In 2010, Mississippi lawmakers handed out $400 million in loans to green companies in return for providing 5,000 jobs. What did taxpayers wind up with?
For the most part, Mississippi's green dream has become a black hole.
Starting in 2010, then-Gov. Haley Barbour convinced lawmakers to give seven green companies more than $400 million in taxpayer-backed loans — more than the state spends for the departments of Health, Public Safety and Mental Health combined.
“There were all kinds of deals,” recalled Joe Max Higgins Jr., CEO of Golden Triangle Development Link in Columbus. “The attitude was, ‘The (federal) government’s giving away money. Let’s go get some.’”
In return for the state loaning millions, the green companies promised to hire nearly 5,000 Mississippians.
In the seven years since, 621 jobs have materialized from those projects. Some of those companies have failed, some fell apart before borrowing any money, some borrowed less, and one has been a roaring success.
The tab for taxpayers? $174 million.
Repeated attempts to reach Barbour have been unsuccessful, but he has previously said the investments in the green companies were not overly risky.
Mississippi was careful to choose companies that were successful in raising money from private sources, he told the Associated Press.
"You can look at all sorts of companies that are in the growing stage and some of them never make it," he said. "We've been very serious in making sure that the resources put in by the private sector were such that there was a good chance the business would succeed."
Gray Swoope, who headed the Mississippi Development Authority then, said it's unfair to view economic development projects as failures when they provide jobs.
"If a deal is supposed to create 100 jobs and then provides 99 jobs, it's viewed as a failure," he said. "That's absolutely false. There is an economic benefit from the 99 jobs."
Mississippi faced difficult times in 2009 and 2010 with double-digit unemployment in the wake of the financial collapse of 2008.
“We were hemorrhaging,” Swoope said. “We knew the federal government was doing stuff in energy, and we were looking at how the state could compete in these projects.”
Only a handful of lawmakers questioned the projects, including Sen. David Jordan, D-Greenwood. “I’m skeptical about brilliant ideas,” he said, “especially when they haven’t been proven anywhere else.”
Sen. Gray Tollison, R-Oxford, also raised questions.
“You have to put yourself in this time period,” he said. “Oil was between $90 and $100 a barrel, and now it’s between $40 and $50. We were in the mindset that oil was going to stay at the high level. This was just before the shale oil revolution.”
The mindset of lawmakers, he said, was "you're looking for something to create jobs."
That's what they hoped to do when they approved a $95 million loan and a $5 million grant to HCL Cleantech, which promised 800 jobs across Mississippi for plants that would develop cellulosic sugars for biofuels and other uses.
The project fell apart before the loan was given.
The state’s best success story lies in the California startup View, with its production facility in Olive Branch. The innovative company has drawn widespread praise for its high-tech windows, which can change hue and reduce temperatures.
View is paying back its $44 million loan and has already hired 335 employees — five beyond the 330 the company promised.
The Silicon Valley-based Stion, a solar panel manufacturer, has run into worse luck with China flooding the market with cheap solar panels.
The company still owes all of the $75 million it borrowed from the state, making interest-only payments so far, and also owes more than $2 million in fees to the city, county and schools in the Hattiesburg area.
In its original signed agreement with those local officials, Stion agreed to invest $400 million and hire 1,000 workers. So far, the private company has hired 141 employees, who are earning an average of $40,000 a year.
The Silicon Valley-based Twin Creeks Technologies received a $50 million loan from the state, promising to invest $132 million in the Senatobia area and create 500 jobs with its unique production of super-thin silicon panels before crashing and being sold in 2012.
Swoope said because of the state's involvement in the high-tech building for Twin Creeks, automation technology group ABB has since been able to move into that building and provide 300 jobs.
In contrast with Barbour, Gov. Phil Bryant has said he prefers that the state not invest in startup companies like Twin Creeks, saying he prefers established companies such as Continental Tire, which hopes to provide 2,500 jobs in Hinds County. The Legislature gave Continental a $263 million financial package, which included site acquisition, sit preparation, infrastructure improvements and workforce training.
