February 12, 2012

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Senate committee continues Mamtek discussion

January 19, 2012 By

The Chairman of the Senate Committee on Governmental Accountability says he questions whether the Department of Economic Development has the safeguards in place to protect Missourians.

The Senate Committee on Government Accountability hears testimony from representatives of the Department of Economic Development.

Senator Jim Lembke’s Committee has again heard from Department representatives about its involvement in the Mamtek sucralose plant project at Moberly, this time with new e-mails obtained from DED. Lembke says the e-mails reflect that some in the Department were asking “the right questions” about Mamtek and its executives, but he wants more.

Lembke told the Department’s Director of Legislative Affairs Jason Zamkus, “We’ve got to come up with some type of process…you say to the person that has an interest in coming to Missouri and starting a business that we need to have your financials before we can take it to the next step.”

He emphasizes that he is not suggesting background checks be conducted with all companies and all projects. Those with a more established background, with examples given in the hearing being Coca-Cola and Ford, would not be subject to the same inquiry as someone from a relatively unknown company, as was the case with Mamtek. “The bottom line for me is,” Lembke says,” how do we keep this from happening to another community.

Lembke wants to meet with DED in a different setting to discuss new approaches to prevent more Mamtek-like situations in the future. “Let’s learn from it and put some things in place that will actually protect the taxpayer and our Missouri communities.”

The House Committee looking into the Mamtek deal, the Special Standing Committee on Government Oversight and Accountability, is scheduled to meet at 12:30 p.m. Thursday. Chairman Jay Barnes anticipates long-awaited witnesses Tom Smith, who was Mamtek’s site consultant and Mike Wise, a patent attorney who claimed to have been to Mamtek’s plant in China.

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Proposals would slow down Mamtek-like bond arrangements

January 17, 2012 By

Two measures have been proposed in the House by a member of the committee that has looked at the Mamtek situation that would take some grease off the wheels in future, similar deals.

Representative Chris Kelly (D-Columbia)

Representative Chris Kelly (D-Columbia) says right now when communities want to issue bonds for industrial development, bond advisors & lawyers might advise the city’s credit be used, such as what happened in Moberly with Mamtek. His proposals target such arrangements.

“That is a, I think, kind of a sneaky method to avoid the Missouri Constitution, because what it does is it requires that one city council effectively bind the appropriations of further city councils without a vote of the people, and the Constitution prohibits that.”

The plan regarding communities would require a change to state statute, found in House Bill 1304, while the prevention of such state-backed bond deals requires a constitutional amendment found in House Joint Resolution 58.

Kelly acknowledges his proposal would put communities in Missouri at a disadvantage when competing with those in other states to bring in new industries, because those deals sometimes develop very quickly. Having to put certain elements before a vote of the people will significantly slow the process down. ”That’s one of the things that the cities won’t like about this, but if the only thing that my bill does is it makes cities more aware of this problem, I will think that that in-and-of-itself is a good thing.”

On that line of thought, Kelly says his bill would not have to pass to sound an alarm. “I want to raise the consciousness about the danger here.”

Kelly says if his bill had been law when Mamtek was developing, the deal would have been aired better and might not have reached the stage it has. He notes, he is not critical of the people with the City of Moberly. “I am morally convinced that they did not realize that they were binding the credit of the City. The people I find fault with are the bond advisors and the bond lawyers.”

While discussing who was at fault in the Mamtek deal, Kelly says he thinks the state handled it “probably, actually about right. There’s a lot of political motivation to blame (The Department of) Economic Development because the governor’s a Democrat. But I think the Department of Economic Development handled this under (Governor Jay) Nixon the same way that they handled these under (Governor Matt) Blunt and it’s just handy now that this one went south, to try to find a political way to blame Nixon.

Kelly is not saying that DED could not have done better in certain areas involving communication or contributions to due diligence. “At any given time in any operation … you can find ways to make improvements.” He adds, “if there were sins here, they were pretty venial sins.”

