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Thursday, Aug. 25, 2016

State fines chip mill $393,588

Sunday, February 6, 2005

JEFFERSON CITY - A Scott County judge ordered a now-closed chip mill to repay almost $400,000 to the State of Missouri for not keeping jobs promised under the terms of a Community Development Block Grant.

At the request of Missouri Attorney General Jay Nixon, Circuit Judge David Dolan ordered Canal Wood Corporation to repay the original block grant of $193,588 from the Missouri Department of Economic Development. The firm was also ordered to pay an additional $200,000 for not keeping the promised jobs.

The 1997 contract provided Canal Wood with $193,588 in infrastructure grants. As part of the agreement, the company promised to create at least 20 full-time jobs at the facility. Of the 20 promised jobs, at least 51 percent of those hired were to be from low and moderate incomes for at least five years.

If the company breached the contract, it was obligated to pay the contract price plus $10,000 for every employee not hired for five years. Canal Wood ceased all operations in February 2001, less than four years into the contract.

When Nixon sued in May 2002, he asked that the state be reimbursed for the amount of the contract and the $10,000 for every employee not hired for five years. Last March, he filed a motion for summary judgment on the case and asked the court to issue a ruling based on evidence presented to that point. Dolan held a hearing on the motion last September and granted the motion through his Jan. 31 order.

"Economic development grants and loans from the state are a two-way street," Nixon said. "The benefits of these grants must be matched with job creation and retention. If not, these companies are falling in their obligation to the taxpayers and must repay the money."