Our Views: Council gives SHINE a pass

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Sunday, June 18, 2017

We called on the Janesville City Council last week to scrutinize SHINE Medical Technologies' request for more public money as part of a tax increment financing deal, but members largely played cheerleaders for the project during Monday's meeting.

They sidestepped the issue of whether SHINE's proposal is even financially feasible given what we know about investors' tepid support and the project's escalating cost. A SHINE official attended Monday's meeting, but only Council President Doug Marklein asked him a question, and not a probing one. Marklein and other members seem largely unfazed by SHINE's continued delays and missed benchmarks.

Economic Development Director Gale Price now says the project's construction price tag has reached about $180 million, though SHINE says the number is “significantly lower.” The construction cost started out at $100 million. Regardless of the construction amount, there's millions of additional dollars in permitting and regulatory costs.

Meanwhile, The Gazette has learned SHINE spent $250,000 over the past year on lobbying at the federal level, and some of those efforts appear directed at securing more federal dollars for SHINE's Janesville project.

At Monday's meeting, members seemed more interested in justifying their votes to expand the SHINE deal than they did in asking difficult questions. Some council members acted as if it's none of their business whether SHINE can raise the funds to build a project whose start date has been pushed out from 2016 to 2020.

It's only somewhat reassuring the city council set a 2022 deadline to break ground on the project (a 2020 deadline if SHINE has its investors and permits lined up) because the council could easily push back that deadline at SHINE's request.

Thus far, taxpayers haven't lost money on the project. About $1 million has gone toward equipping the site with utilities, which presumably any business could use at some point. The real danger, which Price acknowledged at Monday's meeting, is at the moment SHINE begins construction and receives the TIF incentives.

“It's inherent that the economic development team and our outside counsel make sure that they are fully funded and ready to go. As long as they get through that construction and start operations, it pans out,” Price explained. “If they don't because I don't do something right or we miss something in the agreement or whatever that is, then we have a problem. So I'm telling you that's going to be on my back.”

Well, he's not quite right. If this project fails or somehow punishes taxpayers, that's on the entire city council. This is no longer a situation in which council members can claim in retrospect they didn't know any better. Lots of hints are being dropped that the SHINE project isn't playing out as originally advertised.

Of course, it's possible SHINE could prove the skeptics wrong. But from what we gather, SHINE has raised only a fraction of what it needs to break ground nearly five years after it struck its TIF deal with the city.

That the city has structured the TIF deal to minimize taxpayer losses should not alone justify the city's indefinite commitment. The council must consider, too, opportunity cost. In pouring its time and energy into a delayed project, the city could be missing other opportunities to develop the SHINE site—prime real estate adjacent to an airport on the city's south side.

The council's failure to press SHINE on the details of its fundraising plans means the council in the future will have no real idea whether SHINE is any closer to reaching its financing goals. This council is simply taking SHINE at its word, and that's not enough.

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