Saturday, June 08, 2013

Another economic development deal goes sour

From the Beaufort Observer 

We here at the Observer have contended for sometime now that care should be taken by government officials before they take risks with taxpayers' money. We think economic development incentives can be a good and effective way to promote economic growth and development but that no all such grants are sound.

We are currently researching one such grant. That is one that was obtained to run a sewer line down River Road to service an expansion of the Carver Machine Works facility. The grant was supposed to create a prescribed number of jobs and when Carver failed to do so the state refused to disperse all of the promised grant money. The county and City of Washington taxpayers were stuck with some $200,000 in "clawbacks."

We've not finished the research on this project but what we have already learned is that it was not a good deal. The primary reason for this assessment is that the officials who negotiated the grant and the Board of Commissioners and City Council failed in a simple, well accepted strategy in such undertakings: They failed to secure adequate collateral to cover the risk. When Carver fell short, Carver had no obligation to cover the clawback the taxpayers were forced to swallow. More here.

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