Catalyst Fund giveaways force local companies to subsidize their competitors

One recipient being investigated by Treasury Department for possible fraud

The Governor’s Office of Economic Development (GOED) this past week approved funding for several companies planning to move to Las Vegas and set up shop. The bribe money to attract these businesses comes from Nevada’s $10 million Catalyst Fund.

The largest handout went to SolarCity — a company based in San Mateo, Calif., with operations in a dozen states, presumably without a prerequisite bribe. The company installs solar panels at homes, businesses and government agencies. It is being given funding totaling $1.2 million over three years and says it plans “to initially create more than 100 jobs.”

“The Catalyst fund is critically important to our efforts to create jobs and grow Nevada’s economy, which has been my highest priority since day one,” Gov. Brian Sandoval gushed about the giveaway to SolarCity and the other firms, apparently oblivious to the fact Las Vegas already has about two dozen or so companies in the business of installing solar panels — companies that have been paying taxes for decades without being handed a grubstake of $1.2 million.

One wonders whether the employees of, say, Bombard Electric — a family owned and operated business that has been in Las Vegas since 1982, paying taxes and business license fees — are as enthusiastic as the governor.

Maybe Bombard and Sibo and Suntrek and Heliocol West and Solar Unlimited and Green Power Systems, to name but a few, should all apply to the governor for a grubstake, too. But they are already here, doing business and paying taxes and competing against each other. What’s the point in helping those suckers who have been playing by the rules?

Speaking of playing by the rules, it turns out there is something about the new recipient of $1.2 million in Nevada tax dollars that was not in any of the press releases or news media accounts here: SolarCity is being investigated by the Treasury Department for possible fraud in obtaining millions of dollars worth of grants from the Department of Energy for installing solar panels.

According to the Western Center for Journalism, SolarCity has received more
than $66 million from that program, which pays an upfront cash grant amounting to about 30 percent of the cost of a solar installation. That’s in addition to a $344 million loan guarantee from the Energy Department.

The prices SolarCity and other companies were listing for their work may have been
inflated, the Washington Post reports. “While firms can install solar panels for roughly $5 per watt of energy and make a comfortable profit, some firms were charging as much as $7 and $8 per watt.” 

The awarding of the Catalyst Fund money to SolarCity came two weeks after the company reported its first earnings since becoming a public company, according to the San Jose Mercury-News. “The San Mateo-based solar installer posted a fourth-quarter loss of $3.04 million, or $1.10 cents a share … Analysts had expected a loss of 49 cents a share, and SolarCity’s shares were down more than 9 percent in after-hours trading.”

The company’s founder is Elon Musk, a big contributor to Democratic campaigns in general and to President Obama and Sen. Harry Reid in particular.

According to a Vegas Inc. story, GOED board member Secretary of State Ross Miller fawned, “You had me at Elon Musk.”

Musk’s electronic car company Tesla received a federal loan guarantee for $465 million. According to the San Francisco Business Times, Tesla lost $89.9 million in the fourth quarter of 2012, bringing the company’s total amount lost or written off to more than $1 billion. Musk’s SpaceX gets $1 billion in NASA funding.

“Musk symbolizes the Obama entrepreneur — someone who relies on government to make their riches as opposed to the marketplace,” the Western Center for Journalism observed. Add Nevada to the list of government market manipulators.

And it is all perfectly legal, according to Attorney General Catherine Cortez Masto, whose opinion on the Catalyst Fund states: “The Nevada Constitution does not prohibit the State from disbursing Catalyst Fund money to regional development authorities that by definition must be local governments, or prohibit local governments from disbursing Catalyst Fund money to companies.”

She determined this even though Article 8 of the Nevada Constitution reads: “The State shall not donate or loan money, or its credit, subscribe to or be, interested in the Stock of any company, association, or corporation …” And: “No county, city, town, or other municipal corporation shall become a stockholder in any joint stock company, corporation or association whatever, or loan its credit in aid of any such company …”

Never let the law of the land stand in the way of all those jobs.

A two-person crew can install a typical home solar panel set-up in less than a day, and the number of jobs created by the operation and maintenance of those panels is none.

Lest the state and local government agencies start salivating over all the taxes that will be generated by all those solar panel installations, state law exempts solar panels from sales and property taxes.

Thomas Mitchell is a longtime Nevadan and Fellow at the Nevada Policy Research Institute. You may share your views with him by emailing thomasmnv@yahoo.com. Read additional musings on his blog at http://4thst8.wordpress.com.