The convoluted bankruptcy of coal company Blackjewel has hit another turn of events as the company’s former CEO moved to liquidate the company. A federal judge is considering a motion submitted last week to convert the bankruptcy from Chapter 11 to Chapter 7.
That would mean that instead of exiting bankruptcy as a new company with less debt, Blackjewel L.L.C. would effectively cease to exist.
Former Blackewel CEO Jeff Hoops, who is currently under investigation for mismanagement of the company, said in a filing that Blackjewel had only $146,000 in unrestricted funds, and could not pay millions in back taxes, reclamation fees and employee healthcare expenses.
“Given [Blackjewel’s] lack of operating assets, permanent, negative net cash flow, and continuing financial losses, there is no reason to continue this proceeding as a Chapter 11 and incur the substantial and unnecessary administrative expenses attendant to doing so,” Hoops and other filers said in the November 25 motion.
“It’s pretty common for companies to shift from a Chapter 11 to a Chapter 7 when they’re struggling like Blackjewel is,” said University of Chicago School of Law assistant professor Joshua Macey, a coal bankruptcy expert. “Given how long this bankruptcy has dragged on, how poor conditions for coal are right now, how speculative and unprofitable Blackjewel’s assets have been, it isn’t surprising that it’s moving to a liquidation.”
Still, Macey said, the move is another recognition by the coal industry’s major players that mining it is rarely profitable.
According to court filings, virtually all of Blackjewel’s assets have been sold, and the company’s only remaining assets are $146,243 in unrestricted cash and existing claims against Hoops, his wife and children, and a handful of other parties.
Attorneys for Blackjewel attempted to sell Blackjewel’s equipment and mining permits in Kentucky, West Virginia, Virginia and Wyoming soon after the company filed for Chapter 11 bankruptcy protection in July last year. Some permits were successfully sold, but others did not sell, due in large part to the declining market for “steam” coal, which is used to generate electricity. The assets that did sell were recouped for far less than their value: Blackjewel sold an estimated $357 million worth of assets for just $44 million.
Blackjewel accrued $80 million in administrative and other expenses from July 1, 2019, through October 31, 2020.
According to court filings, Blackjewel also has multiple outstanding permit violations, an unknown amount of outstanding environmental reclamation liabilities, unpaid taxes totaling $3.2 million, tax liabilities of untold amounts, $14.9 million in unpaid employee healthcare claims, unfunded pension obligations totaling $11.9 million, and tens of millions due to the legal teams that have administered the bankruptcy.
It is not clear how much of those debts will be repaid, but given the Blackjewel estate’s dire financial straits and the proposed conversion to a Chapter 7 plan, it seems that a significant portion of those debts will not be recovered.
The Chapter 7 petition comes nearly a year and a half after Blackjewel abruptly filed for bankruptcy last July, leaving hundreds of Appalachian coal miners out of work and unpaid, and spawning one of the largest labor protests in the region in decades.
Correction: This story was edited on Dec. 3 to make clear that the judge has not yet approved the Chapter 7 conversion proposal.
Many challenges parents and caretakers face under normal circumstances are exacerbated by the coronavirus pandemic. Through the CARES Act, additional federal dollars were granted to help essential workers with things like child care regardless of income. Still, not every new challenge for working parents has been addressed during the pandemic.
Resource and referral agencies across the state such as Mountain Heart Community Services Inc., which is in 30 West Virginia counties, are processing the increased applications.
Susan McCoy is a supervisor and case management auditing coordinator with Mountain Heart Community Services, a resource and referral agency that provides child care for working parents along with other services.
Essential workers have been reaching out to Mountain Heart in 30 counties in West Virginia since April.
“In the beginning, once the changes came down in March and April,” McCoy said, “we did see a lot of frontline workers, nurses, doctors, emergency medical services, police officers, folks of that, you know, doing those kinds of jobs who weren’t eligible before.”
