Google Definition:
A forgivable loan, also called a soft second, is a form of loan in which its entirety, or a portion of it, can be forgiven or deferred for a period of time by the lender when certain conditions are met.
But what happens when conditions are not met? That's when "forgivable loan" becomes synonymous with a "sucker's bet."
I remember it like it was yesterday, but in truth it was six years ago. Holy cow ...does time fly.
I also remember calling out Janesville council members in 2010 with a video about their laughable $227,500 "forgivable" loan "incentive" to create 130 jobs to a Fortune 500 company (Grainger Industrial Supply) that at the time, had $460 million cash on hand listed in their financial report. Back then, watching the city council vote unanimously to approve the deal after they wouldn't even allow the local Grainger corporate representative to take questions was so surreal that I dubbed their demeanor a result of "fear market enterprise."
But now comes a news story on the state's WEDC annual audit report showing Grainger has not created any of the 130 jobs originally planned for the site and only retained 808 of the 1,169 planned to date.
However, according to this older Gazette article, a company spokesperson said about 950 people worked for Grainger in Janesville as of December 2014. That means Janesville lost more than 140 jobs at Grainger since then despite the report at that time the city would lose only 30 jobs to outsourcing.
Still, the state agency is an official audit and has been seeking to recover $50,000 from Grainger. This week it was also discovered five more Janesville employees had their jobs shipped to Panama.
According to the original article (from April, 2010) on the city's incentive deal, the $227,500 figure for Janesville's separate cash "loan" to Grainger was reached because the city valued each new job of the 130 promised at $1,750.
But if those 130 jobs never materialized, according to the state audit, and in fact the Janesville location continued to shed even more jobs than previously expected, will Janesville officials call on Grainger and ask to be made whole again on the loan?
Under "sucker's bet" rules in fear market enterprise, I don't expect it. In fact, I expect Janesville officials to give Grainger the city's "Business of the Year" award. That's how it works around here.
ADDITIONAL:
Green Bay Progressive - WEDC Wants Tax Dollars Back from Company Outsourcing Wisconsin Jobs
1 comment:
Whoa...both deals for 130 jobs were made around the same time. if 1,169 employees was the target that meant Granger reported 1,039 to start with. $227k is a lot of money for Janesville to lose. this is a bigger scandal than the wedc losing $50k. If the city does nothing to claw it back, they'll show everyone what a joke their tif contracts are. you're right again, they'll spin the numbers to make it appear like the target was reached or sweep the whole thing under the carpet.
Very prophetic.
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