WEST VIRGINIA DEVELOPMENT OFFICE (WestVirginiaUSA 1900 Kanawha Boulevard East - Charleston, WV 25305?0311 (304) 558-22 34 - (800} 982-3386 . CE 2017-03 June 9. 2017 Rebecca L. Stepto Executive Director 0070, West Virginia Ethics Commission 210 Brooks Street. Suite 300 Charleston, WV 25301 RE: Request for Exemption ofa Public Contract on behalfofthe West Virginia Development Of?ce. Dear Ms. Stepto: Please accept this letter as a formal request on behalfofthe West Virginia Development Office (WVDO) for an exemption from the prohibition against interests in public contracts pursuant to West Virginia Code Although the WVDO believes that there is no conflict with the West Virginia Ethics Act (the ?Act") because no elected public official or member oftheir immediate family has an interest in the profits ofa public contract, nor bene?ts from the activities described herein, the WVDO seeks this exemption to alleviate even the indicia of imprOpriety. The WVDO respectfully submits that failure to provide the exemption would cause undue hardship, excessive cost. andfor substantially interfere with the operation ofthe agency and that the exemption is imperative to the success ofthe agency?s ability to attract economic opportunity to our state. BACKGROUND The WVDO began participating in the Greenbrier Classic in 201 to promote the State of West Virginia to potential private economic partners. The Professional GolfAssociation (PGA). which is a world class organization. already had a presence in the state through the Greenbrier Classic golftoumament. The Greenbrier Classic is conducted by Old White Charities, inc, a non-profit corporation.' At that time. Governor Earl Ray Tomblin envisioned the direct benefit ofaligning the State of West Virginia with that endeavor and chose the WVDO to carry out the mission ofusing the tournament as a business recruitment tool. The WVDO initially focused solely on recruiting "game changer? business clients and building substantive connections between high-level executives, site selectors. existing industry leaders and state of?cials. The WVDO has benefited from the exclusivity ofthe venue and used the tournament as an effective tool to highlight the best of West Virginia. Although the initial effort for the 201 1 event was business recruitment. in the following years. the model evolved to expose new people to the benefits of living, working. and playing in West Virginia. In the following year, the Legislature recognized the value ofthe tournament for business recruitment and promoting the tourism industry in the State and appropriated funds accordingly. Old White Charities. Inc. is a Section non-pro?t corporation whose directors are the children ofthe current Governor. However. see attached correspondence which indicates that the Governor nor any member ofthe Governor?s family receives any compensation or payment ofany kind from Old White Charities. Inc. tn the years to follow-3. the planning became more re?ned and connected with the tournament. For example. the tournament constructed a formal welcome center focused entirely on tourism at no extra cost to the state that was manned by the West Virginia Division ofTourism. The staffalso helped ensure that everyone attending the tournament had first-hand understanding ofthe opportunities. features, and benefits of West Virginia. The ability ofthe state to work closely with the event was one ofthe primary factors the PGA used to select West Virginia in the ?rst place. The efforts have succeeded beyond expectations. The WVDO has hosted dozens ofCEO?s and other decision makers who in?uence location decisions for major investments at the Greenbrier Classic. including major companies in the consumer goods, chemicals, petrochemicals, automotive. hardwoods, e- commerce, and energy industries to expand business opportunities in West Virginia. The WVDO has not only connected state officials with decision makers, but has also shared the experience with many great philanthropic organizations like Big Brothers, Big Sisters. the Boy Scouts. and the Children?s Home Society. The WVDO routinely invites dozens of West Virginia professionals to network at our events, creating opportunities to cross promote the state's business community and identity new investment channels. These efforts have translated into tangible benefits for West Virginia. For example. relationships cultivated during the Greenbrier Classic connected the WVDO with a Fortune 100 company. which is anticipated to employ between 800-I000 employees. All in all, the WVDO can attribute more than $1 billion in investment and thousands ofjobs to relationships developed at the tournament. Indeed, the agency believes there is a direct connection between almost every major announcement (and even smaller projects) and the relationships that were either started at or built upon at the Greenbrier Classic. In summation the Greenbrier Classic is a world-class event sought after by industry professionals across the country and it represents the state?s greatest business deveIOpment tool. This will be WVDO's sixth year participating in the tournament and the WVDO has adjusted the model back to strictly business development and recruitment. It has already started outreach activities. There is no legislative appropriation dedicated for the event in this year's budget. STATUTORY AUTHORITY The WVDO was statutorily created to foster economic deve10pment on behalfol?thc state of West Virginia. Its primary responsibility is to furnish assistance to new or existing businesses. In providing this assistance. any documents, materials, data. or other writings are confidential and speci?cally exempt from public disclosure under the West Virginia Freedom