Since April, the agency has seen at least 30 more cases every month compared to the same time last year. In April alone, there were almost 130 more families who asked for help compared to the previous year.
“I do believe it is because the income limitations for essential workers have been waived,” McCoy said.
The stay-at-home order forced more parents to juggle child care while working from home. While essential workers such as custodians, doctors, and nurses were eligible for financial assistance, no policies existed then or now to help parents trying to stay productive at home while also taking care of their kids.
“It has been a challenge, especially when they have younger children who are not in school,” McCoy said. “And just overall income situations have been really difficult for families. You know, if you’re not working, you’re not making money. It’s hard to pay for childcare and you know, bills that are adding up for families.”
West Virginia is a rural state, and many times, day care isn’t an option. But those who are looking for employment can start their own daycares. Through Mountain Heart, child-care providers can get trained to provide care for up to six children in their own home. An additional service of the agency helps provide resources in remote and rural parts of the state that may not have the population to support a daycare center.
“You don’t have to go to a childcare center or facility to receive Mountain Heart (benefits),” Burdette said. “You can have an individual person that goes to the training program and takes care of your child while you’re at work or at school.”
Burdette looks for funding opportunities along with sources to partner with, and to help with program development within the agency.
The solutions or resources have been in place since the War on Poverty was declared in the 1960s, and it’s helped single parents go to school or work, while someone else cared for their children.
No program is not perfect, and the pandemic has magnified these challenges. Burdette was recently one of 40 professionals across Appalachia to attend economic skills training at the Appalachian Leadership Institute. It’s part of the Appalachian Regional Commission (ARC) fellowship program.
Burdett hopes the fellowship will reveal strategies and resources that would work for West Virginia.
“I think the whole area of jobs and economic development is very important,” Burdette said. “If we could figure out better ways to allow people to work. You know that the ways that other people do it in rural areas, even in other states or other regions outside Appalachia is through telework or telecommunications. And of course, we don’t always have that, especially with, you know, the issues we have with connectivity and broadband and those types of things.”
After completing the nine-month series of online meetings, Appalachian Leadership Institute Fellows will become part of a peer-to-peer working group committed to Appalachia’s future.
The benefits are part of the federal CARES, or Coronavirus Aid, Relief, and Economic Security Act.
The federal benefits that provide financial assistance to essential workers regardless of income, are expected to run out after December.
When the Coronavirus pandemic was declared in March, state leaders shut down schools, ordered businesses to close and told people to stay home from work unless they were deemed “essential” by the federal government.
This included hygiene production and services such as custodians for essential buildings. It created new challenges for single parents deemed essential, especially when daycares shut down. With virtual learning, more challenges emerged for parents. Jessica Lilly spoke with a few moms coping with this reality to get a sense of what they’re up against.
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Kaitlyn Oxley and her daughter, Mia, pause for quick photo for SnapChat.
Kaitlyn Oxley is a custodian in Mercer County, West Virginia.
“I was deemed essential,” Oxley said. “But the daycare closed down as soon as it started. So I had to be off work and work when I can. It was usually one or two days a week if that.”
After the daycare closed, Oxley says she had no choice but to stay home most days, only working when her mother got a day off and could keep her 3-year old young daughter.
With so little work, Oxley’s bills started to add up – but she made it through with support from her family.
“I had a very gracious aunt that helped me,” Oxley said. “Luckily, I got my settlement. So I got the backup. But if I didn’t have that I would have been, just out of luck.”
The settlement came from insurance after she was in a car wreck in September 2019. The timing of it was a huge help for Oxley.
Kayla Graham is also a custodian in Mercer County.
“When the pandemic hit, I was out of work for a week,” Graham explained.
Graham, a single mom with four children, ages 13 to five, said that it was a layoff that helped her get back to work.
