Venture capitalist John Correnti
January 5, 2013 8:49:55 PM
On the surface, Lowndes County, Amory, Ontario, Ohio, and Stanly County, N.C., don't seem to have much in common.
That they all have a desire for economic development and job creation certainly doesn't make them unique. What they do have in common, however, are their frustrating experiences with venture capitalist John Correnti.
All four communities have succumbed to empty promises by Correnti of large investments and hundreds of high-wage jobs. In all four cases, local officials working with state leaders had secured millions of dollars of infrastructure improvements and tax incentives. And then when it came Correnti's time to ante up, all four ended up alone at the altar like a jilted bride.
But can you really fault local officials for what in retrospect seems like naiveté? Correnti, after all, has worked considerable magic in these parts before. The former Nucor executive was catalyst and chief rainmaker for the $650 million Severstal steel mill completed in 2007.
With the stock market crash the following year and the ongoing economic recession, the playing field has changed. Add to that a rash of green-energy failures, notably Solyndra, a California solar panel manufacturer, and Correnti is finding it a very different playing field.
Correnti's failure to provide earnest money by the Dec. 31, 2012, deadline for Silicor, a two-phase development that was to have created 971 jobs between a silicon metals production plant and a silicon purification plant, appears to have left Lowndes County holding the bag on almost a quarter of a million dollars of money spent on the project plus some missed opportunities from other industries looking to locate in the county. This according to Golden Triangle Development Link CEO Joe Max Higgins.
The ill-fated project was championed by Columbus state senator Terry Brown, a Correnti ally. The Mississippi Legislature approved $75.5 million in incentives for Calisolar (which became Silicor) during a Sept. 1, 2011, special session. When a phase-one construction start-up deadline of Sept. 2, 2012, was agreed upon, Higgins was told by company officials the funding for the project, including financing from a German bank, was in hand and ready to go.
"On July 15 of last year, (District 1 Supervisor and board president) Harry Sanders and I were told all of the finances were in order and the project was fully-funded," Higgins said. "We were relieved because we didn't want another Project Green or rebar plant or frankly, an experience like we had with Severstal.
"Correnti and his team from Global Principal Partners went grossly over budget on Severstal and came to us asking for more money. What was supposed to have been a $650 million project ended up costing closer to $1 billion."
Correnti and GPP Senior Managing Director David Stickler did not respond to requests for comments on Thursday and Friday.
The failed steel rebar plant, known as Project Green, which Correnti and GPP attempted to bring to Lowndes County but could not get properly funded, left a bad taste in Higgins' mouth, making him leery of Correnti's latest scheme from the beginning.
"Terry Brown approached me in Jackson and said Correnti has a deal (Correnti) wants to bring to Columbus and he said the money was there," Higgins said. "We've read this book before, it just has a different cover. These were the same folks that were involved with Severstal and the failed rebar plant they ended up shopping all over the state. We worked with them and worked with them on that project and they couldn't get the funding together.
"We told them to put up $50,000 in earnest money and it would have given them two years to get the project together. But they yelled and screamed and said they would take it elsewhere.
This is the same thing that happened when we told them in November (with the Silicor project) they needed to put up some earnest money ($150,000) and meet some milestones. David Stickler screamed like we had asked for his first-born child and told us he would take the silicon plant elsewhere."
According to Higgins, Project Green did look for greener pastures, going first to Noxubee County, then Amory.
the river and rebar
"The largest single investment ever" is how a Northeast Mississippi Daily Journal business reporter described in 2008 the announcement of a $175 million project bound for Amory. With the promise of an 80,000-square-foot facility along the Tenn-Tom River and the creation of 200 jobs paying $60-$70,000 annually, there was cause for celebration in northern Monroe County.
Steel Development Co. and Correnti, its CEO, were ready for business in Amory. But after a celebratory groundbreaking, the project fizzled like a bottle rocket with a bad fuse.
"It was touted as a done deal," former Monroe Journal Editor Chris Wilson said. "(Former Gov. Haley Barbour) came to town with some of the people associated with the project. But my sources close to the project said they never could get their funding together."
City of Amory and Monroe County officials worked hard to make the project a reality. Amory applied for a $495,000 grant to bring rail spur to the 80-acre site, deeded to Steel Development Co. by the city. Project Green was even listed as one of the top steel mill projects in the U.S. by Trade & Industry Development Magazine.
