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Saturday, July 13, 2024 - 11:49 AM

INDEPENDENT CONSERVATIVE VOICE OF UPSTATE SOUTH CAROLINA

First Published in 1994

INDEPENDENT CONSERVATIVE VOICE OF
UPSTATE SOUTH CAROLINA

Hidden currents How SC officials kept electric vehicle project secret

On the night of Sunday, Feb. 26 this year, state and local government officials gathered in the 600 Executive Club at the Williams-Brice football stadium in Columbia for an event billed as a “Confidential Economic Development Dinner with Project Connect: Scout Motors.”

The meeting was so secret that dinner guests were required to sign nondisclosure agreements to attend, according to records obtained recently by The Nerve under the S.C. Freedom of Information Act.

The stated purpose of the event, led by Gov. Henry McMaster, was for “South Carolina leadership to host a dinner for Project Connect’s leaders,” which included Scott Keogh, Scout Motors' president and chief executive officer, as well as executives and a board member of the Volkswagen Group, records show. The German-based Volkswagen Group last year created Scout Motors as an independent company.

The confidential briefing materials, which included a dinner seating chart as part of nearly 1,000 emails provided to The Nerve by the town of Blythewood, noted that Volkswagen’s board of directors planned to make a final decision on March 3 about whether to locate Scout Motors’ first electric pickup truck and sport utility vehicle assembly plant in South Carolina or the other finalist state, believed then to be Mississippi.

Also included in the emails, which were released under the state's open-records law, was an incentives wish list that was provided in December by Scout Motors – identified in the document only as Project Connect – through a global real-estate services firm to local officials.

The Nerve’s review of the written “request for proposal” found that it served as the framework for the more than $1 billion in approved state and local incentives for Scout Motors.

State and local officials told The Nerve that it’s common for large companies seeking to locate or expand in South Carolina to present written requests to government agencies for taxpayer-backed incentives.

On the morning of March 3, Keogh informed McMaster in a phone call at the State House that an approximately 1,600-acre site off Interstate 77 at the town of Blythewood in Richland County had been selected for the Scout Motors plant, which would cover 1,100 acres, according to documents provided to The Nerve by the Governor’s Office under the state's open-records law.

“We’re inspired by South Carolina, its people, and your commitment to becoming the epicenter of electric vehicle innovation,” Keogh said in a follow-up confirmation letter that morning to McMaster, which was emailed to the governor’s chief of staff.

By noon that day, South Carolinians learned for the first time about the announced 4,000-job, $2 billion project. Production at the Blythewood plant is scheduled to begin at the end of 2026.

Records provided to The Nerve show that the project – which likely will cost taxpayers in South Carolina far more than the $1 billion dispersed in March to the state Department of Commerce – had been kept secret since at least October 2022.

The Nerve this month sent written questions to state and local officials about the incentives offered to Virginia-based Scout Motors, which Volkswagen launched in May 2022. Among other things, The Nerve wanted to know why local public hearings weren’t held before incentives were formally offered to allow citizens to express their views on the massive taxpayer-backed project.

More broadly, The Nerve sought answers as to why there was no statewide public discussion beforehand about the Republican McMaster's executive order in October 2022  – issued about two weeks before the first recorded meeting between state officials and Scout Motors representatives – committing the state to promote the electric vehicle industry.

McMaster; his chief of staff, Trey Walker; or governor spokesman Brandon Charochak didn’t respond to The Nerve's inquiry about the governor's Oct. 12, 2022, executive order.

In a March email that was included in records provided by the Governor’s Office, Walker told S.C. Commerce Secretary Harry Lightsey, who was appointed by McMaster, that the state was “not going to ‘crowd source’ decision making, like the drafting of legal documents or contracts,” related to the Scout Motors project.

“If the voters don’t like it,” Walker wrote, “there is a process for expressing their displeasure. Elections.”

Other records from the Governor’s Office show that the “Commerce team” held a private conference call about the project in January with S.C. House Speaker Murrell Smith, R-Sumter; and Sen. Harvey Peeler, R-Cherokee, the former Senate president and current Senate Finance Committee chairman. Two private meetings were held in February in the Governor’s Office involving the “Commerce team,” Smith and Peeler, according to a timeline.