“Luckily, my youngest daughter, her father, ended up getting laid off because of the pandemic also,” Graham said. “So he helped out a lot with watching the kids whenever the daycare shut down. And usually, like a typical day, I go to work, I come home, I work on their schoolwork, and some days, you’re just feeling like you’re pulled in every direction.”
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Kayla Graham cuddles with her four children.
Most of the time, she doesn’t really think about the challenges or how hard things could get. She simply does what she needs to do – for her family.
“I don’t really think right now anything could really help,” she says fighting back tears. “It’s just, you know, kind of doing what you have to do during the pandemic.”
When the local daycare finally opened back up, both Graham, as well as Oxley, qualified for financial assistance with child care through the nonprofit Mountain Heart Community Services Inc. because they were essential workers. The private, community action agency was created back in the 60s in the wake of the federal War on Poverty.
Anyone deemed “essential” qualifies through December. Mountain Heart offers child care assistance and several other services in 30 counties across the state.
You know, you have to make a living,” Graham said. “And without Mountain Heart, I probably couldn’t do that. And it helps a great deal whenever it comes to single parents, with multiple kids.”
Today, with the kids back to school, there are new challenges.
“Pretty much you just kind of have to wait until I get off of work and then do all of the kids’ school work then,” she said. “It’s difficult. They do their Zoom meetings at daycare. And, you know, they’re where they talk to their class and their teachers. I’m lucky that the daycare does that and they help with that.”
Graham notes her challenges in ensuring all of her children’s needs are met.
“My kids, they’re also in special ed, two of my boys are in special ed so whenever I say I’m pulled in every direction, my youngest daughter, she just started preschool. So it’s like this one wants help, this one wants help, and this one wants help. But it’s like where do you start? That’s, it’s stressful.”
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Kaitlyn Oxley’s daughter, Mia, dressed as the Stephen King character Penny Wise for the Miss Wicked Pageant in Beckley, WV.
At times, it’s hard for these women to share these stories. But one activity that made both women smile was participating in pageants.
“I think it builds a child’s self esteem for the most part,” Graham said. “They get up there and everybody’s talking about how pretty they are, you know, and it’s putting them up on a pedestal and that’s great. It really is.”
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Kayla Graham’s five-year-old daughter, Isabella, was presented with a trophy for Halloween Princess in the 2020 Miss Wicked Pageant in Beckley.
The women don’t find much time for themselves any more. But they find a bit of happiness to see the smile on their kids’ faces. Kayla encouraged other single parents like herself as they work through a difficult era.
“Honestly, you’re not alone,” Graham said. “Everybody’s kind of stuck in my own spot right now, as frustrating as it is.”
Graham and Oxley also said that another stimulus package would mean a chance to get ahead on bills and not have to worry as much about Christmas presents for the kids.
West Virginia residents who need help with their home heating bills this winter can apply for another round of financial help from the Department of Health and Human Resources. The relief comes as the colder months are setting in and the economic future is uncertain, due to the pandemic.
Applications opened Monday for the Low Income Energy Assistance Program, which will help pay heating bills for qualifying West Virginia homes for one month.
The heating assistance program occurs each year, but the DHHR said it expects more applications than normal due to hardships from the pandemic this year.
This season’s LIEAP program is funded through the CARES Act, federal COVID-19 relief aid distributed to states in the spring and summer, and is supplemented with a recent federal grant of more than $28.6 million, according to the DHHR.
Many LIEAP qualifying households received two additional heating support payments this year due to the pandemic. Additionally, money from the CARES Act was distributed to those who could not afford utilities during the first four months of the pandemic. After a voluntary hiatus, beginning July 1, West Virginia utility companies reinstated service shutoffs.
U.S. Senator Joe Manchin said in a news release that about 48,000 West Virginians will need heating assistance this winter.
To see if you qualify for West Virginia’s Low Income Energy Assistance Program, go to the website— wvpath.org.
A new entrepreneur center is launching in West Virginia to support women and people of color, a demographic hard hit by the coronavirus, who are interested in starting a small business.
