Your tax dollars at work:
The American branch of the Korea-based solar panel maker Nexolon says its investment in San Antonio is far more extensive than the incentives the company is being given by the city to locate at Brooks City Base, and says it plans to use the city as a springboard to become the solar power leader for the Western Hemisphere. ~ WOAI Local News
I’ve written previously about the City of San Antonio’s deal to bring a South Korean solar panel manufacturer to the city’s south side, see: Julian Castro Ridicules CNN Report But Major Questions Remain.
In the past month some city council members have finally taken notice of Nexolon’s sketchy finances and are questioning why the city is offering a foreign company a massive incentive to locate here. The incentive being a huge $12 million discount on land. After members questioned why the city was willing to lease/purchase a tract of land worth $17 million for $5 million, Julian Castro intervened to push things forward:
Amid a deal to bring 400 megawatts of clean energy to San Antonio, uncertainty has settled around a key member of a consortium selected by CPS Energy to engineer the colossal solar energy project. Express-News reporters Nolan Hicks and Neal Morton uncovered signs this week of financial distress in the South Korean parent company of Nexolon America LLC, which is set to receive hefty incentives from the city to manufacture solar panels at Brooks City-Base on the South Side.
Nexolon Co. Ltd. lost nearly $60 million in the first six months of last year and carried a heavy debt load June 30. The next month, CPS inked a deal with OCI Solar that calls for Nexolon to build a $100 million solar-panel manufacturing facility somewhere in the 1,500-square-mile CPS service area.
To lure Nexolon to Brooks, the city offered a package of incentives to the startup that’s either crafty or crazy, depending on who’s talking.
The incentives, approved last month by a majority of council members, include a 10-year tax abatement, a $400,000 grant and $500,000 in fee waivers from the San Antonio Water System. But the city’s North Side council members — Elisa Chan, Reed Williams and Carlton Soules — took exception to an agreement to lease 86 acres worth $17 million to Nexolon for just $5 million.
The city has pledged to plunk the remaining $12 million into infrastructure at Brooks surrounding the site. Nexolon could take ownership of the land at any time in the next decade, although this would require it to start paying taxes.
In a newsletter this week to residents, Chan wrote, “We all hope that Nexolon will do well and flourish, but should it go under, it will continue to own the 86-acre tract of land that can be sold … at a high price in the future.”
“That is just a weird deal,” Chan told me. “That land is going to be worth more than $17 million in the future. And Nexolon, at the end of the day, they can just sell it. That’s a crazy deal.”
Weird, crazy … what happened to wise? Consider the claw-back provisions.
Rene Dominguez, director of the city’s economic development department, explained what would happen if Nexolon fails.
For one, the city would stop abating its taxes and file a lien to recoup any losses. And the grant is tied to job creation: Nexolon has promised to bring 400 jobs.
““We don’t pay unless they reach milestones,” Dominguez said.
As for the $12 million discount on the property, Chan and company were astute to pounce: It’s the weakest part of the deal. An optimist would consider it a leveraged incentive. If Nexolon fails, Brooks would still reap an investment in its infrastructure.
That’s at the heart of what’s spurring controversy over the deal: the city’s insistence that Nexolon build at Brooks.
““Are we doing a little more because it’s a South Side investment? Sure,” Castro said Wednesday. “We want to create momentum there in a traditionally economically depressed area.”
He called Nexolon’s financial problems “a concern” but said he still believes in the deal.
No worries. Money is no object when taxpayers foot the bill right? Should Nexolon not reach stated milestones, I’m sure the City (taxpayers) will spur things along in form of additional revenues (taxes) that will be found (confiscated).
As usual, paying off political cronies creates “good jobs” — but let’s see how many true SouthSiders end up in those jobs. Wanna bet you’ll see some people on foreign work visas in the upper offices?
How many times have we heard a Democrat tell us we need to make questionable corporate welfare deals with taxpayer money, in the name of creating good jobs — from people who wouldn’t know how to create a high paying job unless it came with a government title?
UPDATE: Who has responsibility for making sure the taxpayers are protected? Apparently…..nobody.
City leaders Thursday urged the Brooks Development Authority to take its own look at the finances of a key contractor for CPS Energy’s major solar project — a company battered by collapsing solar-panel prices — before handing over a heavily discounted piece of prime land.
However, BDA board Chairman Manuel Pelaez-Prada said the responsibility for examining the books of Nexolon America LLC is “way above” the pay grade of his organization.
A vote by the city-appointed board represents the last hurdle between Nexolon America LLC and 86 acres of land at the former Air Force base, which the BDA is charged with redeveloping.
Good thing Julian Castro is such a good buddy of Barack Obama. Bailouts using taxpayer money are his business forte.