MDA CFO: Safety net working in case of Twin Creeks
The Mississippi Development Authority’s chief financial officer said Friday afternoon that while every economic development project that receives state aid carries some risk, the system of “clawbacks” is working in the case of Twin Creeks Technologies.
Twin Creeks, the California-based solar panel manufacturer, received a $26 million loan from the state to open an 80,000 square-foot facility in Senatobia, but the company never got off the ground and was bought earlier this month by GT Advanced Technologies. GT does not plan to honor Twin Creeks’ agreement with the state.
The state loaned Twin Creeks $15 million to build the facility, and another $8 million to purchase equipment. The state now owns the building and its contents. Another $3 million in public money was used for site prep and for infrastructure upgrades.
“This shows that the clawbacks are working,” MDA CFO Kathy Ghelston told the Mississippi Business Journal in a phone interview. “We have the building, we have the equipment. We will get a settlement hopefully. I think that worst-case scenario, everything we’ve paid for, we have. Best-case scenario the state is made completely whole.”
The state sued Twin Creeks in Tate County Chancery Court in early November. Ghelston said she was optimistic the parties could reach a settlement that would allow the state to recoup its investment.
Ghelston said the first sign of trouble came Oct. 17, when Twin Creeks officials told MDA brass in a meeting that it was not going to be able to make the first loan payment to the state, which was due in December.
“At that point, we knew that the project was in real danger,” Ghelston said.
Gov. Haley Barbour convinced lawmakers late in the 2010 legislative session to pass a $50 million loan package that did not specify Twin Creeks by name, but spelled out the investment ($132 million) and job-creation benchmarks (500 over five years) that Twin Creeks claimed it would reach when the company announced in June 2010 that it was building a facility in Senatobia.
Ghelston said Twin Creeks had the technology to produce solar panels cheaper than their competitors in 2010. The problem, she said, arose when China flooded the U.S. market with solar panels that were cheaper.
“I don’t know if there is anything we could have done to prevent what happened from a market standpoint,” Ghelston said.
The MDA plans to market the building for a new prospect to sell or lease. Ghelston said the facility would be ideal for suppliers connected to the aerospace or automotive industry. She took exception to a Memphis-area commercial Realtor’s assertion to the Associated Press that the building is worth far less than the $15 million it cost to construct.
“I question how they would know that considering they’d never been in the building,” Ghelston said. “It’s not a warehouse. It’s a very technologically advanced building. It’s not a shell and that’s not the way it will be marketed. We believe there are real opportunities for that building.”