The West Virginia Women’s Business Center is launching in Charleston with a satellite office in Fairmont. The goal is to support women and people of color entrepreneurs across the state — providing resources and connections to either start or grow a business.
“Small businesses are the backbone of our economy in West Virginia,” said Tiffany Ellis-Williams, director of the Economic Development Center at WV State University. “Our small businesses must also include more women and people of color. Accessibility of resources to generate new products or services and create thriving businesses is the key to economic growth and wealth within a community.”
Services are all virtual for now, and they include mentoring, networking and assistance obtaining funding and financing. As the Brookings Institute found, small businesses in communities of color had less access to aid provided through the coronavirus relief aid packages.
Nationwide, men start 70 percent of businesses, and according to the Brookings Institute, only 20 percent of businesses are owned by people of color, even though people of color make up nearly 40 percent of the U.S. population. Additionally, data have shown the pandemic is hurting Black businesses nearly twice as much as white-owned businesses.
Standing at the site of a long-abandoned, multimillion dollar industrial park in November 2016, U.S. Rep. Hal Rogers urged residents in southeastern Kentucky’s Bell County to envision the tourism potential for miles of open land.
Joined by Matt Bevin, then Kentucky’s governor, and local politicians, Rogers pointed to the expanse of forestlands and mountaintops in the distance as he unveiled a $12.5 million federal grant for the Appalachian Wildlife Center. Rogers, a Republican who represents the state’s Appalachian region, had helped secure the money through the Abandoned Mine Land Pilot Program, a federal initiative designed to foster economic development around former coal mine sites in Kentucky and other states.
The proposed state-of-the-art facility would include a museum and local artisan market where visitors could learn about nature. The center’s biggest attraction: the elk that roam the area.
“Let me assure you this is a worthy project that we are investing in,” Rogers said during the gathering. “The Appalachian Wildlife Center has the potential to transform tourism in our region. There is no place in the country with a better story than eastern Kentucky.”
Nearly four years after the announcement, and three years after the wildlife center was first supposed to be completed, the land is still largely untouched except for a few pens to hold elk and some water utility construction. The projected infusion of hundreds of thousands of tourists has not materialized. And Bell County residents, a third of whom live in poverty and fewer than 1 in 10 of whom have a college degree, are still waiting for an influx of jobs from yet another effort promising to help the area recover from the decline of the coal industry.
The AML Pilot Program, created in 2015, is among the latest efforts that pledged to change the fate of eastern Kentucky. State and federal leaders have directed hundreds of millions of dollars to the region over the past 50 years as part of multiple economic revitalization efforts.
Those investments have resulted in some improvements, including new hospitals and other health care facilities, job-training programs, and some businesses that have come and stayed. But many projects haven’t lived up to expectations, leaving residents waiting for an economic lifeboat that never seems to arrive.
Stacy Kranitz, special to ProPublica
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Downtown Pineville, Kentucky, a small town in Bell County near the future site of the Appalachian Wildlife Center.
Since its inception, the AML Pilot Program has awarded $105 million to 43 projects in the state with little vetting. Some projects like the wildlife center have taken far longer to complete than promised, with no consequences. And lofty projections for job creation, visitation and tourism revenue made by the wildlife center and other projects went largely unchallenged by the state, the Kentucky Center for Investigative Reporting and ProPublica found.
An industrial park in Martin County was awarded $3.37 million in September 2019 even after a consultant warned that the project had “fatal flaws,” including its location near a federal prison. Two other industrial parks that received funding have already lost, or are at risk of losing, major businesses after pledging large numbers of jobs and related economic growth.
And a $2.5 million grant to Harlan Wood Products LLC in 2016 was tabled after the company was unable to obtain additional private funding. The Harlan County business, which is now dissolved according to the Kentucky secretary of state’s office, had planned to produce wood pellets for biomass fuel, employ up to 35 people and create about 60 indirect jobs.