Smith and Peeler didn’t respond to The Nerve’s recent written requests for comment. The Legislature with uncharacteristic blazing speed passed an amended resolution – an original co-sponsor of which was Smith – in one week in March after the official March 3 announcement by Scout Motors, authorizing approximately $1.3 billion in state surplus funds for the project.

As The Nerve revealed in June, the $1.3 billion works out to be about $240 for every man, woman and child in South Carolina.

Asked whether Commerce officials had any contact with Smith or Peeler about Scout Motors before the January conference call, agency spokeswoman Kelly Coakley in an email response this month didn't directly answer the question but said, “S.C. Commerce has had regular communications with legislative leaders over the last 18-24 months regarding significant economic development projects in the S.C. Commerce pipeline.”

Local officials defended the behind-closed-doors negotiations on the Scout Motors project.

Blythewood Town Administrator Carroll Williamson said in an email response this month to The Nerve that no public town hearings were held before the March 3 official announcement because “no official action by the Town was required before the public announcement.”

In a letter this month to The Nerve, Patrick Wright, Richland County’s chief attorney, said it would be “virtually impossible to get organizations to come to South Carolina if every item discussed or negotiated had to be released immediately.”

“In its foresight, the General Assembly allowed for discussions and negotiations to be private, so jobs and growth would not be stunted in our great state,” Wright said.

The S.C. Freedom of Information Act allows public bodies – though it isn’t required – to meet behind closed doors to discuss the proposed “location or expansion of industries or other businesses in the area served by the public body.” Government agencies under the FOIA can – though they aren’t required to do so – withhold incentives agreements until a public announcement is made about the project, or the agreement is “finalized,” whichever occurs later.

The Nerve recently asked Scout Motors CEO Keogh for specifics about how South Carolina’s incentives package was better than what might have been offered by Mississippi, believed by S.C. officials in February to be the other finalist state.

Keogh didn’t reply to the email inquiry. Mississippi officials also didn’t respond to a request for comment.

The Volkswagen Group last week reported third-quarter operating profits of about $5.3 billion in U.S. dollars. The company, headquartered in Wolfsburg, Germany, has 115 production plants worldwide with about 676,000 employees, according to the company’s website.

The South Carolina Policy Council – the parent organization of The Nerve – has called for greater transparency in the state incentives process.

Confidential wish list

Timelines provided to The Nerve by the Governor’s Office and town of Blythewood under the state’s open-records law show that Commerce received a “request for proposal” in July last year from JLL (Jones Lang LaSalle) Inc., a global real-estate services company headquartered in Chicago. The timelines noted, though, that the “lead went quiet.”

Following a meeting in Washington, D.C., on Oct.25, 2022, which involved a Scout Motors official and representatives from the Governor’s Office and Commerce, Commerce learned that the company was “interested in looking at South Carolina for a manufacturing EV assembly plant,” according to the timelines.

JLL representatives on Dec. 19 “reached out to S.C. Commerce and made a visit to South Carolina to tour the Blythewood site,” the timelines said. The “request for proposal” (RFP) from JLL on behalf of Scout Motors was sent Dec. 30 by the Central SC Alliance to Jeff Ruble, Richland County’s economic development director, who forwarded it that day to Williamson, Blythewood’s town administrator, according to emails provided by the town to The Nerve.

The Legislature collectively provides millions in annual funding to the Central SC Alliance and other regional economic development organizations, as The Nerve previously has reported. For the fiscal year that started July 1, the Central SC Alliance was appropriated $750,000, state budget records show.

Although it didn’t identify Scout Motors – only the code name “Project Connect” – the RFP from JLL laid out Scout Motors’ wish list, including:

  • A cash grant
  • Income, property and sales tax breaks, along with rebates of payroll taxes
  • Highway interchanges at “no cost to the company”
  • Multiple rail spurs at state expense
  • A truck staging area for about 300 trucks
  • A free, 40,000-square-foot employee training center
  • State-funded employee recruitment and training
  • A state-constructed, daycare facility to accommodate 400 children
  • State funding for a 40,000-square-foot temporary office building
  • A state commitment to “establish an electric vehicle charging station network of sites”
  • A state commitment to “not support the establishment of an automotive Original Equipment Manufacturer (OEM)” within 45 “road surface miles of the Mega Site,” and
  • A partnership with state and local government agencies to ensure compliance with the “German Supply Chain Due Diligence Act,” which, among other things, requires that the site was never the “subject of unlawful eviction or unlawful taking of land, forest and waters … the use of which secures the livelihood of a person.”

