Friday, August 15, 2008

Virgil Goode, MZM, And The Left's Big Lie, Revisited

Welcome to the digital age, James. As a relatively new blogger you must learn a few things. It's very easy to take five minutes and put up a "quick hit" such as you did yesterday on Virgil Goode. I'm sure you put in at least five minutes writing about Virgil's latest "lie". I can imagine you sitting back afterward while smiling smugly, thinking to yourself, "let's see how that goes over".

Responsible bloggers do not live for that quick, smug feeling of "gotcha" though. Most know that "gotcha" will all too often come back atcha. Responsible bloggers research their subjects and do not fall for the big lie. Not very often, anyway. I myself have done so, you and I both will again. But I resolved long ago not to resort to the smug name calling you've just enjoyed doing.

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it." Often attributed to both Joseph Goebbels and many leftist fanatics who seem to relish using it to describe the Republican Party. In the real world, though, it's more often the Democratic Party that actually makes use of this despicable tactic.

That's probably because it works. It's been proven right here in Virginia, that it works. Mark Warner has proven it, using it to discredit the administration of Gov. Gilmore. The left wing grassroots has proven it, using the same tactic to claim that somehow Virgil Goode owes the city of Martinsville big bucks for trapping the City Council into a deal with MZM.

Fellow Henry County blogger and left wing grassroots organizer, James White, seems to have fallen completely for the "big lie". It seems James believes the lie so deeply, that he considers Virgil's truthful answer to be the lie instead.

James' video questioner asks Virgil Goode;
"... Have you ever considered picking up Martinsville's tab for the failed MZM deal?" To which Rep. Goode answers, "Martinsville actually ended up making money off that deal. They were A LOT better off"
James then responds with;
Ask Virgil Goode a question he doesn't want to answer and what does he do? He lies, then cuts and runs as fast as he can go. Welcome to the digital age Virgil.
(emphasis added) [LINK]
Yes, welcome to the digital age, indeed, James.

I've never been a Union Official, James. I've never been a grassroots left-wing kind of guy either, though. But now I see why both groups find it so easy to advocate taking money from one citizen in order to give it to another. After all, $100,000 just isn't a "lot" of money. Apparently not to you guys, anyway.

I went over all this, in great detail, in February of 2007, when Waldo Jaquith made the same claim.

I'll save you the trouble of looking that article up, and place the relevant portions here instead. Then, Waldo claimed, as James now implies, that Virgil Goode somehow manipulated the MZM/Martinsville deal that brought the defense contractor to the Clearview Business Park, and therefore he owes Martinsville some big bucks. It just ain't true. Neither statement. (Changes to original in red);
Let me tell you the truth of the matter. A truth that is easily discovered if one only looks for it, rather than merely wishing for future Al Weed (and now Perriello) campaign slogans, lies, and half-truths.

In late October of 2003 rumors began circulating throughout Henry County about a possible new employer, some said it would be a defense contractor. On October 30th Ginny Wray of the Martinsville Bulletin wrote a story confirming the rumors and naming MZM as the new employer, citing Virgil Goode as her source.

At this time MZM already had a presence in the 5th District so Virgil was familiar with the firm. He also was familiar with a shell building that Martinsville had to offer in the Clearview Business Park. According to Ms. Wray, Virgil urged MZM to take a look at Martinsville and their facility.

The following day a story by Mickey Powell of the Bulletin adds a few more details, with some quotes from Mitchell Wade, President and CEO of MZM at the time. Powell found it difficult to get much more information, such as the selling price of the shell building from either Wade or Tom Harned, Martinsville's Economic Development Director.

All we knew at that time was that the City had sold its $945,000 shell building to MZM for an undisclosed sum, and that Virgil Goode had introduced the two parties.

The following Tuesday, at an announcement ceremony attended by then Governor Mark Warner, it was disclosed that the City of Martinsville had received $1.027 million for the facility. $400,000 from MZM, $500,000 split equally between The Governor's Opportunity Fund and the Virginia Tobacco Indemnification and Community Revitalization Commission, and $127,000 in private funds from the Chamber's Partnership for Economic Growth, a partnership affiliated with the Martinsville-Henry County Chamber of Commerce. (Deduct the $940,000 cost of the building's construction and the city was left with $82,000 profit.)