For the wildlife center, pledges of economic turnaround soared even as the projected opening date was repeatedly delayed. The center is now expected to open in June 2022, according to the Appalachian Wildlife Foundation, the nonprofit organization that is responsible for its construction.
“We’re actually building it. Nobody’s ever done anything for tourism like we’re doing,” said David Ledford, president and CEO of the nonprofit foundation. He said project delays have been primarily due to construction challenges on the reclaimed mine site and a request by federal authorities for an additional environmental assessment. The coronavirus pandemic also has pushed back construction, according to recent reports submitted to the state by the foundation.
The federal Office of Surface Mining Reclamation and Enforcement, which oversees the distribution of AML Pilot Program funding to states, did not respond to a request for details about its application review process. But three officials familiar with the process, who aren’t authorized to speak publicly, told KyCIR and ProPublica that the agency does no independent scrutiny of grant applicants’ claims.
Stacy Kranitz, special to ProPublica
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A pawnshop window in downtown Pineville.
State officials also could not provide KyCIR and ProPublica with records showing that they verified the tourism and job projections. In fact, a committee appointed by the state Energy and Environment Cabinet secretary has helped to dole out millions in taxpayer dollars without maintaining any records of discussions or votes, as required for public bodies, KyCIR and ProPublica found.
The committee, which helps determine how the program’s federal tax dollars are spent, is not required to comply with state transparency laws, according to state officials who argue that it is not a public agency because it serves in an advisory capacity to the cabinet secretary.
State and local programs across the country that offer incentives for economic development repeatedly come under scrutiny for failing to achieve job creation and revenue benchmarks.
The AML Pilot Program falls within a gray area that sometimes escapes deeper examination.
The federal government has gradually given states more decision-making authority over grant distribution and oversight, said Brett Theodos, a senior fellow and director of the community economic development hub at the Urban Institute in Washington, D.C.
But the AML Pilot Program stands out because the federal agency responsible for distributing the funds does not appear to have provided clear parameters and measurements for success, he said.
“The lack of expert decision-making, public meetings or outcome tracking makes (the AML Pilot Program) open for abuse,” Theodos said.
Disney-like Experience
The announcement on building the wildlife center came nearly two decades after the failure of an industrial park project on the same site.
The state spent more than $10 million to buy the land, build a bridge over the Cumberland River and run a three-lane, paved road up to the mountaintop, where the industrial park would be located.
But no industry came. The park sat empty for more than a decade.
Stacy Kranitz, special to ProPublica
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This sign is all that remains of a proposed industrial park. Nearly two decades later, the Appalachian Wildlife Center would choose to build on the same site.
Then, in 2014, Ledford announced plans to construct the Appalachian Wildlife Center. At the time, Ledford said he was considering five counties as potential locations for the center, which would be funded solely through private donations.
The following year, Ledford chose Bell County.
Ledford said in 2015 that the project, which would encompass 12,000 adjoining acres, would draw 580,000 visitors and generate more than $113 million for the region in its fifth year in operation. “We will not seek any government funding for the project. It will be funded thru private donations,” Ledford said in a news release that projected a 2017 completion date.
After three years of operating at a net loss, the Appalachian Wildlife Foundation sought to bolster funds for the center by seeking an AML Pilot Program grant.
In an application filed in 2016 by the county, the foundation offered more ambitious tourism numbers than it had a year earlier. Not only would the center draw 638,000 visitors in its fifth year in operation, it would spur the creation of more than 2,000 jobs in the region.
Ledford did not respond to a request to explain why he sought government funding after vowing not to do so. He has said that the state and federal governments vetted the economic projections.
But hundreds of pages of federal and state documents related to the Appalachian Wildlife Center project show no indication of any independent assessment or critical vetting by the state or the federal government of the tourism and job creation projections. At least three federal documents, including a 2019 report, repeat almost verbatim the project application’s claims for visitation, job creation and revenue generation.