“It is the expectation that the Government receiving this request will assemble content experts and provide a detailed and thorough response to the questions included with this document,” according to the cover sheet from JLL, which listed a response due date of Jan. 6 this year.

The RFP estimated 4,800 jobs with “Phase 1” of the project, though it didn't give specifics. In comparison, the state incentives agreement with Scout Motors requires that a minimum of 4,000 “qualified” jobs be created over no longer than an initial eight-year “achievement period.”

And, as The Nerve revealed in June, Scout Motors itself would have to create at least 400 jobs – not 4,000 – allowing the difference to be made up by company “affiliates” and “counted suppliers.” In addition, as many as 400 employees could be “badge” workers, defined in the incentives agreement as “cafeteria, security, and janitorial maintenance personnel” employed by third parties.

In mandating an immediate appropriation of nearly $1.1 billion in state surplus funds for the project, the Legislature in March designated that the money be used for such things as land acquisition, a bridge to support the construction of a rail spur, road access and related improvements, soil stabilization, water and wastewater infrastructure, and an employee training center – items covered specifically or more broadly in the RFP.

The state incentives agreement also covered various RFP provisions, The Nerve’s latest review found, including, for example:

  • A new interchange
  • A minimum 40,000-square-foot, “state-of-the-art” training center, with the first $25 million of construction costs to be funded by Commerce
  • State-funded employee training and recruitment 
  • State job development credits and sales tax exemptions
  • County reimbursements for lease payments on a 40,000-square-foot temporary office building
  • County-dedicated land for future “childcare, health and wellness, and/or recreational uses, to support the workforce and local community,” and
  • A ban on state incentives being offered to “competitive vehicle production facilities” within 75 “road surface miles” of the Blythewood site.

The incentives agreement also mandates compliance with the German law dealing with environmental, human rights and property rights issues, which legal observers have said reflects the “environmental, social and governance” (ESG) movement. The Nerve has reported extensively about the ESG movement in South Carolina since last year.

Regarding environmental issues, the Scout Motors RFP sought state and local government approval to allow site preparation work to begin “in advance of receiving formal construction permits and the environmental impact assessment.” The company paused site work last month following concerns from environmental groups and state and federal agencies, The State newspaper reported.

In her Oct. 16 email response to The Nerve, Commerce spokeswoman Coakley declined to give specifics about the role of Commerce or any other government agencies played in responding to the RFP, citing confidentiality protections in the state’s open-records law regarding economic development projects.

But Coakley acknowledged that is “very common” for companies or their representatives to present RFPs to Commerce seeking incentives.

She also said JLL “regularly represents clients that evaluate whether to locate in South Carolina,” estimating that it “likely initiated” contact with Commerce on behalf of “more than 50 companies during the last five years.”

Asked how common it is for large companies seeking to locate or expand in Richland County to provide a written incentives wish list, such as the one submitted by JLL on behalf of Scout Motors, county attorney Wright replied in his Oct. 24 letter to The Nerve, “This sort of request occurs on almost every project.”

McMaster or staffers in his office did not respond to The Nerve’s written questions related to Scout Motors’ RFP.

Private, pricey meetings

On Jan. 9 this year, JLL representatives and Scout Motors’ technical staff visited the Blythewood site, according to timelines provided by the town of Blythewood and the Governor’s Office. A “Project Connect” itinerary produced by Richland County’s economic development office and included with town emails provided to The Nerve, show that at least 10 federal, state and local officials met privately with Scout’s technical staff that day at the University of South Carolina’s Alumni Center.

A dinner that night was attended by Commerce Secretary Lightsey, Richland County Council Chairman Overture Walker and council member Paul Livingston, according to the itinerary. More private meetings were held the following day.

