Another economic development deal goes sour | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

    We here at the Observer have contended for sometime now that care should be taken by government officials before they take risks with taxpayers' money. We think economic development incentives can be a good and effective way to promote economic growth and development but that no all such grants are sound.

    We are currently researching one such grant. That is one that was obtained to run a sewer line down River Road to service an expansion of the Carver Machine Works facility. The grant was supposed to create a prescribed number of jobs and when Carver failed to do so the state refused to disperse all of the promised grant money. The county and City of Washington taxpayers were stuck with some $200,000 in "clawbacks."

    We've not finished the research on this project but what we have already learned is that it was not a good deal. The primary reason for this assessment is that the officials who negotiated the grant and the Board of Commissioners and City Council failed in a simple, well accepted strategy in such undertakings: They failed to secure adequate collateral to cover the risk. When Carver fell short, Carver had no obligation to cover the clawback the taxpayers were forced to swallow.

    In October, 2012 the Charlotte Business Journal reported on an economic development announcement that was going to create 450 jobs and was touted as having the potential to jump to 600 jobs. Click here to read that story. The story says that Denver Global would be getting $3.6 million in state incentives and another $800,000 from Lincoln County.

    In February of 2012 there was another flurry of announcements that claimed 600 jobs would be created. Governor Bev. Perdue flew up to Newton for the ceremony and said: "This is the start of something really big that can help change this community and this area," said Gov. Beverly Perdue who was in Denver for the announcement. Perdue said she hoped the announcement was the "first day of a long-term journey together" with RATO. Click here to read that story.

    In spite of all the hype, it never happened.

    The Lincoln Times-News ran a story last week (May 24, 2013) saying that Denver Global had been put on hold. We did about a half hour of research and found out what the Department of Commerce and Lincoln County should have known. RATO had only one buyer for its products...Lowes Home Improvement. When Lowe's discontinued buying from RATO the market was gone.

    That is very much what Beaufort County did recently to sell the ill-fated Quick Start II building which sat empty for years after it was built. Click here to read more about that. They gave taxpayer money to a startup company that has no track record and that has, for all practical intents and purposes, only one buyer. As best we can determine the company has no assets. Of course we hope that buyer (Flanders Filters) will continue in business and will continue to buy from the buyer of the Blue Goose. But no one can know that we will not have the same thing on our hands within a few years as Lincoln County has on its hands now with RATO.

    The moral of all this is that our officials should have all risks they take with the taxpayers' money collateralized. Carver should have to pay the city and county back for what the taxpayers got stuck with. So too should any other company that fails to live up to what it promises.

    No elected official should ever vote to give away one dime of taxpayer money for a project that they would not be willing to invest their personal assets in. Or if they do then these elected officials should have to pay the taxpayers back if the deal goes bellyup.

    Wonder where Governor Perdue is about now?