GreenTech Automotive had originally planned to invest $2 billion and build 250,000 of the all-electric “My Car” vehicles, creating 350 jobs in Tunica County in exchange for $5 million in loans from Mississippi.
In July 2012, Barbour squeezed into one of the first cars with GreenTech founder Terry McAuliffe (now governor of Virginia) for a press event, which was also attended by former President Bill Clinton, with whom McAuliffe is longtime friends and colleagues.
Earlier this month, State Auditor Stacey Pickering demanded that GreenTech return the $5 million, plus $1.5 million in interest. The company has repaid $150,000.
Higgins recalled a time a state lawmaker contacted him about the company Calisolar locating a plant in the Golden Triangle area, promising 1,000 jobs.
The head of Calisolar, John Correnti, didn’t think Higgins would work with him, but Higgins let the lawmaker know that wasn’t true.
“He needs to understand one basic fact — no means no. We’re either going to do this right or not,” Higgins said he told the lawmaker.
On Sept. 2, 2011, Mississippi lawmakers voted in favor of a $75 million loan for Calisolar, which planned to manufacture and purify silicon.
Higgins said local development officials kept waiting on Correnti. Nothing was happening, and the region was having to pass on other possible business.
He said Golden Triangle Development Link set a Dec. 31, 2012, deadline for Correnti to get his funding in place, or “we’re done with you.” By that date, Calisolar was to put $150,000 in an escrow account for the plant in Lowndes County, which had promised $19 million in long-term property tax abatements.
When Correnti failed to meet the deadline, economic development officials moved on. (Correnti died in 2015.)
In the end, the silicon manufacturing plant went forward, but the silicon purification — the green part of the project — “never happened,” Higgins said.
On Dec. 31, 2013, Bryant announced that Correnti’s company, now known as Mississippi Silicon, would invest $200 million in a “high-tech facility” in Burnsville that would be “one of the most efficient and cost-competitive silicon metal production facilities in the world.”
By that time, Mississippi’s loan fell from $75 million to about $18.5 million, this time with the promise of 200 jobs.
So far, the company has provided 150 jobs with plans of providing 50 additional jobs in the next year or so.
“It’s been a major boost, especially in the Burnsville area," said Gary Matthews, executive director for the Tishomingo County Development Foundation.
He wouldn't give the pay amount but said, for the area, it's "on the high end."
While that story appears to have ended well, the story of KiOR has been a disaster.
Mississippi gave the Texas-based biofuels company a $75 million, taxpayer-backed loan, and, in return, the company promised to invest $500 million and create 1,000 jobs.
Instead, it filed for bankruptcy, from which it has emerged, and Mississippi is suing the company for fraud.
Dennis Cuneo, a former Toyota executive who helped Mississippi land a Toyota plant, served as a consultant on all of these green projects, except GreenTech and Calisolar, which became Mississippi Silicon. He could not be reached for comment.
Sen. Hob Bryan, D-Amory, said there is no way to time travel and fix these bad deals.
“What we can do is have ongoing discussions and put into practice the policies that will keep this from happening again.”
Contact Jerry Mitchell at (601) 961-7064 or email@example.com. Follow him on Facebook and Twitter.
Green gravy train
Legislature votes for money on green projects: More than $400 million
State spending on these budgets in comparison:
- Health Department: $57 million
- Public Safety: $84.5 million
- Mental Health: $226.7 million
- Taxpayer-backed projects:
- Stion: $75M loan, promise of 1,000 jobs, 141 actual jobs
- View: $44M loan, promise of 300 jobs, 330 actual jobs
- KiOR: $75M loan, promise of 1,000 jobs, no actual jobs
- Twin Creeks Technologies: $50M loan (reduced to $27M loan), promise of 500 jobs, no actual jobs
- HCL Cleantech: $100M loan (project fell apart and wasn't given), promise of 800 jobs, no actual jobs
- Calisolar (now Mississippi Silicon): $75M loan (reduced to $18.5M loan), promise of 1,000 jobs, 150 actual jobs
- Greentech: $5M loan, promise of 350 jobs, only a few jobs left (state auditor is suing for return of $5M, plus interest)