On Jan. 31, S.C. House Speaker Smith and Senate Finance Committee Chairman Peeler held a conference call on the project with the “Commerce team,” the identities of whom weren’t identified, according to the Governor’s Office timeline. On Feb. 14 and Feb. 16, Smith and Peeler met privately at the Governor’s Office with the “Commerce team,” the timeline noted.

Neither Smith nor Peeler responded to written requests from The Nerve for comment. Commerce spokeswoman Coakley in her written response said while her agency has “no independent verification” of the Jan. 31 conference call with Smith and Peeler, “any call during this period was likely to brief legislative leaders about the status of the negotiations.”

The Scout Motors technical team made a second site visit from Feb. 1-4. On Feb. 2, McMaster hosted a dinner at the Governor’s Mansion with various guests, including Scout Motors CEO Keogh and other company leaders, Republican U.S. Sen. Lindsey Graham, Lightsey, Walker and Jeff Ruble, the county’s economic development director, according to the timeline from the Governor’s Office.

In an email response this month to The Nerve, McMaster spokesman Charochak said the total cost of the Feb. 2 dinner was $3,692, which was “paid for by the Governor’s Mansion.”

Scout Motors’ technical team made a third visit to the Blythewood site on Feb. 23 and 24, according to the timeline from the town of Blythewood.

For the “Confidential Economic Development Dinner” at Williams-Brice Stadium on Feb. 26, the S.C. Highway Patrol escorted Scout Motors and Volkswagen officials from the Charlotte, N.C., airport to the event, which included a cocktail reception, a stadium “light show,” an “SC Pitch” video, and remarks by McMaster and Lightsey, records show.

The text of Lightsey’s remarks was included with the emails provided to The Nerve by the town of Blythewood.

“We will be your partner – it will not be just VW that is making an investment in SC; we will be invested in your success,” Lightsey said. “That partnership endures over the course of decades for as long as you choose to be here. You will be on a first name basis with and have access to our top leadership – no matter who they might be. Look around you, the folks in this room represent our leadership.”

A seating chart attached to one of the emails listed 50 guests. The event program identified 31 attendees, divided among the following groups: “Project Connect Guest of Honor,” which included nine Scout or Volkswagen executives, and a Volkswagen board member; state legislators; university presidents; state agency heads; and county leaders.

Asked about the costs of the Feb. 26 dinner and earlier visits by Scout Motors’ staff, Coakley in her email response said Commerce spent a total of $117,605.22 toward costs associated with the dinner, a follow-up site visit and barbecue in Blythewood the next day, and the Jan. 9-10 technical meetings.

The costs included van rentals for “local and airport transportation for Scout Motors executives and consultants,” and for local transportation to the Blythewood site for “JLL personnel,” though she noted that Commerce did not pay for other travel costs for Scout executives or consultants.

Commerce spent a total of $44,946.22 on the Feb. 26 dinner event, Coakley said.

During the event, McMaster presented Keogh and Chris Condon, Scout Motors’ chief financial officer, with the governor’s “Honorary Sandlapper” award, according to the program. McMaster created the award last year for out-of-state residents to “express gratitude, to recognize an extraordinary accomplishment, to generate good will, or to demonstrate the State’s commitment or interest to an endeavor or project,” according to the Governor’s Office website.

Records show that the guest list included – besides McMaster, his wife and several staffers in his office, and Lightsey and other Commerce staff – state Department of Transportation Secretary Christy Hall, then-S.C. Department of Employment and Workforce Director Dan Ellzey, County Council Chairman Walker, Blythewood Mayor Bryan Franklin and Columbia Mayor Daniel Rickenmann.

The following university and college presidents also were on the attendees list: Michael Amiridis, University of South Carolina; James Clements, Clemson University; Roslyn Clark Artis, Benedict College; and Tim Hardee, S.C. Technical College System.

