Bankrupt manufacturer Abound Solar, which is liquidating despite having received $70.9 million in taxpayer-backed loans from the Department of Energy, may leave government services in its former Weld County, Colo. home in trouble because of diminished property tax revenues.
The Greeley Tribune reported last week that Abound owes nearly $1 million for this year and by next year will have accumulated $1.8 million in county tax debt. As a result various school, public safety and other government services departments will have to look at budget cuts. The school district where Abound’s taxes went to, in St. Vrain Valley, will have to absorb more than a half-million dollars in lesser revenues because of the company’s failure.
Every county, city and community deals with property tax losses due to foreclosures and business closings, but the Abound Solar/Weld County example is one in which an unworthy company, that was the beneficiary of crony corporatism, saw its fortunes artificially inflated thanks to massive infusions of taxpayer money. The domino effect is that government expectations were raised – unjustifiably – that higher revenues would come. Important decisions about hiring and equipment purchases were based upon those projections.
Who to thank for that false hope? Why Mr. “Hope and Change” himself, President Obama, who believes solar and other alternative energy schemes don’t work because of a free-market failure, not because there is no demand for them. In the specific case of Abound, a March House Congressional Oversight Committee report – titled “The Department of Energy’s Disastrous Management of Loan Guarantee Programs” – explained how credit evaluator Fitch Ratings “described Abound as lagging in technology relative to its competitors, failing to achieve stated efficiency targets, and expecting that Abound Solar will suffer from increasing commoditization and pricing pressures.” Fitch determined there was only a 45-percent likelihood that Abound would repay its loan to taxpayers. The details were spelled out in a story by Colorado Watchdog.
In practice, as opposed to his theory, much of the billions of dollars in stimulus money he dedicated towards green energy initiatives actually went to supporters of his campaign. In the case of Abound, billionaire Pat Stryker and her Bohemian Companies had significant investment in the company. She donated $475,599 to federal Democrat candidates and causes from 2008 to 2012, according to the Center for Responsive Politics. Included in that amount was $11,900 in maximum contributions to President Obama’s two campaigns for the White House. Stryker also was an $87,500 bundler for the president’s Inaugural Committee, and donated $50,000 herself. The Sunlight Foundation reported that she gave $35,800 to the 2012 Obama Victory Fund.
Stryker, one of the “Gang of Four” wealthy liberal donors that helped turn Colorado into a “Blue State” from Red, is known to have contributed millions of dollars to Democrat candidates for state and federal office in her lifetime. Among those are gifts to former U.S. Rep. Betsy Markey, whose district included the Abound facility – donating max contributions for her 2008 and 2010 successful runs for office.
Markey, who lobbied hard for the DOE loan to Abound, should absorb some of the blame for its failure and thus the difficulty Weld County finds itself in. Without any justification or evidence to support her claims, she vouched for Abound.
“Without the loan guarantees, they would not be able to really move forward on this project,” Markey told the Fort Collins Coloradoan. “It’s seed money that’s going to be fully paid back by Abound.”
Besides Weld County, Abound also owes Larimer County over $98,000 for unpaid taxes, in addition to the Cities of Loveland and Fort Collins (nearly $18,000) for overdue utilities bills, according to the Northern Colorado Business Report. In bankruptcy filings the company stated it had $82 million in liabilities and $136.1 million in assets.
“Abound’s insolvency, declared early last month, is among Colorado’s largest corporate bankruptcies in recent memory,” NCBR reported.
Abound also owes DOE $70.9 million, but agency spokesman Damien LaVera said in June – after the Chapter 7 bankruptcy filing – that U.S. taxpayers would likely lose $40 million to $60 million after liquidation is complete. But with the severe reduction in value of the solar industry (which drove energy giant BP to get out altogether), is the $136.1 million in assets a realistic figure?
Moreover, if the figure is legitimate, then why wouldn’t the federal government fully recover the amount of money lent to Abound? After all, the Energy Policy Act of 2005 prohibits subordination of a guaranteed loan to other financing, which is what got DOE’s Loan Program Office in trouble with Congress in the Solyndra scandal. Are the likes of Pat Stryker in line to recover money ahead of taxpayers?
Another creditor, investor Mike Sargent, told NCBR he poured $1.2 million into Abound with the belief their technology was “extremely good,” but recognizes he might have to take the loss as a tax deduction (another way renewable energy failures cost the Treasury revenues) and will never invest in solar again if the government is involved (which means he will never invest in solar again).
“You can’t trust them because of politics,” he said.
Is anyone else who wants to jump into business deals with government listening?
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.