In 2019, foundation leaders estimated that the center would open in June 2021. By its third year, it would make $8.5 million after operating expenses, they said. The projection was based on new estimates of 850,000 visitors annually, starting in its third year, and average per visitor spending of $44 on admission fees, food and gift shop items.
“We’re going to build a first-class tourism destination and we’re going to deliver a Disney-like experience,” Frank Allen, a foundation board member, said during a presentation last year. “I know it sounds ambitious and it is but, bear with me, at one point so was Disney World. Ultimately, all you need is a great plan and a lot of money. We’ve got the plan and most of the money.”
A screenshot of Kentucky Gov. Matt Bevin’s Facebook post in 2016 announcing the Abandoned Mine Land Pilot Program grant for the Appalachian Wildlife Center and showing the proposed rendering.
Stacy Kranitz, special to ProPublica
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Four years later, the future site of the visitor center still lies empty.
The Appalachian Wildlife Foundation’s tourism projections exceeded by nearly 300,000 the number of visitors last year to western Kentucky’s Mammoth Cave National Park, one of the region’s leading tourist attractions and home to the longest-known cave system in the world.
Ledford said the projections stem in part from his belief that the wildlife center will generate more visitors and revenue than the Keystone Elk Country Alliance in northwest Pennsylvania, which was created in 2009. The facility attracts more than 481,000 people annually, according to its website.
The wildlife center hopes to capitalize on tourists traveling to other destinations, including resorts such as Pigeon Forge, a mountain town two hours away in eastern Tennessee that is home to Dollywood, and Hilton Head Island in South Carolina, which is a seven-hour drive from Bell County. About 94% of the center’s visitors would be from outside the state, according to the foundation’s estimates.
“Our visitors are not going to spend three or four days here,” Ledford said in an interview. “It’s not the end destination. It’s a stop on the way to someplace.”
Jeffrey Larkin, an Indiana University of Pennsylvania professor who teaches ecology and conservation, is skeptical that the wildlife center will be able to live up to its projections.
Stacy Kranitz, special to ProPublica
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An elk pen at the future site of the Appalachian Wildlife Center in Bell County, Kentucky.
“I would say that the challenges that lie before the Kentucky facility would be, ‘If you build it, would they come?’” said Larkin, who received his master’s and doctoral degrees from the University of Kentucky and who once conducted fall elk tours in the Appalachian area of the state. “It’s in a part of Kentucky that’s not often visited by a lot of people.”
A New Program, Another Promise
Nestled in the southeastern corner of the state at the juncture with Virginia and Tennessee, the land that would become Bell and Harlan counties was cemented in the region’s history when frontiersman Daniel Boone blazed a trail through the Cumberland Gap in 1775.
The counties also reflect in many ways the Appalachian region of which they are a part: They are breathtakingly beautiful, largely rural, overwhelmingly white and significantly poor.
The remote counties, among 38 deemed economically distressed in eastern Kentucky, have long wrestled with high poverty and unemployment rates. But a struggling coal industry hastened economic contractions for rural communities in Appalachia.
In the past decade, coal production in the state’s Appalachian region dropped from 67 million tons to 13.6 million, forcing the elimination of most mining-related jobs, which plummeted from 13,000 in 2010 to 3,400 in 2019.
“Coal’s hold over eastern Kentucky has long dampened creativity, long-term planning, alternative economic development, the ability to think in terms of the public good rather than personal gain and adequate taxes with which to support public infrastructure and services,” said Ronald D. Eller, former director of the Appalachian Center at the University of Kentucky and a retired history professor.
Rogers, the politician who earned the nickname “Prince of Pork” because of his success earmarking funding for his district, has been at the center of many of the infusions of federal dollars for the region he represents. In June 2015, he chaired the U.S. House Appropriations Committee, which pushed for the AML Pilot Program as part of the U.S. Department of the Interior and Environment Appropriations Bill.
