Tax Dollars Blowing in the Wind of Crony Capitalism

We recently posted an excellent article by former Congressman Ernest Istook highlighting the battle we face in the upcoming lame duck session of Congress over a proposed $18 billion extension of the wind-energy production tax credit being fueled by crony capitalism.

For the latest example of wind blown tax dollars and crony capitalism in Ohio we only need to look at the shores of Lake Erie and the Lake Erie Energy Development Corporation (LEEDCo).

LEEDCo was founded as a non-profit economic development corporation in 2009 as a result of a public/private funded feasibility study for the Great Lakes Energy Development Task Force to put wind turbines in Lake Erie. Members of LEEDCo include the Cleveland Foundation, NorTech, the City of Cleveland, Cuyahoga, Lake, Lorain and Ashtabula counties.

The projected costs for the 6-9 wind turbines alone is approximately $92 - $100 million. This does not include any overruns of construction costs, the cost of installing the transmission lines to get the power from the turbines to the shore, reworking or updating of the existing power grid to accommodate the wind power and/or the estimated yearly maintenance costs of $5 million as outlined in the feasibility study.

After several failed bills in the U.S. Senate to promote funding for wind energy (Here & Here) by Senator Sherrod Brown (D-OH), and after his continued badgering, LEEDCo received an initial $4 million grant in 2012 to fund their Project Ice Breaker. Project Ice Breaker is for research & design engineering on the bases needed for the proposed wind turbines in Lake Erie.

This grant is through the first stage of a $180 million U.S. Dept of Energy sponsored offshore wind power competition.  Along with this, three other N/E Ohio companies with ties to LEEDCo received grants;

• Freshwater Wind LLC (LEEDCo's private developer) $500,000
• Nautica Windpower LLC (A LEEDCo Partner) $500,000
• Case Western Reserve (A LEEDCo Partner) $540,000

Failing to qualify for the full $47 million available for each project in the second round of the grant awards (tax dollar giveaways), LEEDCo was only awarded $2.8 million by the D.O.E. to complete engineering and other related studies on Project Ice Breaker.

But this setback is not about to stop LEEDCo. Lorry Wagner, president of LEEDCo, acknowledges the setback but reaffirms their dedication to forcing this project through.

In 2012 the left-leaning Brent Larkin of the Plain Dealer was surprisingly critical of the wind turbines in Lake Erie and again questioned the cost & sensibility of the turbine project....

There are 534,899 households in Cuyahoga County. Installing five or six wind turbines seven miles out would generate enough power to light a maximum of 6,100 of those households.

The cost is pegged at about $150 million. In Cleveland dollars, that means overruns would push the final figure past the $200 million mark. That doesn’t include annual maintenance costs of about $5 million.

Because businesses and manufacturers always use between 30 percent and 40 percent of the power produced, the wind turbine pilot project would produce about 0.5 percent of the county’s required electricity.

Nevertheless, windmill supporters haven’t given up the chase. Even as business leaders who know how to read a bottom line have quietly backed away, proponents – led by the Cleveland Foundation – have refused to follow the lead of other Great Lakes cities and scale back their grandiose plans. (Emphasis Added)

And this brings us to the wind-blown bile of crony capitalism we see in many of these wind turbine projects.

When speaking of crony capitalism in Cuyahoga County and/or Ohio, somewhere along the line you will find some sort of non-profit group being controlled or influenced by the cabal of corporate charlatan's at The Cleveland Foundation & the Greater Cleveland Partnership (GCP).

Taking a look at the original Great Lakes Energy Task Force and LEEDCo the non-profit economic development corporation specially created for wind turbine project, you will see it is nothing more than a shell game of incestuous relationships fleecing the public with our own tax dollars.

The Cleveland Foundation and Nortech, a non-profit front group for the GCP, both served on the Great Lakes Energy Task Force. The task force in turn hired JW Great Lakes Wind LLC to create a wind feasibility study for turbines in Lake Erie.  

In creating this wind feasibility study for the Task Force, JW Great Lakes Wind LLC had the "help" of the Great Lakes Wind Energy Center, a front group for the Cleveland Foundation pushing for turbines in Lake Erie. 

From this wind feasibility study for the Task Force, paid for partially with public money & created with the help of groups tied to the Task Force, the non-profit Lake Erie Energy Development Corp. (LEEDCo) was created by the Task Force to oversee the push for wind turbines in Lake Erie.  

With a quick click here, you will see many of the Board members of the Task Force that created LEEDCo, are now Board members for LEEDCo.

The non-profit LEEDCo hired Bechtel Development Company, Inc. (Bechtel), Cavallo Great Lakes Ohio Wind, LLC (Cavallo) and Great Lakes Wind Energy, LLC (GLWEnergy) to work on the project.

Bechtel, Cavallo and GLWEnergy have formed Great Lakes Ohio Wind, LLC (GLOW), the company that will own and develop the project.

