There’s a postscript to the Fisker Automotive bankruptcy story from earlier this week: The actions by the Department of Energy in awarding the unworthy luxury electric automaker a $529 million loan gave them validation, to the point where the state of Delaware made its own “investment” with state taxpayers’ money in the company.
Now that the collapse is official, Delawareans are out too.
To be sure, state government officials are accountable for their own foolish decisions. They committed $21 million in public money to the California-based company, in exchange for a promise to take over a former General Motors manufacturing plant to build its second electric car model, the Atlantic. But rather than generate thousands of “green jobs,” instead the factory sat dormant while Gov. Jack Markell and the state’s economic development officials waited for Fisker to come and resurrect the plant to life again. It never happened, and eventually the state learned that if the company went bankrupt, the repayment of the funds it gave Fisker is subordinate to the rights of other lenders to get their money back, including the U.S. government.
Now that has happened. Perhaps hardest to stomach, as the Delaware Journal reported, is the fact that Delaware taxpayers were stuck paying the utility bills for the empty plant while Fisker – which bought the property – fizzled. The bankruptcy filing has ended the state’s obligation, and the state’s economic director told the newspaper the tally for the plant’s electricity and natural gas bills totaled $7.4 million – with a final month or two to be settled.
The other part of the Delaware deal was a $12.5 million loan from the state that would convert to a grant if Fisker hired about 2,500 employees within five years. The Journal said the state now hopes to recoup some of that as a debt in the bankruptcy process, unless the buyer of Fisker’s loan from DOE – Hong Kong-based Hybrid Technology LLC – decides to go forward with operations in the First State. According to bankruptcy documents reviewed by the newspaper, that seems highly unlikely, as does the recovery of much – if any – of state taxpayer money. In fact, if the plant is sold, the proceeds go to Hybrid Technology!
Moreover, the Journal reported almost a year ago that “U.S. Department of Energy officials pushed for contract provisions in the (Delaware) incentive agreement that ‘deeply subordinated’ the state contracts to the earlier loans arranged by the federal agency and (Silicon Valley Bank).” The newspaper cited memos it had obtained via public records requests as the source of its information.
This week the Journal quoted a Democrat Delaware state senator, Karen Peterson, about the original decision to offer the Fisker incentives.
“We had to take chances,” she said. “Some of these projects will pan out, and some will not.”
How do these people who are carefree and careless with other peoples’ money keep getting elected?
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.