oflnformation Act. The agency receives special revenue funds derived from excess lottery revenue proceeds to promote the state and attract potential businesses to West Virginia. The WVDO is authorized to enter agreements orjoint ventures with non-profit organizations to further its mission. The relevant provisions ofthc West Virginia Code are set forth as follows: West Virginia develoimienl of?ce; con?dentiality. [A]ny documentary material, data or other writing made or received by the West Virginia development office . . . for the purpose of furnishing assistance to a new or existing business shall be exempt from the provisions ol'article one, chapter twenty-nine-b oflhis code: l?rm ided. That any agreement entered into or signed by the development oft-ices . . . which obligates public funds shall be subject to inspection and copying pursuant to the provision of said article as ofthe date the agreement is entered into. signed or otherwise made public. 2 Last year the state did not participate in the Greenbrier Classic due to the devastating ?oods. Powers and duties of the executive director. The executive director shall enhance economic growth and development through the devel0pment ofa comprehensive economic development strategy for West Virginia. Development of?ce promotion fund. There is hereby established in the slate treasury a special revenue fund known as the "development office promotion fund." Moneys deposited in this fund shall be administered by the development office and used solely to promote business formation. expansion. recruitment and retention through aggressive marketing and international deveIOpinent and export assistance. which together lead to more and better jobs with higher wages for all geographic regions and communities ofthe state, including rural areas and urban core areas, and for all residents. including minorities. Public-private partnerships. The West Virginia Development Office is authorized to enter into contractual or joint venture agreements with a nonprofit corporation organized pursuant to the corporate laws of the state, organized to permit qualification pursuant to 501(c) of the Internal Revenue Code and for purposes of the economic development of West Virginia. and funded from sources other than the state. From time to time the executive director may enter into joint ventures wherein the West Virginia Development Office and the nonpro?t corporation share in the development and funding of economic development programs. All expenses associated with the recruitment efforts will be paid from the DeveIOpment Office promotion fund. Although all state funds are the ?public?s money." the legislature specifically intended and authorized expenditures ofthis nature recognizing the inherent positive economic impact on our State. Furthermore, W. Va. Code 58-2-4 provides that the Executive Director ofthe Development Office "[m]ay enter intojoint ventures wherein the West Virginia Development Office and the nonprofit corporation share in the development and funding of economic development programs." WVDO submits that continued payments to Old White Charities, as a nonprofit corporation. is consistent with this statutory power. The WVDO believes that it is important to note that its relationship with Old While Charities is ongoing relationship. established by the prior administration. The WVDO has also not received any request or direction from the current administration to initiate any efforts seeking this exemption. In fact, planning for much ofthis event. and actions taken to be involved with the Grecnbrier Classic. occurred prior to the change in administration. BASIS FOR THE EXEMPTION The WVDO asserts that in the event the Commission determines there is a conflict with the Act, the agency is entitled to an exemption from the prohibitions set forth in West Virginia Code l) and (2) due to excessive cost. undue hardship. and/or substantial interference with the Operation ofa government agency for the following reasons: I. Excessive cost: 0 The WVDO has approximately 20-30 targeted clients committed to attend the (Jreenbrier Classic this year. including CEOs. high-level executives. national site-selection consultants, and industry leaders. Over 100 invitations have been extended and the WVDO anticipates more commitments are loithcoming. 0 As part ofthe recruitment package. the WVDO has pledged to reimburse reasonable and necessary travel-related expenses for the principle target clients. Ix.) As part ofclient sen ices. the WV DO has agreements in place to enhance client experience. including food and beverage. entertaimnent. and meeting space. Venue tickets have gone to rint that include the West Virginia De artment ot'Commerce loeo. . The WVDO targets site location consultants during the Greenbrier Classic. These consultants are hired by major companies to evaluate potential sites in a geographic region and assess what makes the most business sense for their clients. They act as a proxy between the company they represent (which remains confidential) and the states where potential development sites are located. Site consultants typically work on multiple projects for multiple companies at any given time. Companies rely heavily on data from their consultants to make decisions about where to place its operations and capital. Face-to-face meetings with state officials help consultants strengthen lines of communication and information packages. This arrangement allows for signi?cant economies of scale. By bringing these consultants to a centralized location at a captive. world-class event. the agency saves substantial money because the WVDO would otherwise need to develop these relationships in diSparate meetings