Nixon sues closed mill to recoup funds

Friday, May 17, 2002

Attorney General Jay Nixon has filed a lawsuit to recover more than $200,000 from a chip mill that closed its Scott City facility last year.

Canal Wood Corp. reneged on a contractual obligation to create and maintain at least 20 new full-time jobs after benefiting from a community development block grant made by the Missouri Department of Economic Development to Scott County, Nixon said.

The state approved Scott County's block grant application in 1997 to cover expenses for water, street and sewer construction costs for Canal Wood's chip mill plant in Scott City.

Under agreement

As part of the agreement, Canal Wood promised to create at least 20 full-time jobs at the facility, with at least 51 percent of the jobs to go to people coming from families classified as "low and moderate income" as defined by the federal government.

Canal Wood was contractually obligated to keep the jobs at the facility for at least five years, Nixon said. If the corporation breached the contract, it was obligated to pay $10,000 per job to the state of Missouri, plus interest, according to Nixon, who filed the lawsuit May 13.

The mill closed in February 2001, less than four years after the agreement was made, terminating all the jobs. In addition, monitoring by the state determined that less than a quarter of the jobs were filled by people who met the income guidelines.

"Economic development grants and loans from the state are a two-way street," Nixon said.

"By reaping the benefits of this block grant to construct its chip, Canal Wood had an obligation to taxpayers to create and keep jobs in return. They failed in their obligation and now they need to repay that money."

Going to court

Nixon is asking the Scott County Circuit Court to order Canal Wood Corp. to pay the state $10,000 per job, plus interest, as well as costs incurred by the state in bringing the lawsuit.

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