"A large number of people worked hard on this issue for years," Sen. Hob Bryan, D-Amory, said. "There were numerous issues that arose as the project developed, and I think all of them were resolved in a manner agreeable to the industry. Gov. Haley Barbour was a big help on this project. Not only did the Mississippi Development Authority go to extraordinary lengths to help, but Gov. Barbour personally worked to get this plant, and all of us owe him thanks for doing that. The city, the board of supervisors, and everyone worked together to support the project."
"We were pretty hopeful about the project until last year," Amory Ward 3 Alderman Tony Poss said. "A lot of this had to do with the market crashing. We were very optimistic it was going to happen."
Bryan said that although losing the project was disappointing, it's sometimes the nature of the beast.
"That's the story of economic development -- long hours, days, weeks, months, years, dealing with matters as they arise, with the chance that things won't work out," Bryan said.
Without fanfare, the industrial property was deeded back to the city during a city board meeting in June. Poss said Amory is moving on.
"You want to be as optimistic as possible because it was going to bring a great deal of jobs and losing it was very disappointing," Poss said. "But we are going to re-market the site and stay positive that something will come down the line."
Who needs GM?
Ontario, Ohio, had been hit hard in recent years, especially when General Motors closed a plant leaving more than 1,000 people unemployed. But good fortune and good times were headed back to the city of about 6,200 people as in the form of a new silicon plant, which was to bring more than 1,000 high-paying jobs with it. California-based Calisolar was headed to the Buckeye State to locate at the site of the old GM plant with $275 million in approved federalized loans along with it, leaving many to believe happy days were here again.
Then Calisolar appointed a new board chairman -- John Correnti.
"John Correnti never wanted to come to Ohio," Ontario Mayor Larry Collins said. "The board over-rode him on this once, but he got his wishes. It was (Correnti) who caused this deal to collapse. We offered him everything, including some of the best electrical rates in Ohio. But we knew he was very good friends with Haley Barbour and we heard he was going to try to bring the project to Mississippi in July 2011."
Collins said Calisolar's decision to not locate to Ontario at the last minute was gut-wrenching.
"This was a great disappointment," Collins said. "First of all, we never thought GM would leave us. Then we had Calisolar leave at the last minute. Our town was so hopeful and then this was pulled out from underneath them at the last minute. But we're moving forward. In retrospect, it's the general consensus that we dodged a bullet by not being in business with John Correnti and Calisolar."
Stanly County, N.C.: Back and forth
Even as Correnti was making plans with Ontario and then Lowndes County, Correnti and company were also wooing Stanly County, N.C., promising even more jobs and bigger payrolls.
Clean Tech and Silicon Bar, LLC was in negotiations to locate in Badin, N. C., with a $300 million investment and the creation of 450 new jobs. Officials with the project and members of the Stanly County Board of Commissioners publicly bickered back and forth over the project until it was announced in December 2011 that the deal was off the table.
In an article published April 27, 2012, in the Stanly News and Press, Stickler was quoted as saying the jobs were heading to Lowndes County.
"We have selected a site in Mississippi directly across the street from the $880 million project John Correnti and my firm financed and built several years ago," Stickler said. "We have not yet broken ground on the site as we are just now finalizing the last details of our economic incentive package with the state of Mississippi."
Stickler's comment was made almost eight months after the MDA approved the $75.5 incentive package for Calisolar and Lowndes County.
"At the end of our negotiations, (Clean Tech) decided to walk away," Stanly County Commissioners Chairman Gene McIntyre said. "Even after they announced they were coming to Mississippi, they came back and tried to negotiate with us."
Higgins is a man who doesn't like to lose, applying a sports metaphor to his duties as the region's top economic developer. Although he doesn't take the loss of the Silicor project personally, he said he will work harder for the area.
"John Correnti was batting 1,000 (after) Severstal," Higgins said. "But the rebar plant brought the average down to .500. The rumored steel mill in West Point drops that to .250 and now there's the silicon plant. The people of Lowndes County deserve better and I'm going to try to bring them better."
Higgins said a "show me the money" approach may work best in the future.
"I think it's up to the MDA to make sure these things are properly funded from the get-go," he said. "These things should be in order by the time they hit our office."
Bryan also said some incentive reform may be needed.
"When I was chair of the finance committee, we never undertook any economic development project which put taxpayer money at risk," Bryan said. "We used public funds to build infrastructure, which was owned by the public. We gave tax breaks and other incentives, but we put ourselves in the position of guaranteeing a company's performance. In recent years, we've moved away from that in some instances, and I think it's a mistake to do that, except in extraordinary circumstances."
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