Tobacco commission grants can leave communities on the hook

Full Screen
1 / 2

Copyright 2020 The Associated Press. All rights reserved

This aerial photo taken with a drone shows the former furniture manufacturing building, Friday Sept. 18, 2020, in St. Paul, Va. The building was expected to house a proposed biofuels business that got public economic development money. The project, Appalachian Biofuels, never materialized and part of the part of the developer's grant that was supposed to be repaid was instead forgiven. (AP Photo/Steve Helber)

RICHMOND, Va. – The executive director of a Virginia economic development commission bent rules to forgive a six-figure grant to a politically connected developer whose planned biofuel project didn’t pan out, documents obtained by The Associated Press show.

The Tobacco Region Revitalization Commission's Evan Feinman did not recoup $210,000 Chuck Lessin owed the state, according to a report from the Office of the State Inspector General. Feinman instead allowed Lessin's unrelated work as a member of the Virginia Israel Advisory Board, which also promotes economic development, to count toward the money he owed when his Appalachian Biofuels project fell through.

In an interview, Feinman defended the decision, saying Lessin took an “adversarial approach” to repayment and, ultimately, beleaguered Russell County where the project was supposed to locate would have been on the hook or facing litigation if the grant wasn't forgiven.

Lessin, who runs a bingo hall in suburban Richmond and is a Republican political donor, did not respond to requests for comment.

The episode is the latest in a series of questionable business deals made by the commission created more than two decades ago to spend Virginia’s portion of the national tobacco settlement. Infrequent state reviews have found persistent problems with how money is spent and tracked. And AP's review of the program that funded Lessin’s venture found tangled repayment situations have played out time and again across the poorest parts of the state.

The commission gives performance-based grant or loan money to local governments through the Tobacco Region Opportunity Fund. The money then flows to developers at the beginning of a project. But if the project doesn’t meet its promised goals, localities can be left holding the bag if the private companies don't repay them.

Since the inception of the program, the commission has sought to recoup about $22.9 million through the places it's meant to help, with about $1.6 million currently outstanding from 14 localities, records provided to AP in September show. The commission does not track how much of that money was effectively repaid by the developers or the locality, likely with taxpayer money.

“Since our primary focus is supporting and growing the economies of the localities we serve, we work with them on a repayment plan when necessary and try to be as flexible as possible so that we don’t impact often tight local budgets,” commission spokesman Jordan Butler said.