According to Mickey Powell of the Martinsville Bulletin;
Information from the Center for Responsive Politics shows that MZM is Goode's top financial contributor, donating more than $37,000 to him during the current election cycle. That money was given either through a political action committee, people associated with the firm or their family members, a Web site indicates.

Goode admitted those contributions. He said, though, that he would have given information about the shell building to any firm, regardless of whether it financially backed him.

He received MZM's money "before I knew they were interested" in the building, he said.
This clearly refutes Waldo's insinuation of any "quid pro quo".

Now, let's look at what we know of the background negotiation that went on before this deal was announced.
  • Martinsville had a shell building that had been on the market for 3 years with no takers.
  • Martinsville owed $940,000 on this shell building and desperately needed both a buyer and the employment that a buyer would bring to the area.
  • A firm with a presence in Virgil's 5th District was searching for a facility in order to expand part of its business.
  • Virgil introduced the two parties and negotiation began for the purchase of the building. MZM offered $400,000 for the building, knowing that it would require another several million dollars in renovations to make the building suitable for its purposes.
  • Tom Harned, Martinsville's Economic Development Director at that time asked Virgil to request a better offer from MZM.
  • That request for a better offer was turned down by MZM.
  • Tom Harned then asked Wade to apply for state incentives to make up the difference.
  • Virgil Goode was not a party to these negotiations, though he was copied on most, if not all, of the correspondence between Harned and Wade.
  • At a stalemate point in the negotiations, Virgil suggested that Martinsville apply for two $250,000 grants from The Governor’s Opportunity Fund and the Tobacco Indemnification and Community Revitalization Commission to help retire the debt on the building.
  • At that point MZM refused to cooperate, insisting that it wanted a simple cash real estate deal, leaving Martinsville with the option of dropping negotiations or signing the performance agreement obligating it to repay the forgivable loans if the company did not meet its projections.
  • At the time, John Sternlicht, general counsel to the Virginia Economic Development Partnership, the state agency that drafted the performance agreement, expressed concern about the unusual nature of the City's request.
  • Earl Reynolds, City Manager at the time responded to Sternlicht, “The city understands that this is outside the normal procedures,” indicating the City's eagerness to complete the deal.
  • Sternlicht's reply, from a Dec. 11, 2005 story by Lawrence Hammock in the Roanoke Times, “The company is usually on the hook. But in this instance, based on [Martinsville’s] urgent request, this is what we did," further indicates that the deal was pushed through to completion by Martinsville officials.
  • The final disposition is yet to be determined, but City Finance Director Wade Bartlett said in today's Martinsville Bulletin that any funds repaid will come from the City's fund balance, currently at $9.5million. The Bulletin article quotes Bartlett; "No matter how much of the $500,000 the city ends up paying, it will not impact our ability to provide services in the future to residents or bankrupt the city."
In summary, one can blame Earl Reynolds, Tom Harned, Gene Teague (then Mayor), Terry Roop (then Vice Mayor), and the rest of City Council for making the final decision to request the grants and taking the highly unusual step of signing the performance agreement. All Virgil Goode did was bring the two parties together.

Let's do a little accounting exercise, shall we?
Cost of shell building to Martinsville$945,000
From MZM$400,000
From Governor's Opportunity Fund$250,000
From Tobacco Commission$250,000
From C-PEG (Local Chamber Econ. Dev. group)$127,000
Total Sales Price$1,027,000
Profit (sales price, less actual cost of building)$82,000
Balance of tax and other revenues gained from MZM/Athena$161,430
Profit Sub-total$243,430
Refund of grants due to MZM non-performance (est) (Actual refund, 05/24/07 Bulletin Article, $143,000)($145,000) ($143,000)
Martinsville Final Balance $98,430

The above balance sheet does not include revenues from utilities such as water, electric, and sewer. Also not included are local income and sales tax revenues from MZM/Athena employees. Obviously a $100,000 return on a $1 million dollar investment is not what one would hope for, especially since it ended after only a 4 year term, but it's not the catastrophic loss that Waldo (and now James) would have you believe it is..
Once again, the big lie has come to be thought of as the truth. Virgil Goode did not create the deal. The deal that "lost money" for the city of Martinsville. Congressman Goode did just what any small government advocate would want, he simply brought the two parties together to negotiate their own deal. A deal that DID NOT result in the spilling of any red ink over there on Church Street.

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