On Thursday, April 26, the Mississippi Office of the State Auditor (OSA) Performance Division released a report detailing the relationship of the former Viking Range Corporation with the Mississippi Development Authority (MDA). After failing to produce and maintain 250 additional jobs for five years at the Greenwood facility, the company has repaid in excess of $2.5 Million to the State of Mississippi through multiple payments.
In July 2005, MDA completed a memorandum of understanding (MOU) with the former Viking Range Corporation to grant $3 Million to the corporation from the Mississippi Major Economic Impact Act (MMEIA) to assist in constructing a dishwasher manufacturing facility. Initially, Viking agreed to create and maintain 250 new jobs for five years in addition to the approximately 1,150 employees at the time the MOU was signed; MDA did not provide documentation verifying actual employment numbers. Viking also agreed to make a $10 Million capital investment into the facility before May 1, 2008.
In an audit, OSA determined that Viking supplied a capital investment of over $15 Million; however, Viking was unable to create the additional 250 jobs required by the original MOU. After defaulting on the job creation mandate, Viking paid a $312,000 penalty to the State of Mississippi in January 2009.
Amendments to the MOU were drafted in April 2009 and February 2012; these amendments extended the job creation date to May 1 of 2011 and 2015, respectively. When Viking failed to meet the job requirement agreement in 2011, the company paid a $396,000 Million penalty to the State of Mississippi in quarterly installments and amended the MOU as previously stated.
Viking Range Corporation was purchased by Middleby Corporation in December 2012. The project was defaulted in 2015, and no amendment was made to the MOU. Middleby Corporation paid a default penalty of $600,000 in December 2015. After being sent a letter of default by MDA in June 2017, Middleby Corporation has paid $1.2 Million, which represents two $600,000 payments for failure to maintain the MOU requirements in 2016 and 2017. According to the MOU, Middleby is still subject to annual penalties until May 2020.
In 2015, the Mississippi Legislature approved a $5 Million bond issuance to Middleby Corporation under the ACE Fund. This funding was issued after Middleby Corporation purchased Viking Range Corporation. A 2016 change in state statute forced the grant to be issued through the Mississippi Industry Incentive Finance Revolving Fund (MIIRF); this change lowered to capital investment obligation of Middleby from $20 Million to $5 Million. Currently, Middleby Corporation has received $2.3 Million through the MIIRF.
In July 2017, MDA issued a letter of default to Middleby related to the funding through the MIIRF for failure to maintain the MOU related to that funding source. Middleby paid the default penalty of $13,300.17 in August 2017.
OSA recommends MDA verify current employment numbers at the signing of all MOU agreements. Additionally, regarding Viking/Middleby Corporation, OSA strongly recommends MDA closely monitor the situation to ensure Middleby is adhering to its MOU to minimize or eliminate future defaults.
The full report can be found online at the OSA website.
State Auditor Stacey Pickering’s office
4/26/2018
Sarah Ulmer
