Tennessee State Representative Chris Hurt Talks Ford Deal Points and Growth for West Tennessean’s

Tennessee State Representative Chris Hurt Talks Ford Deal Points and Growth for West Tennessean’s

 

Live from Music Row Friday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Tennessee State Representative Chris Hurt of Haywood County (R-District 82) to the newsmaker line to discuss details of the Ford mega site deal as a big win for West Tennesseeans.

Leahy: We are delighted to welcome to our newsmaker line State Representative Chris Hurt, who represents Haywood, Crockett, and Lauderdale counties. Welcome, Chris! Thanks for coming to the program.

Hurt: Good morning. Thanks for having me.

Leahy: Well, I think for you, this week’s session which ended in the approval of an appropriation of $884 million in financial incentives to help bring Ford Motor and Electric Battery Company into the Memphis Regional mega site was a big day for you. Would you consider that to be a big success in your legislative career?

Hurt: Oh, absolutely. It was a huge step for our state in general, but more specifically for our region over here in West Tennessee. And, yes, it was a highlight of my service so far, and I was excited to be part of the General Assembly when this opportunity came upon us.

Leahy: Now that mega site out there, it’s had a very long and twisted history. Give us a background on how the mega site came about, how long it’s been there, how long it’s been empty?

Hurt: The discussion started in the early 2000s and the property was purchased in 2007. The property has been there and the state has owned it for 14 years, and it has had a rocky road. Early on there was some excitement about it through the years without being able to attract a tenant.

There was a lot of interest loss. There was the question of the wastewater, the infrastructure build-out which really felt like a commitment there needed to be made in order to attract a tenant.

But I don’t want to say it was on the chopping block a couple of times, but it was definitely a lot of concern in the General Assembly and with involved leaders that if we would ever be able to get anything there because of the infrastructure questions.

But each year before me, we had local leaders that continued to battle for it and keep it in the budget to keep some funding and keep trying to move forward.

And then leaders there in the legislature, fortunately, with Governor Haslam, and don’t let me get started with Governor Bredesen, but through the Haslam administration, into the Governor Lee administration, we were able to keep it there and keep it alive to be ready for this opportunity.

One of the drawbacks was it was so large. It ended up being a plus, but through the years it was a 4,100-acre track that a lot of tenants didn’t quite want that much.

And then they were concerned about what would be done with the rest of the track if they didn’t utilize it. Also, through the years, it had a rough road.

But fortunately, through what I feel is good leadership we are able to keep it there and be able to capitalize on this opportunity with Ford.

Leahy: Now, see if I have this right. Did Ford promise that this facility, both their electric pickup manufacturing facility and the electric battery manufacturer that’s coming in as part of the partnership that by 10 years from today, they will create 5,800 new jobs? Is that part of the deal?

Hurt: That is part of the deal and through the ECD commitment, it actually, I think in 10 years they have to have continued to provide I believe it was up to 90 percent of those jobs. So that would be 5,100 is the way I understood it.

Leahy: Got you.

Hurt: Or at that time, the state could utilize some of the clawback featured parts of the agreement to go in and start pulling back and getting repaid some of those incentives. So yes, that is correct. That was the way I understood it.

Leahy: In terms of accountability for this, I’m going somewhere with this question. They say, okay, the deal is and it’s $884 million, $500 million looks like it’s just cutting checks to Ford or the subsidiary that set up with the joint venture with the electric battery company if we get to ten years and they don’t have to reach 5,100 jobs, how much of that money will come back to Tennessee taxpayers?

Hurt: Well, there’s a formula. If they’ve only produced 80 percent of those 5,800 jobs, then 20 percent of the clawbacks would go into effect. So there’s a percentage right scale there that if they were going to only produce 50 percent of the jobs, let’s say around 2,900, then they would have a 50 percent clawback.

And the way I understood if there was a penalty there also with interest that would be added to that at a pretty good I believe I’m stating that I may have been on another discussion. I know it’s a percentage based on the number of jobs they’ve provided based on what they promised.

Leahy: So let me play Devil’s advocate here. Let’s say we get 10 years from today and we find instead of 5,100 jobs, they’ve created half of that 2,550.

And it’s 2032, and we do the count, and it’s only half. Will the state bill them for $250 million? And will that money come back?

Hurt: Yes. The way I understand it is they will pursue 50 percent of the investment. And of course, it will have to go through a legal process to pursue that. But yes, that’s the way I understand it.

Are there other expenses related to this expansion that isn’t covered? For instance, will this mean that Haywood County and the related counties will have more money spent on the construction of public schools, for instance? And is that incorporated in this plan?