Lawmakers created a new pot of money, setting aside $90 million in 2016 to create new job opportunities and stimulate the economies of Kentucky, Pennsylvania and West Virginia by developing reclaimed mine sites. The program later expanded to include three additional states and three Native American tribes.
The federal government distributes the money but allows state officials to develop their own criteria for selecting the projects and monitoring their progress.
“This is a thoughtful alternative to help hard-hit communities reinvigorate their economies by using abandoned mine land to develop hospitals, community centers and much more,” Rogers said in a June 2015 news release after his committee’s approval.
Rogers has since promoted the program as a key economic driver in Appalachia. In a 2018 news release, he called it “one of the most successful job creation and tourism initiatives that we’ve ever had in Eastern Kentucky.” At the time, none of the projects had been completed.
Rogers defended the money spent on various projects that have drawn limited results.
“There isn’t a silver bullet that can lift our region out of generational poverty, and none of our local officials who have applied for an AML grant believes that one project in an industrial park or an exciting new tourism project will lift their county out of poverty,” Rogers said in an email.
Kentucky officials acknowledge that the state’s oversight of the projects focuses on planning and construction, not on expectations for economic development. Once construction is complete, state oversight largely ends, leaving no consistent accountability system for measuring whether the investments drew promised economic changes to the area.
Stacy Kranitz, special to ProPublica
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A coal miner’s flag hangs in the front yard of a home in Middlesboro, Kentucky.
John Mura, a spokesman for the state Energy and Environment Cabinet, said the administration of Gov. Andy Beshear is committed to helping to improve the economy in coal communities and considers the AML Pilot Program an effective tool.
While agreements with grantees do not clearly articulate oversight responsibilities once projects are completed, Mura said the cabinet “may require that the grantee continue to submit an annual report on various metrics such as job creation.”
“This program has brought a good measure of economic vitality to eastern Kentucky in the past four years and there is every expectation that under the Beshear administration, it will continue to produce new jobs and new economic vitality in this part of the state,” Mura said in an email. He did not respond to questions about which circumstances might trigger the request for annual reports.
Mura pointed to two projects that he said have led to an additional 44 jobs in eastern Kentucky.
Dajcor Aluminum, a business operating in the Coal Fields Regional Industrial Park in Perry County, has hired 31 employees since the county received a $6.5 million AML Pilot Program grant in 2018 to buy equipment for the company. SilverLiner, a tanker truck manufacturing company, also has hired 13 employees, Mura said. The company is located in Pike County, in the Kentucky Enterprise Industrial Park, which received a $5 million AML Pilot Program grant in 2016.
James P. Ziliak, an economics professor at the University of Kentucky, said the eastern part of the state could be in worse shape without government investments such as the AML Pilot Program. But he worries about the lack of a broader strategy.
“It’s kind of a failure of economic development policy,” Ziliak said. “A lot has been spent, but has it been spent in the right places? And there have been a lot of empty promises over the years.”
Banking on Tourism
The Appalachian Wildlife Center is not the only tourism project in eastern Kentucky banking on big promises to uplift the region.
A Letcher County nonprofit, the EKY Heritage Foundation Inc., was awarded two AML Pilot Program grants totaling nearly $3.5 million in 2018 and 2019 after promising to transform more than 100 acres of “stagnant land” into Thunder Mountain, a “world-class” sport-shooting and archery resort park. The park would draw an estimated 40,000 annual visitors, according to the nonprofit’s application.
The completed project would employ 40 to 50 people and include shooting ranges, campgrounds with cabins, an amphitheater and a training site for law enforcement and the military.
The application offers no supporting evidence that Thunder Mountain could attract the number of tourists it projects. And while the application asserts that Thunder Mountain would be a “valuable resource” for personnel at a federal prison to be built in Letcher County, plans for construction of the prison were shelved last year.
