Stimulus story reveals much
Published October 15, 2014
By John Hood
by John Hood, John Locke Foundation and NC SPIN panelist, October 15, 2014.
In the homestretch of the Senate race between incumbent Kay Hagan and challenger Thom Tillis — the most expensive race in the country this year — the disclosure that Hagan’s family profited from the 2009 stimulus package she voted for has drawn a great deal of attention.
Well, let me clarify that statement. It has drawn lots of attention from out-of-state media outlets and from Carolina Journal, the newspaper published by my organization. It has thus far drawn scant attention from the North Carolina press corps.
To be charitable, perhaps state reporters see it as merely part of the back-and-forth between two partisans locked in a competitive contest. That would be unfortunate, because the Hagan stimulus story is far more than that. It is an illustration of how easy it is for noble-sounding government initiatives to devolve into crass raids on the public treasury.
One provision of the 2009 stimulus law created a grant program for alternative-energy projects. The program was administered by the North Carolina Department of Commerce’s Energy Office during the administration of former Gov. Beverly Perdue, a Democrat and former lieutenant governor who presided over the states senate when Kay Hagan was a member.
In 2010, a company called JDC Manufacturing applied to the Energy Office for a $250,644 grant to replace light fixtures and gas furnaces and install rooftop solar panels at a 300,000-square-foot building it owned in Reidsville. The total cost of the project, JDC stated, would be $438,627, of which 57 percent would come from the taxpayers and the rest, $187,983, from JDC itself.
The company was owned by Kay Hagan’s husband Chip and two of his brothers. In the application, JDC claimed that the building’s infrastructure was outdated and that current energy costs had “prevented the tenant from growing their business as desired due to the energy operating costs.” Who was this cost-constrained tenant of the JDC building? A company also owned by Hagan family members called Plastic Revolutions, as Carolina Journal’s Don Carrington has reported. Chip Hagan serves on its board.
The double-dealing didn’t end there. In its application, JDC stated that its initial estimate of the cost of installing solar panels on the building were “based on quotes or commercially available prices” but that “the final project design and installation work will undergo an open bid once awardees are notified” about the status of the grant.
On the same week that JDC submitted the application, however, Chip Hagan and his son Tilden founded yet another company, Solardyne, later renamed Green State Power. Somehow, this inexperienced company managed to win the contract to install the solar panels on JDC’s building, no doubt through an “open bid.” Interestingly, JDC had included its conflict-of-interest policy in its application for public funding. “Employees are to avoid any conflict of interest, even the appearance of a conflict of interest,” the policy stated. “The appearance of a conflict of interest can cause embarrassment to the company, jeopardizing the credibility of the company. Any conflict of interest, potential conflict of interest, or the appearance of a conflict of interest should be reported to your supervisor immediately.”
Perhaps the conflict of interest was worth assuming, however, because it turned out that the JDC building retrofit cost $114,519 less than originally estimated. Unfortunately, the savings didn’t accrue to the taxpayers, who were still compelled to fork out the full $250,644. Instead, JDC spent only $73,464 of its pledged $187,983 investment.
The story doesn't end there, believe it or not. A year later, JDC secured another government grant, this one for $50,000 from the Department of Agriculture, to put another solar array on the same building. Once again, Hagan-owned Green State Power got the contract.
The next time you have solar panels installed on your property at partial public expense, you may want to hire yourself, too. If there’s a cost overrun, you get paid more for the project. If there’s a cost savings, you get to pay less for the project.
Is the Hagan stimulus story the most important issue in the Senate race? Not to my mind, although it is certainly a relevant one. Its true import is to show how quickly government grant programs can become convoluted and self-serving. The state can and should make effective use of private vendors or grantees to supply legitimate public services. Retrofitting private buildings for private use isn’t one of them.
October 15, 2014 at 9:53 am
Norm Kelly says:
There is one reason that the potential misdeeds of the Hagan family are important.
There is absolutely NO CONNECTION between Gov Pat and the Duke coal ash pond spill. Nor the existence of the coal ash ponds. Even the N&D, which rarely reports news, has stated that the coal ash fiasco has been in existence and causing problems 'for decades'. I quote 'for decades' because that's the way the N&D has reported the problem with leaking coal ash ponds. So, if we can trust the N&D this one time, which the facts appear to support (for a change!), we need to look at who controlled what during those decades. A simple search of the algore-internet will show that the Socialist Party of the US (formerly the demoncrat party) controlled Raleigh during at least 90% of the time in question. So, no correlation between the Duke coal ash pond issue and the current control of Raleigh by the Republican party. Yet, the libs continue to claim the problem belongs to the current administration. Why? Cuz they can get away with it. Cuz the majority of people they want to influence fall into 1 or 2 categories. First, the group that is already leaning towards voting for socialist candidates. This issue is hoped to nail the coffin for this group. Second, low-information voters. This group can be swayed. Even if the information is provided, the libs know that this group will NOT do the research nor find the news sources with truth to determine if they are being lied to. Low-information types may be leaning toward the socialist party anyway; they are after all low-information types. But the socialists are preaching to the choir, they hope.
The important part of the Hagan family issue is ignored by the majority of media types because it shines a bad light on their ally/allies. They MIGHT reveal something about this potential conflict in about 2 years, when it won't matter. And they will try to claim that this is new information their crack investigative team(s) dug up. But because K is an ally, the media types, especially the N&D, will NOT bother with this. They believe this is a straw man setup by the Republicans with no merit. It is after all the law that this type of action be taken, and the Hagan family was only doing what the law required. So long as the media is distracted with connecting the Republicans with the coal-ash issue as constructed by their allies in the demon party, most media types will ignore the conflict of interest perpetrated by the Hagan family. That's the thing. So long as the demons don't consider it a problem, neither do media type. Duke coal ash is a REAL problem that MUST be dealt with. The Hagan family misdeeds are simply a scheme dreamed up by conservatives to support their ally, Tillis. Demons simply do NOT scam the system they set up. It's important to remember that it's the Republicans that are trying to screw people. And media types appear to accept this direction from their allies. I wouldn't call them allies if they just appeared slightly more independent and fair minded. Perhaps Fox News gets as big an audience as it does because it's not just a tag line for them. They only appear to be allies of the Republicans & conservatives because the rest of the media types are so committed to the Socialist Party of the US.
There's not a smidgeon of evidence that there is a problem here. There is no 'there' there. These are not the droids you are looking for. Move on.
