Monday, June 24, 2013
When Big Business Drinks, Everybody Pays
Sometimes I just don't know where to begin on stories like this.
In Janesville, a large and profitable shareholder vested company, Seneca Foods Corporation, is considering the construction of an 80,000 sq. ft. addition to their existing food processing facility. As far as common knowledge goes, there is nothing preventing them from moving forward with their expansion.
But that doesn't stop its chief operating officer in Janesville, Paul Palmby, who also is a roundtable member of the brutal divide and conquer group, Rock County 5.0, from approaching local government officials and asking for some form of a hand-out. I know they'll say, why am I bringing up politics? What a partisan! Right, it's only important to them, and us little people are supposed to shut up and ignore it because they're the master job creators of universe. Good grief.
Anyhow, according to this story from the Janesville Gazette, Palmby told Janesville's interim city manager "I want you to tell me the best you can do,” and “wastewater is a big issue to us.” Well OK. Here's a building permit and zoning application for your expansion project. We'll expedite your paperwork since you're a nice guy. But noooooo.
The city manager and his administrative crew came up with a solution ...but a solution to what? Well, here's the game. Suddenly, the city of Janesville is in "competition" with another American city for the expansion. Under pressure, the city proposes building a $3.3 million anaerobic pretreatment lagoon at full taxpayer cost to slash the food processing company’s wastewater costs.
Actually, they're not merely slashing Seneca's structural costs. According to the city council resolution, after taxpayers build Seneca's wastewater facility on city land, the city will be processing all of Seneca's processing effluent at the lagoon at NO CHARGE to Seneca. Bend over anyone?
It gets even worse. In 2012, Seneca reported $1.2 billion in sales, $355 million in stockholder equity and $425 million in working capital. We're not talking hardship here if you know what I mean. Yet, they will also be picking up a $303,000 TIF surplus forgivable loan from the city's cash-strapped general fund based on some nearly impossible to fail benchmarks.
It doesn't help either that the city, with media cooperation from the Janesville Gazette, builds up a deceptive narrative how the food processing company will "agree" to pay increased property taxes that after ten years is considered repayment of the TIF loan OR how estimated sales of methane gas from the pre-treatment lagoon will break-even the city's costs after 12 or 13 years but only IF the maximum production lines are at full capacity. It's a bunch of hooey.
Also, completely left out of the details and likely on purpose, are the additional costs to public utility rate payers on what is known as the utility "averaging concept." This is where all customers participate in utility capital improvements whether or not a particular improvement provides a direct benefit to a particular customer. This means that the new anaerobic pretreatment lagoon will add $3.3M to Janesville's utility assets. THAT means through the long-held averaging concept of 6% annual to provide for the utility's financial needs over the long-term, Seneca's lagoon will cost Janesville rate payers an additional $198,000 a year OR nearly $2 million over ten years on top of the $3.3M initial outlay. Bend over anyone?
I'm way past calling this merely "corporate welfare." With welfare at least, recipients usually have to prove some form of economic hardship. Obviously that doesn't fit Seneca at all. Means testing to get government aid? That's only for poor destitute people.
But possibly the worst part of these kind of wrongheaded deals is that the city and the Janesville Gazette make it all sound like Seneca is jumping through a set of narrow hoops. It seems to never dawn on them that the wealthiest in the private sector refuse to make a move without knowing first what they can get from any and all levels of government - yet often blame government for being the obstacle to their success.
I'm also way past hope thinking that anyone in government has any intention of stopping this crooked game of phony business incentives and kickback politics. In fact, most public officials seem to relish in this corruption as a trophy for their own success.
Posted by Lou Kaye at 1:00 AM