Eye On Boise

Hard times in Pocatello, as contractor submits highest bid for failed Hoku plant

A contractor based in Longview, Wash. has submitted the highest bid for a failed polysilicon plant in Pocatello, the AP and the Idaho State Journal report today; click below for their full report. JH Kelly Inc. offered $5.27 million for the defunct Hoku plant at auction; it’s also suing Hoku’s Chinese parent company in federal court, alleging that it’s still owed $25 million for work done at the site. The plant, which never opened, promised high-tech jobs producing materials for solar panels; the city bought the $1.4 million property and leased it almost for free for the plant, and Hoku also got $2.2 million in federal grants plus a promise of job training money from the state.

Meanwhile, the New York Times wrote about the mess today, in a story headlined, “Idaho Town Struggles After Pinning Hopes on a Failed Factory;” you can read it here. Writer Kirk Johnson paints a grim picture of the situation facing Pocatello, Idaho’s 5th-largest city. “Pocatello’s road was tough before Hoku ever came to call,” he writes. “It lost many of its good railroad jobs when Union Pacific consolidated operations in Utah. A potato processing factory in a neighboring town — about 10 percent of the work force commutes there from Pocatello — has said it will close next year. And like Idaho as a whole, it has suffered from a downward spiral in wages.”

Writes Johnson, “From 37th place in per capita income in the mid-1990s, the state is now 49th, kept from the bottom only by Mississippi, according to federal figures. Part-time jobs have been among the fastest-growing employment categories in recent years, with almost one in four jobs statewide offering less than full-time hours — the fifth-highest rate in the nation. Many downtown businesses are vacant and up for lease, and the struggling local shopping mall is scheduled to go up for auction this month.”

Contractor offers $5.3M for defunct Idaho plant

POCATELLO, Idaho (AP) — A Washington state-based contractor battling a Chinese company over a defunct $700 million polysilicon plant submitted the highest bid for the Pocatello property at a recent auction, a newspaper reported Wednesday.

JH Kelly Inc. offered $5.27 million for the Hoku plant, beating another bid of $4.78 million, The Idaho State Journal (http://bit.ly/SxHTxs) reported.

JH Kelly, based in Longview, Wash., is suing Hoku's Chinese parent company in federal court, alleging that Tianwei New Energy Holdings still owes it about $25 million for work done at the site.

The plant was nearly completed but never opened. Numerous contractors who helped build it have gone to court to collect money they say they are owed for work.

"We want to work with the city of Pocatello and the Bannock County Economic Development Commission to mitigate the sting of Hoku/Tianwei's broken promises, help them attract a new user to the property and to recoup as much as we can of the monies that we are owed," JH Kelly said in a release.

A federal trustee handling the Hoku bankruptcy case recommended the court accept the bid by JH Kelly. A decision is expected Nov. 12, though other bidders can submit bids through that date.

Celeste Miller, a bankruptcy attorney representing Hoku, told The Associated Press that the trustee has reported interest in the property from other potential bidders.

Consequently, just who winds up controlling the plant infrastructure may come down to the wire, Miller said.

Hoku began building what was supposed to be a $370 million plant in 2007, hoping to supply Chinese companies with materials for solar panels.

Eager Pocatello officials agreed to numerous financial concessions with the hope the plant would generate 200 full-time jobs for a region hard hit when chemical company FMC shuttered a nearby plant in 2001.

By 2009, however, polysilicon prices had plummeted, the cost of the Pocatello plant doubled, and Hoku was forced to hand over control to Tianwei as part of a financing deal with the Chinese company meant to save the project. That effort failed, too, and lawsuits piled up amid the bankruptcy.

Another subcontractor, North Carolina-based Industrial Piping Inc., said Hoku owes it $13.6 million. Industrial Piping also sued Tianwei.


Information from: Idaho State Journal, http://www.journalnet.com


Copyright 2013 The Associated Press

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Betsy Z. Russell
Betsy Russell covers Idaho news from the state capitol in Boise and writes the Eye on Boise blog.

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