Senators seek economic development records
Thursday, October 6, 2011
Missouri senators began a probe Wednesday into state economic development projects that have run into trouble by announcing they will seek documents from the Department of Economic Development.
The lawmakers’ inquiry comes after recent attention focused on an unfulfilled project for an artificial sweetener plant in the central Missouri city of Moberly.
“At any level of government, I think we need to get down to the bottom of what went wrong,” said Sen. Jim Lembke, R-St. Louis, who is the chairman of the Senate panel handling the investigation.
Mamtek U.S. Inc. planned to employ several hundred people at an artificial sweetener plant in Moberly. The city issued $39 million in industrial development bonds for the project, the state offered more than $17 million worth of incentives — though no state funds went to the company — and $8 million was to come from private investors. However, the plant still is under construction, the company has laid off its employees and Mamtek missed a bond payment.
Senators said Wednesday they will request documents from the state Department of Economic Development related to the Mamtek project and for another troubled development in Kirksville. The Senate Governmental Accountability Committee did not take public testimony.
A spokesman for the Economic Development Department said the agency will continue to provide information and documents as they were requested.
The Columbia Daily Tribune has reported extensively about the Mamtek project in Moberly. Besides lawmakers, the attorney general’s office and the Randolph County prosecutor are investigating to determine if criminal or civil laws were violated. In addition, Moberly City Manager Andy Morris has said the city provided documents requested by the Securities and Exchange Commission and UMB Bank, the trustee for the bonds, indicated in a recent filing that it expected to receive a subpoena.
Lembke said there was not a specific timeline for the panel to complete its review and that it could be end up being coordinated with the attorney general’s probe or independent from that.
“I think the Legislature has a big role in this,” Lembke said.
Sen. Joe Keaveny, one of the Democrats on the Republican-led committee, said he feared a drawn-out investigation could have a “chilling effect” for other job creation efforts.
“The longer we drag this out, the bigger question that there will be,” said Keaveny, of St. Louis.
Sen. Kurt Schaefer, whose district includes Moberly, was added to the committee responsible for the inquiry. Schaefer said residents in Moberly already have been harmed by the failed project and that there is potential for other Missouri communities to feel some affects too.
Last month, Standard & Poor’s downgraded the rating for the project’s bonds and a series of 2008 bonds from Moberly. The rating agency also lowered the city’s issuer credit rating from “A” to “B,” which means it could pay more for future borrowing.
Schaefer, R-Columbia, said he wants the legislative investigation to review what happened in Moberly, determine if there is a way for the project to be salvaged and ensure other communities do not face a similar situation.
Questions about the Mamtek project have fueled doubts for some lawmakers during a special legislative session focused on new incentives for international cargo. The committee’s first hearing came on the same afternoon that a separate House panel approved a new economic development package for the special legislative session.