Sunshine Week (March 10-16) celebrates citizen participation in government while underscoring the necessity of government transparency. Each day this week, we’ll take you behind the scenes to show you how Watchdog reporters use publicly available documents and hard work to reveal how government really works. — Editors
By Sheena Dooley | Iowa Watchdog
When it came to giving away money to businesses, the Iowa Economic Development Authority had a record-breaking year in 2012, just a year after it was formed at Republican Gov. Terry Branstad’s request.
Branstad wanted to do away with the existing publicly run Iowa Department of Economic Development and replace it with a more nimble public-private partnership that could use multimillion-dollar packages to lure new companies to Iowa and get others to expand their operations in the state.
Despite the high stakes, the mainstream media failed to dig into the authority and its work. That led me to take a look.
After scouring databases and documents and talking to sources, I found a majority of the 11-member authority board headed companies that received loans and tax credits approved by the board. Also, 44 companies that received loans were in collections for failing to make good on the 1,388 jobs they promised. In total, they produced only 21 jobs, while leaving taxpayers on the hook to cover millions in bad loans. (See the stories here and here).
My first step was to background the agency, looking at the legislation that created it and its reporting requirements. Then I sought out experts in national and local think tanks that follow its work and the work of similar agencies in other states. From there, I went to the authority’s website to see what reports and information was posted.
I found a searchable 2011 annual report that listed companies that received taxpayer money, as well as those that had loans in collections and default. I was able to extract the data and put it into an Excel file and find trends – biggest awards, job figures and the amount owed to the state.
I took that information and ran each company through a searchable database on the Iowa Secretary of State’s website. It houses information on the status of companies operating in the state. I was able to see which businesses had folded and which were still operating. That information helped me find communities that were hurt the most by these companies’ failures, so I could talk to the people who were hardest hit.
My next step was finding out more about the authority’s board, which conducts background checks on companies and awards them with tax incentives and loans. I found the board members’ employers through the Iowa Economic Development Authority’s website. I then ran the employers through the annual reports to see if they had collected money. Through that I was able to document that a majority of the 11-member board worked for companies that received tax credits. The board was signing off on loans made to their own companies. That was my first story.
I then requested a database of awards in collections as of 2012, which was not provided on the website I also found the website lacked any information regarding the charge of the organization, reporting requirements, a history of the formation of the authority or even what kind of incentives they provided.
I used that database to look at the promised jobs, awarded incentives (tax credits and loans), outstanding loans and the status of the collections process. I found recipients produced only 21 of a promised 1,388. I also discovered that nearly $8 million in loans were in collections and had yet to be repaid.
I talked to the authority board president and spokeswoman for the agency about the vetting process for these companies and safeguards in place to protect the investment of taxpayer dollars. They talked about increased efforts to ensure money could be recouped if a company went belly up. However, federal court records showed that one of Egypt’s largest companies that received a $200 million incentive package last year to build a fertilizer plant in Iowa had a subsidiary that faced a lawsuit for defrauding U.S. taxpayers out of millions of dollars. The leader of the authority, apparently, was unaware of the lawsuit, despite these so-called rigorous vetting procedures.
The governor has congratulated himself for the millions of dollars the agency handed out last year to lure companies to Iowa. Of course, neither he nor the agency was willing to tell the public about the conflicts of interest on the board and failed loans. Without mining the data, these issues would have never come to light.
Sheena Dooley is bureau chief at Iowa Watchdog. Contact her at [email protected]
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