Tag: Brad Lofton

Final AvCraft Chapter?

The Horry County Transportation Committee voted earlier this week to write off $113,687 in unpaid rent from AvCraft Technical Services that the county will never collect anyway.

AvCraft filed for bankruptcy in March 2015 after an 11 year history of failing to make good on its promises to Horry County.

This should be the final chapter in the saga of local and state politicians, especially Horry County Council, looking at AvCraft through rose colored glasses in the name of economic development.

Since arriving to much hoopla in 2004, AvCraft was consistent in only two areas – it consistently failed to meet job goal promises and it consistently requested and received rent reductions on the three hangars at Myrtle Beach International it rented from the Horry County Department of Airports.

After eight years of failing to meet goals, Horry County Council tried one last time in January 2012 to help AvCraft save itself with the recommendation of the Myrtle Beach Regional Economic Development Corporation.

One of the main items in that agreement was a $1.25 million reduction in rent on the county hangars over a five year period. This came after three earlier rent reductions, agreed to by the county, failed to make AvCraft profitable.

The following four comments made after the 2012 incentive package was approved demonstrate how far from reality politicians and their economic development arms exist from reality:

“I am thankful for the company’s commitment to Horry County and proud of our economic development team for this terrific announcement.” – Rep. Tom Rice.

“It’s another great day in South Carolina, and we are going to celebrate AvCraft’s decision to expand and create 150 new jobs in Horry County.” – Gov. Nikki Haley.

“AvCraft is a tremendous asset to our community, and this project is just the beginning for aviation-related businesses locating and expanding in the Myrtle Beach region.” – Doug Wendel, MBREDC board chairman at the time.

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Complaints Filed in AvCraft Bankruptcy

Bankruptcy trustee Michelle Vieira filed adversary proceeding complaints against directors of AvCraft Technical Services recently in bankruptcy court.

Vieira, the Plaintiff, is the court appointed bankruptcy trustee for KNH Aviation Services Inc. d/b/a AvCraft Technical Services in the matter of the Chapter 7 bankruptcy filing of the company, Case #15-01641-dd in U.S. Bankruptcy Court District of South Carolina.

The causes of action include breach of fiduciary duties by the defendants for capitalization of the debtor, sale and lease agreements with Sun Air, removal of equipment and self dealing.

The defendants are former owners and directors of KNH Aviation Services Inc. d/b/a AvCraft Technical Services, Mike Hill, Donald Kamenz, Derek Nice and Carol Drew along with the owner of Sun Air and former AvCraft director Jesper Lundberg and Sun Air of Scandinavia A/S.

KNH Aviation Services was put together by Mike Hill. He originated the company and got Kamenz, Nice and Drew to come in as investors to buy AvCraft Support Services in a foreclosure sale from AvCraft’s principal debtor, Maple Financial of Toronto.

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MBREDC Smart Economic Planning or Insanity

On July 7, 2015, the Horry County Council approved another 2-year $2.6 million contract with the MBREDC (Myrtle Beach Regional Economic Development Corporation.)

This action is probably very confusing for anyone who has followed the progress of the MBREDC over the years.

Have Horry County taxpayers received a proper return on the $1.3 million given annually to the MBRDC during the past 5 years? Certainly any prudent investor would ask about an expected return on investment before committing funds to a corporation, whether a quasi-public/private or solely private one. There is only one measure of success when it comes to investing your (the taxpayers) money and that is the return on investment. In this case the return would be measured in number of residents who got jobs per tax dollars spent.

Unfortunately (for my peace of mind and confidence in our County Council) I did some basic math. The MBREDC receives $1.3 million annually from Horry County taxpayers. The former MBREDC President Brad Lofton had announced 1,500 jobs were created by the MBREDC in Horry County during his 3 years running the agency. Oops – but it appears that half of those jobs have not been filled. Let’s do some easy math; 750 jobs at $1.3M X 3 years of taxpayer money = $5,200 per job. Oops, forgot to subtract the money owed to the county by the current occupant of the Cool Springs Business Park (paid for by taxpayer $). PTR owes $73,000 in back rent as of June. Is it now logical to add $73,000 / 3 = $24,333 to the cost per job? Well probably not, but you get the drift.

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Budgets - Cuts, Spending and You

Horry County Council Budget Failures

The latest development at MBREDC indicates how casually Horry County Council approached raising taxes this year.

