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Jeff Kane: Mine's economic report shows County's lack of due diligence

Writing for the Concerned Citizens Roundtable, Jeff Kane reveals several weaknesses in the Economic Impact Study commissioned by the County, including lack of due diligence on the applicant.


This opinion piece was originally published in The Union.

 

December 30, 2022


Opinion - Jeff Kane: The Idaho-Maryland mine economic impact report shows Nevada County's lack of due diligence


A plumber came to our home to bid a job. We explained what we needed and then we checked him out. We asked how long he's been in the trade. We requested references, and whether he's insured and bonded. We wanted to know if he's facing liens or litigation. Is he adequately prepared to perform and complete the job? In sum, can we trust him?

This basic business principle is called due diligence. The proposed Idaho-Maryland Mine's Economic Impact Report exemplifies an unconscionable failure of due diligence. In commissioning the Report, Nevada County inexplicably restricted the study's scope.

The Report's author, Robert D. Niehaus, Inc. (RDN), states, "The scope of our study is to focus on total economic effects as modeled by IMPLAN [a widely used planning software] and fiscal effect on county tax revenues and overall effect on property values." That's what it does in its ninety pages, but it dodges and ignores other crucial issues.

The Report is less than responsive to many relevant questions. For example, when asked if there are other mines operating 24/7 which are surrounded by residential properties, RDN explains that there are "no perfect comparables," and there the matter drops.

RDN states that it didn't explore loss of tax revenue to the County if local wells fail--thus decreasing property values--because the Draft Environmental Impact Report claims potential well failure is fully mitigable. In other words, don't worry, it'll be okay.

When asked what might be the County's costs in addressing opposition to the the mine, RDN replies that that's an environmental issue, beyond the study's scope.

Also beyond the study's scope, says RDN, is healthcare costs. Medical expenses and lost work time due to the mine's massive toxic airborne emissions are, according to the Report, environmental, not economic, issues.

RDN didn't study the mine's effect on County tourism, as, it states, that's taken into account by IMPLAN's "inter-industry linkages." That is, at the end of the day a buck is just a buck: income from mining will offset the loss of our tourist industry.

Another unaddressed economic issue is the $3.5 million cost of cleaning up the Centennial Site. It was not included in the Report since even though RDN agrees it should factor into the final decision, it was not within the scope of this study.

The Report ignores or dances around a number of crucial issues, but its starkest weakness is omission of the economic background of the applicant itself, Rise Grass Valley (RGV).


Nevada County administration didn't ask RDN to explore any aspect of RGV's insurance, bonding, or even sufficiency of capitalization. Nor did it ask it to examine RGV's CEO's previous venture (Banks Island Gold, Ltd.), which went bankrupt, thus failing to pay numerous creditors and dozens of its employees.

The County didn't ask RDN to inquire whether RGV lost its financial support because it was shut down by the British Columbia government for environmental and safety infractions, or whether company officers were under legal indictment.

RDN's Economic Impact Report, then, is necessarily partial and misleading, representing a disastrous failure of due diligence.

Why would we hire a plumber whose last job left an arguably criminal mess, is embroiled in serious litigation, stiffed his creditors, is grossly under-funded, and carries a loan, due this year, with an interest rate (25%) granted only to the highest-risk borrowers?

So before we tumble into a thicket of economic argument, we'd do well to consider why we'd ever choose to conduct eighty years of business with this particular company in the first place.

The Economic Impact Report states that if for any reason RGV was unable to function after being granted a permit, another company could step in and the economic impact would be no different. But we'd be as ignorant of that new entity's background as we are of RGV's. It would be like our prospective plumber dropping out in favor of another we'd never vetted.

Considering that the mine application has, over several years, cost County employees and citizens significant time, work, and money, we should require future applicants to prove themselves before we grant them any attention: show adequate capitalization, an appropriate cash bond, full insurance, and a clean financial, environmental, and safety record.

The Economic Impact Report's deficient scope and the Environmental Impact Report's numerous unmitigatable damages to our community together beg our supervisors to just say no.

The Concerned Citizens Roundtable, Nevada City: Rob Agrimonti, Yasha Aginsky, Charlie Brock, Jeff Kane, Scott Kellermann, Brad Miller, Randall Newsome, Thomas Nigh, Tim Ogburn, Kathy Ogburn, Rondal Snodgrass

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