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Evergreen will repay $3m of its state aid

Solar panel maker got $58m package; House speaker leery of such deals

Workers put together solar panels at Evergreen Solar, Inc.'s Devens facility in 2008. The company has said it will repay the state for the money it received to build its soon-to-be-closed plant. Workers put together solar panels at Evergreen Solar, Inc.'s Devens facility in 2008. The company has said it will repay the state for the money it received to build its soon-to-be-closed plant. (Joanne Rathe/ Globe staff)
By Todd Wallack
Globe Staff / January 19, 2011

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Massachusetts officials acknowledged yesterday that they will recoup $3 million of the money the state provided to Evergreen Solar Inc. to help it build a solar panel manufacturing plant in Devens the company is now closing.

Originally, the state provided the company with a package of grants, tax breaks, and other benefits valued at $58 million.

Evergreen will now have to repay $3 million of $21 million in direct grants, state officials said yesterday. In addition, the company will forfeit $20 million to $21 million of future tax breaks.

Last week, Evergreen abruptly announced it would close the plant by the end of March and eliminate more than 800 jobs, saying it could not compete with lower-cost rivals in China, where the government provides generous subsidies to solar companies.

Evergreen recently opened a plant in China, where it will continue to manufacture solar wafers, a key component in solar panels.

The closing was a stunning setback for Governor Deval Patrick’s effort to make Massachusetts a hub for the emerging green energy industry. But the Patrick administration suggested Massachusetts will not lose as much money as it first appeared.

For instance, the state noted that the $58 million figure includes $13 million the state spent on roads, utilities, and other infrastructure for Evergreen that could benefit other companies at Devens, a former military base.

And the state noted that Evergreen has generated millions of dollars in tax revenue, offsetting much of the cost of the incentives.

“I don’t know what the final numbers are,’’ said Gregory Bialecki, secretary of housing and economic development. But “the amount that was invested in Evergreen was a lot less than previously reported.’’

Bialecki and Patrick also insisted the investment still makes sense in hindsight, because it helped make Massachusetts a leader in clean energy. The state estimated that employment in the sector has climbed 59 percent to more than 10,000 jobs over the past three years, even after losing the Evergreen jobs.

And Patrick said the state needs to offer subsidies to compete with other states that offer packages of their own.

“We need to ask ourselves whether we are serious about competing for jobs on the same playing field as other states,’’ Patrick said in an online chat on Boston.com yesterday. “Far more often than not, we win in a competition. But we have to compete to win.’’

But House Speaker Robert DeLeo said the state’s experience with Evergreen should make it leery of being so generous again.

“A lot of people are very skeptical now,’’ DeLeo said. “I think, unfortunately, this has turned out to be the poster child’’ for questionable state subsidies.

Robert Tannenwald, a Massachusetts economist who has long studied tax incentives, said the Evergreen investment is a prime example of how “these subsidies usually don’t pay off.’’

“At best they are a bad risk,’’ said Tannenwald, a senior fellow at the Center on Budget and Policy Priorities in Washington and a former vice president at the Federal Reserve Bank of Boston. “At worst, they are inefficient, inequitable subsidies that government could spend in better ways.’’

Massachusetts originally offered Evergreen even more — about $76 million in combined incentives. But Evergreen turned down $17.5 million in loans, pushing the amount closer to $58 million.

The package included $21 million in direct grants, $15 million in property tax breaks, $7.5 million in state tax credits, $13 million on roads and infrastructure at Devens, and a subsidized lease of $1 per year for the land.

Bialecki said he put the value of the package at $31 million, in part by not counting the property tax breaks and the money spent on infrastructure.

In addition, Evergreen has not yet received the full benefit of the subsidized lease and the tax incentives, because those benefits were supposed to be spread out over many years. The state said it will end those incentives after Evergreen closes the plant.

Bialecki said yesterday that the $3 million to be paid back is close to what Evergreen last week estimated it would have to pay. The company said it is working with state officials on a final figure.

“We expect to fully meet our agreed-upon responsibilities,’’ Evergreen spokesman Chris Lawson said.

Bialecki acknowledged he originally thought the company would have to pay back more. But he said the amount is lower because Evergreen received credit under its agreement with the state for creating more jobs than promised early on.

“The fact is that Evergreen proceeded with its plans much more quickly than anyone had anticipated,’’ Bialecki said.

However, Bialecki said, the administration plans to work with lawmakers to try to give the state more authority to “claw back’’ incentives when companies don’t fulfill the promises they make in exchange for public aid.

Michael Levenson contributed to this report. Todd Wallack can be reached at twallack@globe.com.