Donald Trump’s agriculture secretary, cited the project as a potential national model.

But more than a year after the public announcement, there’s relatively little to show for the “Agriculture Technology Campus” – a proposed $314 million, produce greenhouse production, packaging and distribution complex in rural Hampton County, which is supposed to bring 1,547 jobs by 2025.

And, as with other major economic development projects in South Carolina, taxpayers are not being told up front about the true public costs of the project.

For example, Weathers was quoted in a September 2020 (Charleston) Post and Courier story as saying he got the idea for the project after visiting high-tech greenhouse operations in the Netherlands in 2018.

The total cost of that trip during the second week of March 2018 for Weathers and Jack Shuler, the Department of Agriculture’s director of agribusiness, was at least $8,555, according to records recently provided to The Nerve by the department under the S.C. Freedom of Information Act.

The agency also paid $10,000 to Parker Poe Consulting, which has offices in Columbia and Atlanta, for an economic-impact analysis of the project, a department spokesperson told The Nerve after the agency released the study last year under the open-records law.

In a press release when the project was announced on Sept. 2, 2020, the Governor’s Office noted that the state Coordinating Council for Economic Development (CCED), made up of the heads or board chairpersons of 11 state agencies involved with economic development, including the departments of Commerce and Agriculture, approved two state grants totaling $8 million to Hampton County to assist with project costs. The CCED also approved job development credits for the project.

But here’s what the Governor’s Office didn’t mention in that release:

  • Commerce on May 6, 2020, agreed to award a $2 million grant to the Southern Carolina Alliance (SCA), a regional economic development organization whose board members include, according to SCA’s website, state Sens. Brad Hutto, D-Orangeburg, and Tom Davis, R-Beaufort, for engineering services and other project costs “related to the site preparation and acquisition” of part of an industrial park. Lawmakers annually have appropriated $5 million to a group of regional economic development organizations, including the SCA.
  • In an agreement effective Aug. 7, 2020, involving the S.C. Department of Agriculture, Hampton County and two private companies – Agricultural Scientific LLC and GEM Yield LLC – a $3 million state grant was awarded for project costs related to design, engineering, wetlands studies, on- and off-site infrastructure improvements, site preparation and construction expenditures.

The Nerve obtained those records, along with agreements for the separate $7 million and $1 million grants awarded by the CCED, under the Freedom of Information Act.

On top of the total $13 million in approved state grants, Danny Black, the Southern Carolina Alliance president and CEO, told The Nerve when contacted Thursday that his organization is helping Hampton County and the local water-and-sewer authority to apply for approximately $8 million to $10 million in federal grants for new roads and water and sewer lines at the site.

“At some point, we will come back to the state and ask for match money to get those done,” Black added.

Unsigned deals

As for the collective $10 million in state grants awarded by the CCED or Commerce, none of that money has been disbursed yet because no separate performance agreements – which typically list job creation and investment requirements – have been signed, Commerce spokeswoman Alex Clark told The Nerve this week.

Asked why those agreements haven’t been signed, Clark in an email response Thursday said: “It is not uncommon for performance agreements to be signed a year or more after a public announcement as final plans (construction, contractors, suppliers, etc.) are confirmed. I would also note that, broadly, companies have had to navigate unprecedented disruptions in the last 18 months.”

The Nerve this week also asked Eva Moore, the Department of Agriculture spokeswoman, about how much of the awarded $3 million “Agribusiness Initiative Grant” has been spent to date, and for specifics on the expenditures.

In a written response Thursday, Moore said the department reimbursed Hampton County $508,756 for “project development activities,” which she noted included an irrigation water study, a separate water report, a cooling and lighting climate study, and concept drawings.

The grant, which was structured to be split up in three $1 million disbursements, requires a minimum $187 million investment and the creation of 297 full-time jobs – well short of the expected $314 million investment and creation of 1,547 jobs by Dec. 31, 2025.

