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ECD ‘Due Diligence Bill’ Advances in Senate

Gov. Bill Haslam, who wants to expand taxpayer-funded grants to business, is also suggesting that extra information collected to pick the winners be kept hidden from public view.

“Due diligence” documents such as corporate financial statements, budgets, cash flow reports and ownership information would be reviewed by politicians and agency staff but would not be open under a measure, Senate Bill 2207, that advanced out of a Senate committee Tuesday on an 8-0 vote with little debate.

Haslam, a Republican, wants to pump $70 million into the Fast Track grant program which is used to entice companies like Amazon to locate in Tennessee in addition to tax incentives and tax credits. Under SB2207, the state would collect more information from applying businesses but share none of it with taxpayers.

“You have to recognize that as a private company, that they have a need to keep information private,” Sen. Bo Watson, a Hixson Republican and the bill’s co-prime sponsor, told TNReport.

Both Haslam and his predecessor, Democratic Gov. Phil Bredesen, have faced criticism for keeping lucrative state deals with corporations shrouded in secrecy. In some cases, it’s hard for the public to even know the final tally of incentives provided because of the privacy of tax information, though in the case of Volkswagen, the bill reached hundreds of millions of dollars for expenses like buying land and training employees to work for the car manufacturer.

The measure comes from a long list of bills Haslam wants to see passed this year, including one that would give the Department of Economic and Community Development more flexibility to offer Fast Track grants for high-impact relocations and expansions.

“Using hard dollars from the FastTrack program is more transparent than the tax incentive process, which is completely confidential under law,” Clint Brewer, an ECD spokesman, said via email. “The due diligence bill does not hide anything ECD is doing, it only protects private company finances.”

The “due diligence” business details, which lawmakers want to add as an exemption from open records laws, are additional bits of information Watson says will help the agency do its “homework.”

Under that legislation, the State Funding Board would be able to review insider details for Fast Track grants but the group — made up of the top five officers in the executive branch — will also be required to keep that information confidential.

ECD now decides which companies to invest in without that “due diligence” level of insider information. It now reviews and keeps proprietary information and any trade secrets close to the vest.

One government transparency advocate contends the documents Haslam is looking to keep out of the public eye are already protected under state law. But push comes to shove, the most important information that needs to be public are the final details of the arrangement: Who is getting how much money?

“Our concern was that language dealing with ownership could be construed to say that they didn’t have to say who they were giving grants to,” said Frank Gibson, director of the Tennessee Coalition for Open Government, who is not fighting the bill because the company name would still be public information on the final ECD contract, even if the owner’s name isn’t.

“Eventually people are able to find out who they are. Volkswagen LLC is still Volkswagen.”


Appliance Maker Electrolux Wins Tax Break

Cooking appliance maker Electrolux has been approved for a 15-year tax freeze – or a $38.7 million savings for the company – in exchange for building a manufacturing center in Memphis, various Memphis news outlets have reported.

The Commercial Appeal says that the tax break is part of a $137 million incentive package from the city, county and state:

The (Memphis-Shelby County Industrial Development Board) ratified a site location and development agreement under which the governments will assist Electrolux in developing a 700,000-square-foot factory in Frank C. Pidgeon Industrial Park in southwest Memphis.

The vote was the first in a fast-track approval process designed to meet Electrolux’s deadline for a done deal by Jan. 31. The City Council and County Commission will vote later on a pair of $20 million contributions to go along with a $97 million state grant.

The company has said it will build ranges, ovens and cooktops at the new plant, which will reportedly employ 1,240 people in jobs with an average salary of about $30,500.