This column appeared originally on Townhall Finance.
Crony capitalism Abound: anatomy of a taxpayer-guaranteed loan
By Amy Oliver Cooke
By now it’s obvious that the Solyndra scandal never should have happened. It’s not even a case of Monday morning quarterbacking. A number of people involved could see the disaster coming.
There is a larger principle here. Government should not use taxpayer money to socialize risk while privatizing profits. Examples such as Colorado-based Abound Solar, which received a $400 million loan guarantee, prove that crony capitalism simply rewards the well connected at taxpayer expense.
Abound Solar, according to its Web site, “produces next-generation thin-film cadmium telluride solar modules” and “is committed to reducing the cost of solar electricity to levels competitive with fossil fuels.”
It is the brainchild of former Colorado State University (CSU) Professor W.S. Sampath and two former students Kurt Barth and Al Enzenroth. It began as AVA Solar and then incorporated into Abound in 2007.
The Web site says it employs 350 people in three Colorado locations. Its Colorado manufacturing plant is located in Weld County, which granted Abound up to $100,000 per year for the next ten years in business property tax rebates. According to sources, the reason for the rebate was job creation intended to benefit Weld County residents. Yet when officials and interested parties ask how many of the 350 jobs have gone to Weld County residents, the solar company does not answer.
Currently Abound has a manufacturing capacity of 65 megawatts expanding to 850 megawatts – at some point. However, in 2010 it manufactured only 30 megawatts. One wonders, if Abound can produce more, why doesn’t it?
The Web site does say it is “growing,” and news reports claim the company plans to add anywhere from 850 to 1,000 employees thanks to a $400 million taxpayer-guaranteed loan Abound received in July 2010. The taxpayer cash is so it can expand its manufacturing capabilities to a facility in Tipton, Indiana. The Indiana Economic Development Corporation “extended up to $11.85 million in tax credits and $250,000 in training grants” as well.
Abound Solar further claims $260 million in private investments, part of which came from billionaire medical heiress Pat Stryker’s Bohemian Companies. This is where the story gets interesting.
Thanks to Independence Institute investigative reporter Todd Shepherd, we still have access to the Web page that lists Bohemian as an investor even though it does not appear on the company’s current Web site. The exact amount that Stryker has given is not public at this time. Also, CSU and the National Renewable Energy Laboratory (NREL) are listed as funding resources.
Total public and private monies equal $673,100,000. Assuming Abound can “create” some 1,350 jobs, that is $498,593 per job, of which $360,000 comes from public coffers.
However, Abound’s Indiana manufacturing facility is not scheduled to open until 2013 or 2014, which seems like a long time to wait to “create” jobs and turn a profit.
As a comparison, the Denver Bronco’s stadium cost $364 million to build of which 68 percent was publicly financed. With a yes vote from taxpayers in November 1998, construction began in August 1999 and was completed in September 2001.
This is not an endorsement of publicly funded professional sports facilities but rather an assumption that the Broncos management didn’t want a disruption in cash flow that could come from the inconvenience of a lengthy construction project.
I asked Abound if the company is still on track for a 2013 expansion and received no response. For most companies, time means money except in solar panels.
Forbes lists medical heiress and founder of Bohemian Companies/Foundation Pat Stryker as number 331 of its top “400 Richest People in America.” Worth $1.3 billion, the Fort Collins resident could single-handedly fund Abound Solar and still be well above the poverty line.
While some of her fortune has gone to Abound Solar, she also has chosen to donate more than $2.2 million (probably a low figure) to Democrats and their causes over the last several election cycles. Beneficiaries include Barack Obama, one-term Congresswoman and Fort Collins resident Betsy Markey, and Interior Secretary Ken Salazar when he successfully ran for U.S. Senate in Colorado.
Stryker is also a charter member of the notorious “gang of four” which changed the political landscape in Colorado through an organization called the Colorado Democracy Alliance (CoDA). Their success was titled the “Colorado Miracle” and is being replicated in other states.
Congresswoman Betsy Markey
With the help from Stryker in 2008, Markey beat incumbent republican Congresswoman Marilyn Musgrave in Colorado’s conservative 4th Congressional District. Abound Solar, Pat Stryker, and Colorado State University are all in the 4th CD. Between 2008 and 2010 election cycles, CSU employees also donated nearly $27,000 to Markey’s campaigns.
When the Waxman-Markey (named for Congressmen Henry Waxman and Ed Markey) cap and trade bill, which included a national renewable energy standard, came up for a vote, Congresswoman Markey danced around the issue for weeks because it wasn’t a popular bill in the 4th CD. Ultimately she voted “yes.”
In an interview on my radio show following the vote, Markey cited “green jobs” as one of her reasons. What she didn’t cite was her relationship to Pat Stryker and Abound Solar or the $2,000 campaign contribution she received from Henry Waxman the night before the vote.
