The saga of embattled solar panel company SoloPower reaches a new low, as Portland taxpayers are now on the hook to cover a $10 Million debt that the company has defaulted on.
A company once pursued for its promise of green jobs will cost the City of Portland $5 million after defaulting on a $10 million state loan.
Portland paid millions to lure SoloPower Systems to the city but will now have to pay much of the $8.1 million left on a state loan the company failed to pay. The Portland Business Journal reported Wednesday that the company defaulted on a $10 million loan from the Oregon Department of Energy. It stopped making payments in September. Portland made two payments of $119,000 toward the loan in April and May, said Oregon Department of Energy spokeswoman Rachel Wray.
Portland will now have to make $119,000 monthly payments toward the company’s debt through October 2020 because former Mayor Sam Adams agreed in 2011 to guarantee $5 million of the state loan. The money will come from Portland’s Bureau of Transportation, but Prosper Portland, formerly the Portland Development Commission, will spend $5 million in urban renewal money on a parking garage the bureau is building in the River District, said Prosper Portland spokesman Shawn Uhlman.
The company opened the solar panel plant in North Portland after receiving subsidies, tax breaks, and publicly financed loans that totaled well over $200 Million; $197 Million from the feds, $20 Million from the state of Oregon, $20 Million by way of a state “business energy tax credit”, and nearly $18 Million in tax abatement. In fact, SoloPower wasn’t even supposed to tap into the $197 Million federal money until they “ramp into the second, third, and fourth production lines.”
Instead, SoloPower blew through all of the money in less than a year. They opened in September of 2012, and by June of 2013, they were shutting down the plant. 29 people were laid off, after promising to hire upwards of 500 people, at an average salary of $51,000, anticipating they would reach full capacity by 2015.
The city promised to back the loan from the state, thanks to then Mayor Sam Adams.
The city of Portland also will agree to guarantee $5 million of the $20 million loan between the state and SoloPower. Because the proposed location is not in an urban renewal district, the city wants to tap parking meter revenue collected by the Bureau of Transportation to pay the guarantee, should the loan default. The PDC, in turn, would use urban renewal money to backstop transportation projects in urban renewal districts, if necessary.
This isn’t the first loan that the company has defaulted on. Even before they shuttered the doors, they missed a $10 Million loan repayment.
Like Solyndra, SoloPower’s product is based on a growing but still nascent technology known as thin film, which offers advantages in terms of cost, weight and flexibility. But neither company has a track record of successful mass production or sales. And they are competing in a market where prices are dropping like a knife.State business recruiters acknowledge that Oregon’s solar ambitions have them navigating the dicey terrain between proof of concept and mass production known as “the valley of death.”
But they insist the state isn’t stretching to make risky deals fly.
Public officials say SoloPower will bring 481 jobs in the next five years and contend there’s little risk of the company becoming another Solyndra. They’ve scrubbed its financial projections and paid consultants to study its technology. None of that vetting is public, but state and city officials echo SoloPower’s basic elevator pitch: Their flexible, lightweight solar panels are uniquely suited to rooftops that can’t take the weight of traditional panels. Its manufacturing is simple, cheap and scalable. And its management team is highly experienced at getting factories up and running.
Under the worst case scenario, the state will have a first lien on equipment it finances, according to the Department of Energy’s loan manager, Paul Zollner. The city, meanwhile, isn’t providing upfront cash. But it’s on the hook to guarantee $5 million of the state loan. It’s also providing property tax abatements worth $17.9 million.
Late to the SoloPower party, the PDC didn’t conduct detailed, independent analysis of the company or its technology. It copied the state’s homework and cribbed from a technology analysis paid for by SoloPower. Despite the rush, PDC officials said their deal was “very deliberate” and Portland Chief Financial Officer Ken Rust made the determination it is a “very low risk” for the city.
So as the homeless population continues to grow, and people are literally starving and freezing to death on the streets, it’s nice to know that Portland’s leaders prioritize using public money to give to their well-connected friends in high places, rather than letting people keep their money or, at the very least, spending public dollars on actually helping the public.
This post originally appeared on The Gateway Pundit