With only the tip of the corporate cronyism pointed out in just this one "wind" project in Ohio, do you really need more reasons as to why Speaker Boehner & the upcoming lame duck Congress should reject extending the $18 billion Wind Energy Tax Production Credit?
 

Lacking Vision - Cleveland-Cuyahoga County Port Authority Tax Increase Should Be Rejected!

The unchecked bureaucratic behemoth -- The Cleveland-Cuyahoga County Port Authority, will again be asking voters in Cuyahoga County for more money this upcoming election.

With the Cuyahoga County area already losing more jobs than any U.S. Metro area over the last 4 months and several other tax increases on the ballot this year, one has to ask -- where do these so call business & community leaders supporting Issue 82 think people in this area will get the money to pay for this latest tax increase?

While a quick look at the community leaders, business leaders and elected officials supporting Issue 82, should be enough in itself to vote against Issue 82, the below Op/Ed will highlight even more reasons why the Cleveland-Cuyahoga County Port Authority's continued lack of vision should preclude them from getting any more of your tax dollars....

From Cleveland.com --

The Cleveland Department of Port Control began operation in 1825 during construction of the Ohio and Erie Canal, when the population of the city was in the hundreds. Once opened, the canal and the port became central to the expansion of trade in the region, with the port serving 2,400 ships in 1838.

With the advent of railroads, use of the canal began to decline during the Civil War, and by the end of the century much of the system was abandoned. With goods being shipped by rail across the country, demand for the port lessened as well. 

Although the opening of the St. Lawrence Seaway enabled international vessels to sail to Great Lakes destinations, the volume of traffic has not met the hopes of the port operators. In 2012, Cleveland hosted only 52 international vessels, an average of one per week.

Today, tonnage through the Port of Cleveland continues to decline. What is overwhelmingly shipped through the city's maritime facilities are commodities: iron ore, scrap, sand, gravel, etc. The outlook for significant growth is dim at best, and even the strategic plan for the Port Authority states:

"The Port's existing cargo markets are mature, niche markets that have been flat or declining for many years and opportunities to expand base cargo operations are limited."

There are two underutilized locations that make up the Port Authority, the Bulk Terminal located on Whiskey Island and the port itself at the mouth of the Cuyahoga River. According to the Port Authority, in 2012 the Bulk Terminal operated at 55 percent of capacity on 45 acres, but it has an important economic function in supplying the ArcelorMittal plant.

In contrast, the warehouses and storage areas located on prime real estate at the mouth of the Cuyahoga add little economic value to Greater Cleveland. In 2012, the port itself was at 5 percent of capacity on almost 90 acres. Over the past 13 years, the port itself operated at 10 percent of capacity.

Trying to put a happy face on things, the port's Strategic Action Plan mysteriously conjures up the potential for additional opportunities for niche business, such as steel slab imports from Canada, maybe some feeder services from Northern Europe, containerized products for the polymers industry, and even wind turbines. How about a ferry to a tiny Canadian port two hours from Toronto or Niagara Falls?

Transportation of finished products and components do not travel via Great Lakes maritime carriers. Aircraft, railroads and trucks manage it all quite nicely. Bulk commodities are the niches that need to be transported via ships. But that market is not growing and there is no feasible analysis that projects it to grow and create the jobs that Greater Cleveland needs.

In reviewing the makeup of the Port Authority's board, one wonders where the maritime experts are. Lawyers and politicians are needed, but not necessarily running the city's port operations. Connections clearly seem to matter more than expertise. For a county still dealing with the aftermath of decades of corruption, we can do better.

The port has otherwise made itself useful by providing loans for development activities unrelated to shipping and storage, but one searches in vain for a rationale why that function should be held by a maritime authority that sits uneasily between the city and county governments. 

There is a whimsical overlay in the Strategic Action Plan that shows the Baltimore Inner Harbor as it would look if it were plunked down east of the football stadium. Aside from the fact that a portion of it would be located in the waters of Lake Erie and another would overlay part of Burke Lakefront Airport, it leaves both the port and the Bulk Terminal in place without addressing the true development needs of our lakefront.

Lacking a plan that can identify growing market opportunities, the vision to place our port operations in proper focus for the next few decades is not to be found in anything the Port Authority publishes. 

We need strong leadership with bold vision to not only right-size our port operations, but also to develop and begin implementation of a waterfront plan that would maximize the precious resource that is our lakefront. We can be a model of how to retain maritime operations while providing a world-class lakefront that shows the best of Midwestern ingenuity and hospitality. We don't need to renew the port levy to support a 1950's vision. We need a new vision that creates jobs by putting our prime lakefront property to its highest and best use.

Jim Trutko, formerly the manager of market research for The Plain Dealer, runs Trutko & Associates, a local market research and consulting firm.