Hurt: There’s what they call the term in the legislation was, I believe, a pilot program. And Ford does beginning in year two, which is two years, not this year, but in a year from now, they will begin paying the locals a set amount on a scale over the next 30 years.

And the total they will be paying to the locals, which would be Haywood County, and then part of it lies in Fayette County also with a couple of 100 acres there. So to those local counties, they would pay a total of right at $270 million over the next 30 years.

And that’s in lieu of taxes. So, yeah, they will be obligated to pay to the locals. I think the first couple of payments, it’s own scales for years, two through five. I say two. It begins in a year, which will be their second year into it.

But anyway, a couple of years there’s like, $10.1 million and then it increases to a total of about $270 million over 30 years payment to the locals in lieu of taxes for infrastructure needs just as you’re talking about whether it be roads, schools to handle what’s coming to that area.

Leahy: Will people employed by Ford and the electric battery plant there be required to be members of unions?

Hurt: That will be up to the workers? I think Volkswagen has faced that and voted it down twice, and that was definitely a lot of the discussion this week as we worked it through the committees.

But that will ultimately be up to the workers. And I have faith. We’re a right-to-work state. Of course, we’re trying to get the constitutional amendment completed. And I have faith in Tennessee workers on how they’ll vote on that. So that will be up to them.

Leahy: So on a one to 10 scale, one being not so big, 10 being really big, how big is it that this deal has been done in the special session?

Hurt: I would say a 20. (Laughter) I’d say that because in this electric vehicle space it’s a waste to see who’s first. And Ford started speaking with Governor Lee and ECD and I believe they contacted the state in February for a project like this.

They recorded 14 other states. 15 total. Came back in July and basically wanted to come to Tennessee and started working through the best package they could get from us.

All that being said, once the offer was made, the memorandum of understanding was signed and then they were ready to start. Of course, we had to do the go through the legislative process.

But they’re ready to get going right now because they’re hoping to be in production in two years. So the fact that we could come in a special session, work this through and get support at the legislative level and get all these packages through, it’s huge.

Not only for us here in rural West Tennessee where they’re even talking about up to 30,000 construction jobs over the next two years during the construction of this project but then moving forward to know and to see this come to fruition, the ball, begin rolling this quick and not wait for session and to work it through session and then something to come out of it next spring, it’s big for Ford to know that we appreciate their commitment.

And that we’re moving forward with our end of the obligation. But also to the people here and my constituents and even the constituents all over rural West Tennessee.

And in Shelby County to see that, hey, this is a serious deal, and we’re moving forward and Ford is serious and they’re ready to start moving this project forward is absolutely huge for us. And I say that to say that they’re talking another 20,000 or up to 25,000 jobs in ancillary companies tier two and tier three.

Leahy: So there could be a lot of economic benefits if people buy electric pickups. Right?

Hurt: There you go.

Listen to the second hour here:

 

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tennessee Coalition for Open Government Executive Director Deborah Fisher Talks Lack of Transparency and the Uncollected Clawbacks

Tennessee Coalition for Open Government Executive Director Deborah Fisher Talks Lack of Transparency and the Uncollected Clawbacks

 

Live from Music Row Thursday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed Deborah Fisher, the executive director of the Tennessee Coalition for Open Government to the studio to describe reports lacking transparency where clawbacks have not been redeemed after large corporations shut down.

Leahy: I am joined in studio by our friend Deb Fisher, who heads the Tennessee Coalition for Open Government. You were going to tell us about the results of all of these funds spent in secret agreements by the Economic Development Administration here to induce a large corporation to come to Tennessee.

Supposedly, if they don’t hit their employment objectives. There are “clawbacks” where they’re supposed to give us back the money. How’s that working out according to this report, Deb?

Fisher: This is the first report, and it was acquired by lawmakers to be presented to the fiscal committee. And I’ll give you just one example from it.

Service Master Global Holdings have received grants I found online on the ECD website of about $5.5 million, $385,000. repaid to each to ECD.

Leahy: Whoa, whoa, whoa. They got $5.5 million in grants with clawback provisions? Is that it?

Fisher: Yeah. The report is sketchy. So I don’t know how much of that was subject to the Clawback provisions, but they received a lot of money from the state.

And that’s the only one listed in this report where they actually did get the clawbacks. There are almost $11 million in clawback owed from previous years that have not been collected.

Leahy: So let’s talk about the not collected bit. And so we don’t have the details of these. These are all secretive deals. To me, you had up a transparency group, why should these deals be secret?

Fisher: Well, they shouldn’t be secret. The public needs to know the performance of ECD. If we’re going to give taxpayer dollars to companies to do things and they don’t do it, we need to know how it works out.

