EDC breezed through wind company vetting

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How could this have happened?

How was it possible that less than a week after trumpeting the planned relocation of Rocky Wind Power to Colorado Springs, the Economic Development Corp. was now putting out a press release casting doubts about the company’s credibility?

After all, some of the area’s more prominent businessmen and women, joined by the mayor and the county commission chairman, had gathered to hear the news about the renewable energy company’s move here.

Didn’t the EDC know who it was dealing with? Hadn’t it checked on the company’s reputation, verified its claims?

In fact, it appears the EDC never dug very far, settling on a site visit, an Internet search and little else.

Mike Kazmierski, president and CEO of the EDC, said the organization’s job doesn’t require it to take a deep look at a company’s record.

He said the EDC’s job is primarily to promote the city and the region. “It’s to try to get more companies to move here, to create jobs.”

And so it’s not the EDC’s role, he said, to carefully vet potential corporate relocation prospects — even as it promises tax breaks and job-training incentives.

Kazmierski said he was “absolutely not” embarrassed by disclosures that the company’s product didn’t work as advertised, or that the Iowa Attorney General was investigating complaints against the company.

The EDC offered more than $300,000 in job-training and tax incentives to coax Rocky Wind to move to the Springs.

The company, headed by Steve Stultz, held a press conference with the EDC at the Antlers Hilton announcing its planned relocation. Mayor Lionel Rivera attended the Feb. 25 press conference, as did other business and political leaders. By the weekend, however, the rumors came rolling in — and the EDC was forced to backtrack.

The deal is now on hold, while the company “settles issues in Iowa,” Kazmierski said.

“But if they get those issues settled, and can prove independently that the product they sell works, we’d be happy to have them in Colorado Springs,” he said.

“Our incentives are based on their success once they arrive,” he said. “When we’re talking to a company we have to treat what they tell us with confidentiality, we can’t let it get out that the company might be moving.”

That fear — that the company might be wooed by other cities — keeps the EDC from actively investigating a company. It prevents it from calling local chambers of commerce and asking about the company. The EDC also doesn’t require financial statements or tax records from privately held companies.

“You can’t ask those questions on a first date,” Kazmierski said. “That would send them in the arms of other cities.”

But some people believe the questions should have been asked — including reviews of financial reports, and audits, as well as calls made to local officials in Iowa.

“The Better Business Bureau and the local chamber of commerce — those are easy calls,” said Tom Zwirlein, professor of finance at the University of Colorado at Colorado Springs and director of the Southern Colorado Economic Forum. “And if cash is actually changing hands — which it didn’t in this case — you’d probably want to do more.”

Because the EDC’s reputation is on the line, Zwirlein believes that looking at a company’s financials and checking the U.S. Patent Office would be reasonable precautionary steps for the group to take.

The Denver Economic Development Corp. does an extensive background check on companies it woos, said Jeff Romine, interim director of business and housing services. And its checks go beyond a simple Web search.

“Background work is obviously important, and it’s important not just to rely on the company’s word or how it looks,” he said. “There are things we have to do — due diligence — prior to confirming the company’s arrival here.”

Kazmierski said he believed the case with Rocky Wind Power was an “isolated incident,” but that the EDC would begin to vet smaller companies more closely in the future.

He said the group would ask more questions and review the companies’ performance — but only after a relationship is established.

“We did our due diligence,” he said. “We did an Internet search, we went to the physical location. There were people working, they had offices, they had vans with the company logo. We had every indication they are a viable business.”

8 Responses to EDC breezed through wind company vetting

  1. If I was a ‘con man’, I would be looking for easy marks like Kazmierski!

    “We did our due diligence,” he said. “We did an Internet search, we went to the physical location. There were people working, they had offices, they had vans with the company logo. We had every indication they are a viable business.”

    Rick Wehner
    March 5, 2010 at 8:06 am

  2. Let’s see … my last post about the EDC was nixed – gee I thought they were not doing a very good job, how dare I!

    The wrong people are in Management/Marketing positions @ the EDC. Lon, PLEASE quit cutting these people slack because you see them all the time. EDC is not doing its job & what they are doing is not performed at a very efficient level.

    RJF
    March 5, 2010 at 11:34 am

  3. I’m sure glad I mentioned the EDC the other day in my diatribe about the discussion of a strong mayor or not.

    Eugene Finkelstein
    March 5, 2010 at 5:58 pm

  4. It truly looks like that there has never been created a viable Process within the EDC to do the Job in a professional manner. Sorry to the private investors sponsoring and not able to hold anybody accountable!

    Peter
    March 5, 2010 at 6:17 pm

  5. Rick, RJF and others that have a concern about EDC, I would like to offer you the opportunity to disucss with me your suggestions on how to do things better face to face rather then through anonymous blog postings. You may not realize that the EDC is a small non-profit that is down 30% in staff and the only organization working day in and day out to attract and retain quality jobs for the 22,000 currently unemployed in our community – we could certainly use your help. .
    As for the wind company, none of the informaiton on the internet or at the state attorney general’s office was available when we started to work with them last summer, check the dates. Additionally, a full background check recently run and a Dunn and Bradstrreet report showed no issues, leins or tax liability etc. The complaints we got after the company’s press conference came from customers and empoloyees, many that did not want to go on record, so in the best interest of our community we chose to pass that on rather than let our neighbors and friends learn what we were told the hard way. We will drill deeper on these small companies as they approach a decision in the future but will continue to do what ever we can to attract and retain the quality jobs our community desperately needs now more than ever. Please contact me at 471-8183 for a meeting. Mike Kazmierski