and in multiple locations across the country. lyggi?p: Important decision makers have made West Virginia a priority on their busy agendas by committing to attend the Greenbrier Classic. To cancel arrangements at this point would cause severe damage to the reputation ofthe WVDO, diminishing our competitive position with other states. Using a major spectator attraction as an economic development tool is a common business development tactic employed by other States. For example. economic development of?cials in Kentucky use the Kentucky Derby as a tool to help lure investors to their state. The Greenbrier Classic is West Virginia?s only opportunity to compete on a national level ?iih other states for these investments. The WVDO has organized this event over multiple years and it continues to grow. The WVDO's clients look forward to this event. Top executives reflect positively on the State ofWest Virginia because ot?this event. This positive sentiment reinforces their connection to the state and affects how they communicate with their clients. investors. and employees. both now and in the future. Withdrawal from the tournament at thisjuncturc will detrimentally affect the state?s economic development efforts and result in wasted titne and resources. Preparation activities occur throughout the year. More than 20 Japanese companies have facilities in West Virginia and the WVDO has invited representatives from our major Japanese manufacturers to attend the event. The exclusivity ofthe event is unique. The tournament represents the on professional sports spectator event in the state. lfthe WVDO cannot participate in this event. it cannot replicate its intrinsic value at another time or place. West would theretore forgo its only opportunity to showcase the state on this scale. and be pre\ ented from bringing companies and consultants into an exclusive. West Virginia setting. 3. gbstantial operation thegovernmental agency: The Greenbricr Classic is one ofthe wvoos busiest and most critical weeks ofthe year. Business people. site consultants, and project managers from all over the world come to the Greenbrier Classic each year as guests ofthe state to meet with state of?cials about potential business development in the state. 0 The Greenbrier Classic is part ofa multi-pronged approach the WVDO utilizes to recruit business clients to West Virginia. A company?s decision to make a major capital investment is not taken and can take years to cultivate. The Greenbricr Classic is a very effective tool in showcasing the state and building relationships. Deals are not often struck at the event. but the tournament gives state officials the opportunity to build relationships with companies and consultants who represent them to show off what the state can offer. 0 The potential opportunities which may be lost are impossible to quantify because investment decisions are not culminated during the tournament. The WVDO has requested that the tournament be mindful ofthe current budget conditions this year, and work with the WVDO to make sure that its presence is appropriate and targeted to recruitment. The WVDO logo will not be on any leader boards or be visible throughout the course: it will be restricted to identification purposes only on venue signage. The WV DO will reduce costs by returning to a one-venue Operation. 11 is crucial that the state of West Virginia continue to support the PGA and its desire to remain in our state because the toumament itselfis a major economic drive. West Virginia has been a key stakeholder in the conversation for the past seven years and the WV DO needs to maintain this relationship well into the future. Furthermore, West Virginia has become a model to other states on how to combine an opportunity such as a PGA tournament with recruitment efforts. In coordinating arrangements for specific clients, we have already started the process oforganizing the event and setting crucial meetings. which cannot be identified due to the con?dentiality provisions of W. Va. Code Travel plans and logistics have been set and efforts are in motion to ensure proper coordination. To cancel these efforts now would severely damage the ability to recruit and expand business Opportunities in West Virginia. lialting or reversing our course of action would be detrimental to an extent we may not be able to repair. The WVDO understands the constraints ofthe West Virginia Ethics Act and intends to act within the letter and spirit ofthe law while at the same time ensuring that this important tool remains viable for the benefit ofour state. As time is ofthe essence, the respectfully requests that this matter be considered by the Commission at the very earliest opportunity because ol'the fast-approaching date ofthe event. Your attention and efforts are greatly appreciated. Joshua L. rrell Deputy Secretaryf?eneral Counsel JLJr?db West Virginia Economic Development Office Greenway Building Northgate Business Park l80 Association Drive Charleston, WV 25311-1217 To Whom It May Concern: Old White Charities, Inc. is a non-pro?t organization. The organization currently holds a 501(c)(3) status. The current of?cers listed with the WV Secretary of State Of?ce are: Director: James C. Justice Director: Jillean L. Justice President: James C. Justice ill Secretary: James T. Miller Treasurer: James T. Miller No part ofthis organization?s income is distributed to its members, directors, or of?cers. Sincerely, die-W? Controller The Greenbrier Classic Old White Charities Of?ce: 304-536-1 10 Cell: 304-647-8259 300 West Main Street White Sulphur Springs, WV 24986 The d, Hill 1965?? 4% CLASSIC 300 W. MAIN STREET. WHITE SULPHUR SPRINGS. WV 24986 - (304) 536-5322 - GPEENBRIERCLASSICCOM