And we’re starting to get just a very small peek at what’s going on. And this has been because some lawmakers have passed laws forcing it, but we still don’t have a full picture. There was a good question yesterday about it.

Leahy: In the Tennessee General Assembly at a committee? House or Senate?

Fisher: House. Bobby Ross. He’s the economic development and asking, how is the performance gone before? And of course, he gives an example of something that’s gone really?

Leahy: One example.

Fisher: But we don’t know the full picture.

Leahy: Why don’t we know that? Why shouldn’t we have accountability, complete detail of comparing every deal where Tennessee taxpayers gave millions of dollars to corporations compared to what they said they would do, what they actually did, how much they owed back in these, and how much they actually paid?

Fisher: I don’t know why we don’t. They don’t provide it. They make it hard to find. They have a lot of discretion to make things confidential. And they have.

A lot of the discretion to make things confidential end up being up to one man, either at the discretion of the ECD Commissioner. In some cases with tax credits. It’s two with a revenue commissioner.

Leahy: Let’s go to that. The clawbacks first, you said $11 million owed in clawback. Who owes the clawback that hasn’t given the money back? Are these companies that went broke?

Fisher: That information is not in the report.

Leahy: You can’t find that out. I would like to find that out, wouldn’t you?

Fisher: Yeah. It’s not clear how many jobs. So the report is pretty sketchy, but it is our first clue. Our first window into the fact that the state is trying to get money owed and hasn’t been able to.

I think these clawback provisions are super important to be put in the contract, but we just have to be realistic about them, and we need to see how they turn out. I mean, it’s not just the magic bullet to the deal.

Leahy: You said something else here about the discretion that some of these folks have, and it’s not just in grants for capital improvements or building buildings or other stuff. It’s for tax credits.

What’s the law on it? And tell us who the Tennessee state officials who have this discretion are? Do they exercise it on tax credits?

Fisher: Right. In statute, there are certain requirements you have to meet to get, say, a job tax credit or a capital investment tax credit, and it’s open to everybody. But if a business doesn’t meet those qualifications, it still can be awarded the credit if the revenue commissioner and the ECD commissioner decide that it’s in the best interest of the state to give that credit to that business.

However, our problem with that is that we don’t have to know who they have decided to give it to. And we think that’s a problem when you basically have two people who can make a decision to give millions and millions of dollars in a tax credit to a company, and that’s not public.

Leahy: And there’s no way to find that out?

Fisher: No, it’s confidential. And it’s confidential by state law.

Leahy: Who voted for that state law?

Fisher: This goes back.

Leahy: How far back does it go?

Fisher: These have been in state law for a while. I don’t know. But they add to it. They subtract from it every year. This year, they added one more of those discretionary tax credits.

Leahy: In the statute.

Fisher: In the statute. Usually, it’s targeted to a company that they want to give incentives to, but they don’t quite meet the qualifications laid out in the state law.

They applied to everybody else, and they want to just bend the rules, basically, for a particular company.

Leahy: Bend the rule. And I’m sure lobbyists have nothing to do with this. That was a little satire there. (Laughs)

Fisher: The state of the credit thinks it’s in the best interest of the state, so they think it’s going to help economic development. So I don’t want to discount that. We just think it should be transparent.

Leahy: Yeah. I think a lot of things should be transparent, and a lot of things that aren’t particularly about this Ford deal. I think a lot more should be transparent. But I want to go back to the two people that can give tax credit at their discretion.

Now, you said it’s the director of economic development, Bob Rolfe. Whoever the revenue commissioner is, it’s a known thing. (Fisher chuckles) But they have a lot of power. A lot of discretion.

Is there any element Deb within the Tennessee General Assembly to limit those discretionary powers that give lots of money to these Fortune 500 companies and sometimes smaller companies?

Fisher: Yes. They wrote the law to allow it, and they could write the law to not allow it, or they could write the law to make it transparent.

Leahy: When you talk to legislators about transparency, what kind of feedback do you get if you say we need more transparency, do they say, oh, yeah. That’s great. Let somebody else do it. How do they respond?

Fisher: Some of them want it. Some of them want it. But they also feel pressured that they need to have jobs brought to their community. And ECD says we can’t deal with companies if we’re going to reveal who we give the money to.

They’re caught between a rock and a hard place because jobs are really important in communities. That’s why we have a whole state agency focused on it. The political angle there is you want the jobs? We got to keep these secrets.

Fisher: To some extent.

Leahy: I think that’s terrible. But that’s the way it is.

Fisher: Not everything is secret, but there are some pretty big holes in this.

Listen to the full second hour here:

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.
Photo “Tennessee Capitol” by Peggy Anderson. CC BY-SA 4.0.