Tuesday, July 19, 2011

Adventures in Subsidizing: Salinas Electric-Car Maker Goes Under

Like many other cities and counties in California, the Monterey County town of Salinas has dreams of reinventing itself as a hub for the green-technology industry. Regrettably, Salinas has, like these other governments, tried to use public funds to subsidize this dream into existence. At worst, the state's eagerness to embrace renewable energy has made it vulnerable to con artists and the politically connected; at best, it's been a huge disappointment thus far. Well, this month you can add Salinas to the list of towns with nothing to show for its "investments."

KSBW reports that Green Vehicles, a start-up firm manufacturing the obscenely ugly Triac 2.0, is closing its doors. Back in 2009, the electric car maker thrilled Salinas officials by agreeing to move down the road from San Jose in return for a $300,000 community development grant. Green Vehicles moved into an 80,000 square foot facility, and promised to create 70 new jobs and pay as much as $700,000 a year in taxes to the city. As the company struggled to find investors, the city ponied up another $240,000, and the California Energy Commission contributed $187,000. All that money now appears to be gone, though economic development officials with the city hope to recoup their second loan to the company.

So, let's recap. Salinas gave over half a million dollars to a small company with an unproven technology and no track record of attracting private capital, because it wanted to transform itself into an "electric valley." Yep, hard to see the risks of this plan ahead of time.

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