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Committee asks whether DED considers Mamtek project a failure

January 9, 2012 By

A House Committee that was formed in the interim continues its work delving into the programs of the Department of Economic Development.

Chairman Jay Barnes (R-Jefferson City)‘s Interim Committee on Government Oversight and Accountability has reviewed a list of 91 projects that have received more than $1 million in state incentives over the last six years. Those projects have reported creating only about a fourth of the more than 20,000 jobs they projected.

The House Interim Committee on Government Oversight and Accountability hears testimony from three representatives of the Department of Economic Development.

Barnes says this raises questions about whether the Quality Jobs Program is performing as it should. “We have results in that show that it’s not doing as well as promised. Whether that means that it’s something that we need to shelve or not is a separate question, but we do know that it is not working as advertised.”

During a Committee hearing Monday afternoon, Barnes pressed DED Business and Community Services Division Director Sallie Hemenway and Legal Counsel Chris Pieper to assess whether the Mamtek project was considered a failure under the Quality Jobs Act. Their response was that projects have different thresholds for reporting job creation, and that Mamtek has not reached the deadline to report jobs created over two years.

It was unclear whether Mamtek submitted an annual report in September. Pieper explains, “If they didn’t submit the annual report with the requisite employment, which would have been one employee by that time, then they would not receive benefits under the Missouri Quality Jobs Program.”

Still, Barnes was frustrated that the DED representatives would not offer a final pronouncement of Mamtek. Upon Pieper re-iterating that Mamtek is not going to receive Quality Jobs benefits, Barnes told him, “It’s OK to say Mamtek’s a failure.”

Pieper responded, “Mamtek did not turn out as anyone would have anticipated.”

The Committee is next scheduled to meet January 19, and Barnes says some other key figures in the Mamtek project are expected to testify. That includes:

  • Michael Wise – patent attorney named in documents released by DED in December who claims to have been to a Mamtek plant in China
  • Tom Cunningham – Attorney for Moberly who received e-mail from Michael Wise about the status of the China plant
  • Tom Smith – business consultant who presented the project to the state and the Midwest U.S.-China Association
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Top House democrat wants new DED offerings

January 3, 2012 By

The Minority Leader in the Missouri House of Representatives says rather than focus only on ideas that have already been vetted, the legislature needs to consider some fresh ideas.

State Representative Mike Talboy (D-Kansas City)

Mike Talboy (D-Kansas City) points to the states neighboring Missouri, all of which he says have angel investment opportunities. Those could be tax credit programs or funds that are typically smaller than some of the economic development programs already in Missouri.

He says putting programs like that into effect can provide “good bang for your buck in the beginning. But then also as the budget years get better and as we have more revenue in the state and as we see the returns on those types of programs, then you can look at expanding them if you need to or be able to expand them into different parts of the state.” Talboy says there is nothing like what he is talking about currently offered by DED.

Talboy says just having some new tools for economic development can spur some important discussions by stirring discussion that might not happen without them. “It allows tangentially some of these ideas to come out of those conversations that are new that we don’t have…you see some of these new ideas sprout up from those conversations.”

The Department of Economic Development has come under scrutiny by lawmakers investigating a failed project to bring a sucralose plant to Moberly. Talboy says that should not have any impact on discussion of new incentives that department might offer. “Whether or not they’re a good program…I don’t think depends on the conversations and whether people have an issue with department or another. I think that if the program’s worthwhile we’ll find a way to make sure that it gets done. If people have objections to certain departments, we’ll deal with those separately.”

The new legislative session begins tomorrow.

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Ford president to speak at Gov. conference (AUDIO)

August 2, 2010 By

The president of Ford Motor Company will be the keynote speaker at the Governor’s Conference on Economic Development in Kansas City next month. But the governor insists we shouldn’t infer that that means Ford has made a decision about Claycomo’s future. [Read more...]

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