Hampton County administrator Rose Dobson-Elliott, who is listed as the county’s representative in the grant agreement, didn’t respond to written questions this week. After The Nerve in May submitted an open-records request for any county incentives agreements, Dobson-Elliott replied in an email, “The Company as of this time has not requested any incentives,” adding, “The County does not go ask if they want incentives.”

The grant identifies “The Company” as Agricultural Scientific. The grant listed the company manager as Zeb Portanova, who also is identified as the manager of the other company, GEM Yield, which is a party to the agreement.

Secretary of State records list Portanova as the registered agent for Agricultural Scientific, a Delaware company formed in March 2020; and the manager of GEM Yield, a Delaware company formed in August 2019. An Aiken address is listed in those records as the office address for both companies.

In his online LinkedIn account, Portanova said he is the CEO of GEM Funds, described as “privately held investment funds focused on Opportunity Zones and impact investing across real estate and private equity.”

“Our investments focus on the synergies created between business and real estate in the sectors of hi-tech agriculture, blockchain, data centers, crypto currencies, and building services,” according to his LinkedIn account.

A website for the Agriculture Technology Campus lists the “GEM Opportunity Zone Fund” as one of the partners in the project. The Governor’s Office press release announcing the project listed Portanova as the CEO of the fund.

Federal opportunity zones are “an economic development tool that allows people to invest in distressed areas in the United States,” according to the Internal Revenue Service’s website.

In his interview Thursday, Black, SCA’s president and CEO, described Portanova’s GEM company as the “financier of this project,” noting, “He can do that because his family and the companies he’s associated with have that kind of opportunity.”

Portanova did not respond to written and voice messages from The Nerve this week seeking comment.

( Update: After this story was published, Portanova pointed out that he initially contacted The Nerve via email about 8 p.m. on Thursday, 10/28/21, though that message was not seen by The Nerve because it automatically was transferred to a junk email folder. When offered to make a statement, Portanova in an email response on Saturday, 10/30/21 said, “GEM is ready to finance construction as soon as financially viable tenants sign a lease.”)

Big plans, big delays

Black said the SCA has a five-year option to buy approximately 1,400 acres from a timber company where the “main construction” of the Agriculture Technology Campus is planned. After purchasing the property, the SCA would sell it to GEM, which would manage the construction of greenhouses, which, in turn, would be leased to partner companies, he said, adding GEM also would handle the construction and leasing of a large distribution building planned for the site.

Besides GEM, partner companies include, according to the project’s website:

  • Canada-based Mastronardi Produce, which, according to its website, is the “largest producer and distributor of greenhouse-grown produce in North America” under its Sunset brand.
  • New-York based LiDestri Food and Drink, which, among other things, describes itself as “specialists” in sauces, salsas and dips, according to the company’s website.
  • New York-based Clearwater Organic Farms, which also has a site in Illinois. Clearwater has largely pulled out of the project, though another vegetable producer is expected to take its place, Black said. The Nerve could not reach Clearwater representatives this week.
  • Core Scientific, based in Washington state, which, according to its website, is focused on providing “best-in-class blockchain infrastructure and hosting to our clients, growing our digital asset mining practice, and pioneering innovative financial products and services through blockchain technology.” Black said Clemson University wants to “play a big part of this (project), too, and so we’re looking to bring in research and companies such as this (Core Scientific).”

Despite the big plans, though, only one building has been constructed so far, though it’s not yet operational, Black said, noting it’s intended initially to be used for a hemp production business.

“When this (the Agriculture Technology Campus) was announced, we obviously didn’t realize the pandemic was going to last as long as it did,” Black said. “But in this case, there have been delays – basically pushed out 10 months just trying to get in and out, and get this thing finalized.”

“We fully expected them to be at least under construction by now, but it just hasn’t happened,” Black also said, though he added, “But this time next year, I feel certain that we’ll be (under construction).”

The Nerve this week sent written questions to Department of Agriculture spokeswoman Moore and Commerce spokeswoman Clark seeking details on the status of the project, but was referred to the SCA or the partner companies.

Brundrett is the news editor of The Nerve (www.thenerve.org). 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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