In addition, the listed guests included the following state lawmakers:

  • House Speaker Smith
  • Senate Finance Committee Chairman Peeler
  • Senate President Thomas Alexander, R-Oconee
  • Sen. Brad Hutto, D-Orangeburg, who is the Senate minority leader
  • Sen. Nikki Setzler, D-Lexington, who is the former Senate minority leader
  • Rep. Bruce Bannister, R-Greenville, who is the House Ways and Means Committee chairman
  • Rep. Tommy Pope, R-York, who is the House speaker pro tempore
  • Rep Todd Rutherford, D-Richland, who is the House minority leader, and
  • Rep. Leon Stavrinakis, D-Charleston.

As with Smith and Peeler, Alexander didn’t respond to The Nerve’s written requests for comment.

The dinner invitation letter to Mayor Franklin, which was included in a Feb. 21 email from Ruble, said McMaster and Commerce would “host Project Connect’s executive board members who are traveling to South Carolina for final conversations and to, again, tour the project site.”

The letter noted that dinner guests “must complete and return the attached non-disclosure agreement (NDA) at the same time.”

“We look forward to you being part of this historic South Carolina evening,” the letter concluded.

County secrecy agreement

In his letter this month to The Nerve, Richland County attorney Wright said the county entered into an NDA with Commerce on Jan. 5 this year, which “broadly bound the county to nondisclosure on all matters related to the project,” adding that the identity of Scout Motors was not disclosed at that time.

Wright responded to a list of questions initially sent by The Nerve to County Council Chairman Walker, council member Livingston and Ruble, the county's economic development director.

Wright said county officials first became aware in a "virtual meeting" last Dec. 5 with JLL real estate brokers, which he noted was arranged by Commerce, of Scout Motors’ interest in locating its plant in Richland County, though county officials didn’t know the company's identity then.

In an email this month to The Nerve, Blythewood Town Administrator Williamson said the town first learned of the company’s identity on Feb. 14 from the county’s economic development office, adding that town officials “generally understood that the project was to remain confidential until it was announced publicly.”

Williamson said the Blythewood Town Council held no public hearings or closed-door executive sessions on the project before the March 3 official announcement. As with Richland County, the Town Council subsequently approved the main project development agreement with Scout Motors, which also included the city of Columbia, Commerce and the state Coordinating Council for Economic Development, made up of the heads or board chairpersons of 11 state agencies involved with economic development.

County Council meeting minutes reviewed by The Nerve show that the project, identified initially only as Project Connect, was discussed in executive session, and that a proposed county fee-in-lieu-of-taxes (FILOT) and incentives agreement was given first-reading approval – by title only – at its Feb.7 regular meeting. The agreement was given second-reading approval at a Feb. 14 special-called meeting, though the minutes didn’t provide any details of the project.

Asked if the county publicly released any project details in February – even without revealing the identity of Scout Motors – Wright in his letter said the county was “bound” by the NDA until the March 3 official announcement. As for why no public hearings were held before March 3 given the large scale of the project, Wright said the company didn't make a final site selection until that day. 

“Until that time, (the) NDA was in effect,” Wright said.

County council meeting minutes show that the third reading of the county FILOT and incentives agreement, which identified Scout Motors, was approved at the regular March 21 meeting.

Besides receiving state benefits, Scout Motors will save millions in county property taxes over 40 years under the FILOT agreement, which will allow the industrial project site to be assessed at the lowest rate applied to owner-occupied homes, as The Nerve revealed in June, and sets a fixed millage rate.

Minus allowed credits, FILOT payments over the life of the county agreement are expected to total more than $1.2 billion, Wright said.

The collective cost of all other county incentives offered to Scout Motors, including land for a childcare and/or a wellness center, office lease-payment reimbursements, and renaming all roads within the industrial park site is projected at about $86 million, Wright said, noting those costs would be “sourced from the property tax payments Scout Motors makes to the County.”

While contending that the incentives negotiations had to be confidential, Wright said the taxpayer-backed benefits offered to Scout Motors will be worth it for the county and state. He pointed out that the company chose Richland County out of “75 potential sites across the country.”

“This will be a multibillion-dollar investment that will provide thousands of jobs for our citizens and be a catalyst for generational change in the area,” Wright said. “All of the hard work and dedication of the people to make this benefit to our wonderful state happen in such a short period of time is something to be applauded.”

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and X (formerly Twitter) @thenervesc.