Opinion: Daily Journal

Hagans: It’s Worse Than We Thought

From a report filed early Saturday by WRAL-TV news, we have confirmation that a cluster of businesses owned by Democratic U.S. Sen. Kay Hagan’s husband and other family members collected even more subsidies from taxpayers than initially reported. While Carolina Journal’s Don Carrington has highlighted a stimulus grant totaling $250,644 that was paid to JDC Manufacturing, a real estate business co-owned by Hagan’s husband, Chip, and his brothers John and David, WRAL confirmed that JDC received an additional $137,000 in energy tax credits from the project. (Some of the relevant documents are here.)

(Politico.com noted the tax credits in its initial report on the story, but those credits aren’t listed in the public documents CJ has reviewed. WRAL said it had seen various internal company documents and proprietary records, perhaps including verification of the tax credits.)

Add a second federal renewable energy grant of $50,000 from the U.S. Department of Agriculture to the ledger, and we learn that Hagan businesses soaked taxpayers for nearly $450,000 to pay for energy upgrades installed at JDC’s 300,000-square-foot building in Reidsville.

It’s worse than we thought.

It’s important to put the story into perspective, because the Hagan camp relentlessly deflects and spins, portraying these taxpayer handouts passed around from one family-owned company to another as nothing improper. And — this is the most laughable contention — that the Hagan family somehow received no benefit from nearly a half-million bucks in taxpayer largess.

Please.

JDC, a company co-owned by the three Hagan brothers, applied for and received $250,644 in stimulus dollars to install more efficient lighting and furnaces and place solar panels at its building. JDC leases the building to Plastic Revolutions, a recycling company also owned by … Hagan family members. Once the project was completed, Plastic Revolutions said it expected to save $100,000 in energy costs annually. That’s a benefit it would not have received without the upgrades, which were made possible by federal taxpayers.

Moreover, JDC wound up with a more valuable asset: a modern, energy-efficient manufacturing facility that would bring a higher price if it sold, and a more inviting location for potential new tenants. And, of course, JDC received $137,000 in tax credits — again resulting from the stimulus grant.

The Hagan family could have financed the project by investing its own money, seeking outside investors, going into debt, or draining its own bank accounts. While some of those other sources might have played a role in this project, the Hagans also went, hat in hand, to the government, and we paid for it.

Would JDC have pursued the project without the handouts? The Hagans haven’t said so, at least not to us. But it matters little now. Our money has been spent.

Another point of contention revolves around the role of Kay and Chip’s son, Tilden, in yet a third (or is it a fourth?) Hagan family company — Solardyne/Green State Power. Solardyne, a solar installation company, filed its incorporation papers with state government the same week JDC applied for the stimulus grant. (Chip changed the name of the company to Green State Power in 2012. Maybe the Hagans thought the name Solardyne would remind potential clients of Solyndra. Who knows?)

Team Hagan claims that Tilden had minimal involvement in the project. Maybe Chip forgot to tell his business partner: Tilden. The Green State Power website features the Plastic Revolutions project, saying “the smooth installation and quick production of power prompted them to install an additional 58kW [solar] array in a similar location.” The additional array may have been paid for with the USDA grant. We’re still checking on that.

Moreover, in November and December 2010, Tilden filed invoices as an hourly laborer for Circuitmakers Inc., a subcontractor that worked on the installation.

About the same time, Tilden also was behaving very much like a project manager. He ordered nearly $160,000 of equipment for the project from a vendor in Vermont, using his Chapel Hill home as the billing address for Solardyne (Documents, pages 4 and 6). On Nov. 18, 2010, he was invoiced for more than $135,000. On Dec. 7, 2010, he was invoiced for nearly $23,000. Both invoices indicated the equipment was for the JDC project, and listed the recipient as John Hagan, Solardyne, at the JDC facility in Reidsville.

Finally, there are some parts of the story that didn’t add up, based on the public records that were made available to us. As you can see in Amendment 2 (on document pages 1 and 2), the budget revision to the grant, in December 2010, JDC reduced its budget for the project from $438,627 to $324,108 — a savings of $114,519. JDC did not reduce any of the stimulus funding it had requested, and it wasn’t required to do so.

The revised budget was approved on two dates — Jan. 20, 2011, and Aug. 31, 2011. A separate letter dated May 2, listing “grantee representatives” John Hagan and Tilden Hagan, said the project was complete (see page 6). JDC got all $250,644.

JDC now claims the project wound up costing more, and provided internal documents to WRAL and The News & Observer that allegedly add up to more than $500,000. The company didn’t give us those documents, and it’s not clear if they were in the state files that were available to us. We’re still asking about that, and will follow up as we learn more.

And, don’t forget, we’re still asking to review the file for the USDA grant.

But here’s where we stand: Companies owned by family members of Kay Hagan got more than $400,000 in taxpayer funding to finance upgrades at facilities and for businesses they own — not just the $300,000 in stimulus and USDA grants we initially found. The grants used tax dollars to offset the costs of improvements in the physical plant, and provide tax breaks for one of the companies, and reduce the energy bills of another. Kay Hagan’s husband and son created a solar company and allowed it to handle some of the work. And we’re still digging for additional documentation.

Team Hagan has chosen to hire Marc Elias, a high-powered political lawyer and Caitlin Legacki, a crisis-management specialist and former Hagan press secretary, to argue otherwise.

And ask yourself: How can you not benefit from free money?

Rick Henderson (@deregulator) is managing editor of Carolina Journal.