    Mike Kazmierski
    March 5, 2010 at 6:46 pm

  6. I’ve worked with Mike on 3 community projects over the past 4 years. He means what he says. Give him a call to arrange a meeting to discuss your concerns, as well as your suggestions. Val Snider

    Val Snider
    March 6, 2010 at 8:16 am

  7. When discount incentives are offered to any business wishing to relocate to the Springs, it is just common sense and proper due diligence that the EDC conduct thorough background checks. Calls to the BBB in a business’ current or former home town should be compulsory. There are just too many fast talking scam artists out there ready to take advantage of good intentions; these kinds of businesses (and their representatives) are simply not going to voluntarily disclose their problems. The EDC needs to make it their SOP to do proper vetting before they make their announcements to the media.

    I seriously doubt that the EDC is so backlogged that they cannot find a way to incorporate background checks into their program. This is NOT a slam against the EDC. Rather, it’s a reality of doing business that it must recognize as necessary.

    Liam
    March 6, 2010 at 12:12 pm

  8. Mike and Val

    The ‘con man’ statement, on the surface, may appear harsh related to a minor failure except when placed in perspective relative to the three year run of ‘public relations’ misadventures which continue to erode public trust. Public ie: money source!

    IE: We have had the ‘vetting’problem starting with the Marshall episode, speculation of some perceived possible involvement of the mayor followed by the refusal of Jan Doran to initially see the need to recuse herself from the city independent ethics commission even though she is tied to both the Clark and Rivera campaigns. The same Jan Doran recently tied to the line that goes from her, to Dave Munger (possible mayoral candidate) to CONO to Dan May to city officials to business owner and landlord and IRS!

    We have had the ‘vetting’ problem with the ‘secret’meetings during which the initial three members of the Memorial Study Commission, the first of which the mayor asked to withdraw and the second of which felt the need to withdraw voluntarily.

    It is almost when some of the deals come up on the horizon, everybody acts like a kid on his first date – trying so hard to impress he steps all over himself.

    When you continue the line through Sallie Clark threatening to sell off Bear Creek Park for $14M, Amy Lathen declaring global warming is a hoax at the same time ‘advising’ the White House on foreign trade at a time when Diane Sawyers film crew just left on a story about streetlights turned off, dead grass parks and undrivable streets, it is may be time to rethink how the public is approached!

    There are approx 700,000 in the county. Around 385,000 registered to vote. In a biggie like a Presidential election, 74,000 is the most who turn out and 65% of those are going for the NO column when it comes to increasing revenues. If my math is correct, it takes 51% to pass any measure and it does not look as if that will happen before 2016 at the earliest the way things are going/

    It is all about MONEY.

    All the promotions and run-ups for the past two tax-hike measures have been targeted at that 15% of the 35% who are already primed to pass a tax hike. Nothing is being done to get out in the field and reach the other 65%.

    The 15% we see all the time at the Carnegie Room at the Library for city meetings, we see them at the Antlers luncheons and press conferences – we see them at Blue Star for dinner and at the Fine Arts Center. Rubbed elbows with a small herd of this group at a $65.00 a head wine tasting affair at the Broadmoor yesterday.

    But, these are not the 65% always saying NO. No Sir. This 65% is at Walmart hoping to have enough to buy toothpaste and toilet paper with enough left over to buy gas to get it all home. Many do not even know that the city government is different from county government – but — they are Voting! Voting No on taxes. We need some YESSES.

    And they are fearful of placing any further funding into the hands responsible for all the recent bad press.

    Right now we have: The Project 6035 Action ready to unfold. We have the Norwood sponsored Biggs/Kofford study on city govt format. We have The Bartolin City Committee to do a cost analysis on city finances. We have DreamCity2020 wanting people to stick flowers in their hair and hold hand skipping up the hill singing Kumbaya.

    We have the Lorne Kramer Center for Creative Leadership group. We have Leadership Pikes Peak. We have the Downtown Partnership, the EDC, The Chamber going off to Dubais.

    The question I keep hearing is: “- – – – with all these ‘groups’ – why is something not happening?” All these leaders yet no direction and we are still looking at a $50m deficit for next year.

    My suggestion would be that without press attention or fanfare (in case of failure) that each of the above ‘groups’ select one member to attend a coordination meeting to see that all the groups looking for solutions pool their resources and give the public something they can believe:

    One credible spokesperson with one message with one direction.

    And get this message out in the field with two man teams equipped with projectors and powerpoints. Devote 18 months to hitting every single possible venue: Senior Centers (if they remain open), American Legion, Veterans of Foreign Wars, Officers Clubs, Officer’s Wives Clubs, Enlisted Clubs. American Society of Hair Dressers. The list could consume pages!

    The folks at the Craftwood and Blue Star have heard the message. You are way over the heads of the other 65%. Those whose yes vote are going to be required and the ones we will pay hell to get.

    The message needs to have direction and be presented with the kind of intensity Eisenhower devoted to D-Day cause this is a war. A war for money. A war for new business.

    Will be happy to discuss some ideas if you feel there is merit in the above

    rickesys@gmail.com or 719.217.2924

    Rick Wehner
    March 6, 2010 at 9:53 pm