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Friday, June 09, 2017

After Five Years Of SHINE, Only Its Shadow Has Grown

Most of my local readers probably think I'm not a fan of the upstart medical isotope company SHINE. But that's not right. To be clear, I give the SHINE CEO much credit for ambition and innovation and hope his idea succeeds.

My problem from the beginning with the SHINE mess in Janesville, and it is a giant mess, was more with the city's trickle-down corporate welfare policies that, by design, give property tax revenue for the next 10 to 20 years from the city's most promising economic developments to well-connected city hall interlopers and Fortune 500 companies.

However, my view of SHINE has changed after recent newspaper reports about SHINE and Janesville corporate welfare officials engaging in new talks to give SHINE more TIF increment money ($1.5 million) because, and get this, because some how, some way, the city is responsible for making sure SHINE recovers costs SHINE did not anticipate in their original prospectus. Believe it or not, THAT'S the city's take on it.

The articles by the Janesville Gazette about the talks for the TIF amendment appear to be unusually forthright ...for the Gazette. The newspaper, in the order of three separate articles about the development, shows city officials and SHINE officials turning, twisting and spinning against each other by the day.

In the first article that broke the story, city officials tied the $1.5M to help pay for the prototype facility. That all changed in the second article when SHINE's VP insisted SHINE -- not the city -- would pay the costs for building the prototype facility.

Both parties now claim the $1.5M TIF increment would NOT fund the construction of SHINE's isotope garage (despite contradictory language in the city's memorandum on the TIF amendment), but will be used instead to pay the costs for moving "relocating" prototype machinery a few hundred feet into the proposed full scale facility.

That's even better because the city is then in no rush now to do anything with the amendment until after the full scale facility is up and running. Right? There is no urgency. Well, that would be true if this proposal was a square deal. Problem is; it's not.

But wait a second. One-point-five million dollars?? To move a future non-productive museum piece across a road? According to the third Gazette article, SHINE now considers the smaller garage type isotope facility to be nothing more than a marketing tool.

Those articles on the SHINE debacle were broken by a confusing if not somewhat disingenuous letter to the newspaper by SHINE CEO Greg Piefer. In it he wrote about how the TIF amendment (as opposed without the amendment?) would bring additional guaranteed revenue to the city and that the amendment came about because the city did not want SHINE to build the prototype on the main site in order to protect the value of city property. The main site is city property until SHINE's full-scale production facility is completed.

In short then, SHINE is telling the city, "it's reasonable to ask us to protect the value of your property according to your wishes, but that will cost you an additional $1.5 million." Bingo. And there it is.

But there's more.

You see, after five long years, SHINE has developed no attachments or bought no property of/on its own in Janesville.

Everything ...and I mean EVERYTHING, from the first seed of venture capital including a city-backed $4 million guarantee; to 80 acres of "free" land; to the city's purchase of another 8 acres of land to yet another sweetheart TIF deal for a city hall "connected" developer that appears to be a gimmick designed to pay SHINE's lease of the building; is all paid for with other people's money. Even the land they want to build their prototype facility on, will not be purchased or owned by SHINE. They intend on leasing it.

So, for all practical purposes, SHINE has no risk in Janesville and could pack up its bags tomorrow and not lose or owe a single dime to anybody.

Now I can understand some people saying, "So what?" SHINE is playing it smart. True, I guess. Why risk your own money when you have a willing hostage encouraging the ransom?

But it was Piefer's letter that convinced me SHINE is playing fast and loose with Janesville when he stated the city has "contributed" $600,000 toward their project "so far" while, in an effort to show SHINE has a lot more skin in game, has "invested" $60 million so far. In that case, Piefer should provide an itemized list showing where he spent "contributed" $60 million in Janesville. Of course "spending" and "investing" are not the same, but it was Piefer who connected the two when he tried to make the comparison in his letter.

Sorry to say, but the only commitment I've seen from SHINE is their commitment to hold Janesville hostage.

Unfortunately, as all of Janesville's trickle-down corporate welfare city council votes go, I fully expect SHINE to win the $1.5M TIF agreement handout with anywhere from a 5 to 2 vote to a unanimous decision.


Anonymous said...

Totally agree with on you this and that's rare for me. Every statement by the city and the pied piper required damage control the next day. It;s beyond ridiculous.

Now Menards with a $400,000 refund settlement? City hall is out of control!!

Anonymous said...

Shocking on how little attention and few comments this is getting at the Gazette when it's a raging dumpster fire.

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