Missy Matthews, president of Childers Oil Co. and of Double Kwik, a chain of more than 40 convenience stores and gas stations in the southeastern Kentucky region, formed the nonprofit that proposed the project. She did not respond to interview requests.
State Rep. Angie Hatton of Whitesburg, an EKY Heritage Foundation board member, declined to discuss claims for the project in detail. She provided a statement that she attributed to Sally Oakes, a Childers Oil Co. employee who served as the foundation’s grant writer.
“The estimates in the grant application are based on various sources of information including reports, journals and magazines as well as communications with other owners/operators of shooting ranges,” the statement said. Oakes could not be reached for comment.
About 130 miles northeast of the proposed site for Thunder Mountain, another tourism-related project, in eastern Kentucky’s Boyd County, received a $4 million AML Pilot Program grant after pledging to double the number of visitors for an existing off-road park.
The grant, awarded in 2017 to Boyd County government, would assist with water, sewer and road improvements intended to primarily benefit Rush Off-Road, a for-profit business owned by E.B. Lowman III, who also is president of a real estate company in eastern Kentucky.
In its application, Boyd County government officials said the improvements would help the park increase to 100,000 the number of visitors. It did not provide a timetable for the increase and offered no evidence or documentation to support the claim.
Project documents cite, but do not include, a market research study by Marshall University in West Virginia, which Lowman said found that the park had a $5 million-plus economic impact on the county in 2017. Lowman declined to provide KyCIR and ProPublica with a copy of the study, and university officials said they were unable to find one.
Boyd County officials did not respond to repeated requests from KyCIR and ProPublica to discuss the project. Federal and state officials did not reply to specific questions about the project.
Shawna McCown said she struggles to understand how the four-wheelers roaring by her house in Rush, Kentucky, will help her or her neighbors.
“They’re saying it’s going to help the community, but we don’t see any benefit for us at all,” McCown, a schoolteacher, said of the project. “How does that help me? I want a community center, a library.”
Residents Left Waiting
Stacy Kranitz, special to ProPublica
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Cynthia Gooch and her niece in an unfinished park in Pineville. Pineville and other towns in Bell County have struggled with unemployment and poverty.
By now, the Appalachian Wildlife Center, which has rebranded itself as Boone’s Ridge, was supposed to be pumping millions of dollars into Bell County. It was expected to have created more than 1,000 direct and indirect jobs in the region, as many as the county’s two largest employers combined: Smithfield Foods, which produces a variety of hams and smoked meats with 500 workers, and the Bell County school system, which has about 430 employees.
Instead, a countdown clock on the project’s website winds down to the most recent opening date: 593 days away.
Meanwhile, Rome Meade, a 26-year-old who lives in the area, has for six months hunted for a full-time job without success.
“I believe it’s gonna turn around,” Meade said. “At least I hope so.”
He’s better off than some. He draws a salary as pastor of the Winchester Avenue Church of God in Middlesboro. And he, his wife and their two young children live rent-free in the church parsonage.
Meade makes too much money to qualify for food stamps or most other government benefits, except for health care.
“I want a job. I’ve always worked, but I can’t get no help,” Meade said.
Meade wishes the government would focus more on helping create well-paying positions that will allow him to stay in the area and not “on things that don’t matter, like an industrial park.”
“All of the tax dollars are going for things that people see no benefit to,” Meade said. “They’re getting frustrated. People are bustin’ their tails, trying to make a living for their families.”
R.G. Dunlop is an investigative reporter for the Kentucky Center for Investigative Reporting. His work has exposed government corruption and resulted in numerous reforms. Email him at RDunlop@louisvillepublicmedia.org and follow him on Twitter at @rgdunlopjr.
This story was produced in partnership with ProPublica, a nonprofit newsroom that investigates abuses of power, and the Kentucky Center for Investigative Reporting, which is a member of the ProPublica Local Reporting Network.