Shortly after the vote, Abound Solar was part of a group that helped pay for TV ads thanking Markey for saying yes to Waxman’s bill. Todd Shepherd exposed the politically incestuous relationship and suggested:
[T]he connections between Representative Betsy Markey (D, CO-4), billionaire heiress Pat Stryker, and Abound Solar, appear to have all of the fingerprints of the kind of pay-to-play agenda that has left many Americans wondering how they got stuck with unpopular bills such as cap and trade, formally known as Waxman-Markey (named after a different Markey).
Markey also urged the approval of Abound’s $400 million taxpayer-guaranteed loan. The Denver Business Journal reported, “Abound applied for the loan guarantee more than a year ago, and Markey and other members of Colorado’s congressional delegation pushed for approval.”
Colorado State University
Located in Fort Collins, Colorado, CSU fancies itself the “green” university:
“Colorado State University is internationally known for its green initiatives and clean-energy research including alternative fuels, clean engines, photovoltaics, “smart” grid technology, wind engineering, water resources, and satellite-based atmospheric monitoring and tracking systems. It’s also known as a “green” university for its sustainability efforts on campus and abroad.
Abound Solar founders got their start at CSU as the university bragged in a 2007 press release.
Stryker also has a connection to CSU, having donated millions to the university. Furthermore, former CSU president Al Yates became Stryker’s mouthpiece and representative on CoDA. The Blueprint, a must-read book from Adam Schrager and Rob Witwer, details the Yates-Stryker relationship along with how democrats won control in Colorado.
Finally, CSU is home to the Center for the New Energy Economy headed by former Colorado Governor Bill Ritter, a renewable energy activist, and funded by private donations, a third of which came from Stryker’s Bohemian Foundation. Ritter now makes $300,000 to promote renewable energy throughout the country.
Governor Bill Ritter
With the help of CoDA and Pat Stryker, Democrat Denver District Attorney Bill Ritter won the 2006 Governor’s race. His one term legacy is the state’s New Energy Economy, 57 pieces of legislation to move the state from reliance on less costly on fossil fuels to renewables. Ritter is a true believer, an eco-evangelical, who signed laws mandating 30 percent renewable energy standards and fuel switching.
In April 2009, Governor Ritter hand-delivered two letters to Energy Secretary Steven Chu who was touring NREL. One letter urged the Department of Energy to grant a $300 million taxpayer-guaranteed loan to Abound Solar:
This request for $300 million would allow [Abound Solar] to triple production capacity within 12 months, develop a second manufacturing facility within 18 months and hire an additional 1,000 employees.
Abound received $400 million in July 2010. By all accounts, the solar panel company will not meet Ritter’s original promise of triple capacity in a year and a new facility within 18 months. Just won’t happen that fast.
When Ritter left office in January 2011, he became the Director of the Center for the New Energy Economy at CSU and one of the highest paid administrators on campus, thanks to Stryker.
President Barack Obama
President Obama received $11,700 directly from Stryker and Joseph Zimlich, who is a director at Abound Solar and is also associated with Stryker’s Bohemian Foundation. No doubt Obama benefitted as well from Stryker’s donations to other democrat causes including Campaign Money Watch and Democrat White House Victory Fund.
In Obama’s weekly radio address on July 3, 2010, he announced an acceleration of “the transition to a clean energy economy and doubling our use of renewable energy sources like wind and solar power – steps that have the potential to create whole new industries and hundreds of thousands of new jobs in America.”
He said that Abound Solar:
will manufacture advanced solar panels at two new plants, creating more than 2,000 construction jobs and 1,500 permanent jobs. A Colorado plant is already underway, and an Indiana plant will be built in what’s now an empty Chrysler factory. When fully operational, these plants will produce millions of state-of-the-art solar panels each year.
That radio address was the formal announcement that Abound Solar received a $400 million loan guarantee courtesy of U.S. taxpayers. Taxpayers get the risk while individuals get the profit.
To recap, Abound Solar receives support from Pat Stryker and Colorado State University both of which fund and promote Congresswoman Betsy Markey. She in turn votes yes on Cap and Trade and urges the federal government to approve the Abound loan.
Abound Solar then contributes to TV ads thanking Markey for her yes vote on Cap and Trade.
Governor Bill Ritter hand delivers letters to Energy Secretary Steven Chu urging the DOE to grant the loan guarantee. When he decides not to run for a second term, he is offered a job at CSU, which is funded in part by Pat Stryker.
President Barack Obama benefitted from Pat Stryker’s political donations. In July 2010, he announces a $400 million loan guarantee to Abound.
Can’t get a $400 million loan? Apparently you don’t know and fund the right people.