Jim Moore, President and CEO of the Myrtle Beach Regional Economic Development Corporation, resigned from that agency Monday.

Moore came to MBREDC only six months ago after the three plus year dismal reign of Brad Lofton. During the four year period represented by these two, MBREDC allegedly reorganized itself with a new approach to attracting jobs to Horry County.

Neither Moore nor Lofton was any more successful in economic development recruitment than the former iteration of MBREDC or Partners Economic Development Corporation before it.

The difference is the current four year MBREDC 2.0 has been receiving serious funding from Horry County Council, between $1.3 million to $1.8 million per year of taxpayer dollars, with little to nothing to show for it.

Think of AvCraft, Project Blue and PTR Industries as the poster children of MBREDC efforts.

Over the past five county budget cycles, MBREDC has received at least $7.5 million from Horry County Council to fund its few employees and other operational costs.

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A Christmas Gift for AvCraft?

It’s two weeks til Christmas and Horry County Council is in the gift giving mood to AvCraft again.

This is an act that plays in December almost as regularly as “A Christmas Story.”

And every time it plays it provides another lesson about everything that is wrong with the concept of giving incentives to companies in the name of economic development.

What it really boils down to is corporate welfare.

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Last Chance for AvCraft

Nearly three years after it signed its latest economic development incentive package with Horry County, AvCraft Technical Services has one last chance to demonstrate its promises are more than hot air.

Sources within county government said AvCraft is currently three months behind in rent payments to the county. Additionally, according to those sources, AvCraft has not begun to make improvements to the fire suppression system and other improvements at the hangars it rents as agreed to in the latest incentive package.

Horry County Council voted Tuesday night to send AvCraft a “Right to Cure” notice that will specify how many days the company has to bring its rent arrearage up to current status or eviction proceedings could begin.

This wouldn’t be so bad if it wasn’t so predictable.

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Project Blue Dies – RIP

Myrtle Beach Regional Economic Development Corporation president Brad Lofton announced to county council Tuesday night that the agency was discontinuing work on the infamous Project Blue.

This is the same project that Lofton called “Horry County’s Boeing” several months ago.

When the project was first announced back in June, council was notified it was on a fast track with a drop dead date to open by December 31, 2012.

Even though details of the project were sketchy to council and non-existent to the public for the first few months, the project seemed to be moving forward.

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Controversial EDC Project Blue on Hold for Now

Public Money, Corporate Welfare

The revelations Monday of a tax fraud conviction and jail sentence for one of the company officials associated with the Myrtle Beach Regional Economic Development Corporation’s Project Blue leads to a conclusion of an apparent shocking lack of due diligence by a number of entities charged with fiscal responsibility for the expenditure of public money.

In many state and local jurisdictions throughout the U.S., conviction of a felony by a corporate officer, especially one associated with tax fraud, would automatically exempt a company from consideration for public money economic development incentives. Such does not appear to be the case in Horry County or South Carolina.

The EDC has put together a deal that would involve approximately $24 million in local and state incentives to Covation, a startup company with no demonstrated performance records.

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David L. Rocker and The Many Faults of Project Blue

David L. Rocker and Project Blue

The real reason for the big secret called Project Blue by the Myrtle Beach Regional Economic Development Corporation may have surfaced Monday when myhorrynews.com, the website for Waccamaw Publishers, broke a story on the shady past of David L. Rocker.

According to documents provided to Horry County Council, Rocker is listed as the Chief Operating Officer of Covation Holdings, a startup Georgia company that is trying to land a call center jobs project in the Carolina Forest area. However, last night the EDC was trying to spin Rocker as merely a consultant on the project.

Whatever the truth is behind Rocker’s participation, his past difficulties should raise some eyebrows about whether the county should be risking public dollars on a project which has, so far, been much hype with very little substance.

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Economic Development Secret Revealed

The hoped for home run from Myrtle Beach Regional Economic Development Corporation was reduced to a bunt single when it was revealed the secret Project Blue is really just a 1,000 job call center.

County council debated the project behind closed doors in executive session for two weeks, before council member Gary Loftus and EDC CEO Brad Lofton made the details of the project public in an interview with the Myrtle Beach Herald last week? Why all the initial secrecy?

A 1,000 job call center project that offers $14 per hour to employees while it receives $24-$30 million of combined incentives is about as good as it is going to get for Horry County economic development. At least that is what Loftus told the Herald last week.

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