SC county’s top industrial prospect sues over ‘illegal’ deal | Business

A Turkish battery firm behind Colleton County’s largest industrial project is suing the commercial real estate company that brought it to South Carolina, claiming it’s being charged illegal fees for incentives that state and local governments provided to lure the factory.

Istanbul-based Kontrolmatik Technologies and its Pomega Energy Storage Technologies subsidiary filed a lawsuit against Jones Lang LaSalle Americas claiming the Chicago-based real estate and site selection group known as JLL wants $5 million as its share of roughly $127.6 million in taxpayer-funded incentives that were promised for a new factory at Colleton Industrial Campus off Interstate 95 near Walterboro.

Pomega groundbreaking

A groundbreaking was held in February for the $358 million Pomega Energy Storage Technologies plant to be built at the Colleton Industrial Campus near Walterboro.

The incentives include property tax breaks, income tax credits, sales tax exemptions and a grant to help offset construction of public infrastructure, such as roads and sewer lines. Additionally, the Pomega plant will get about $900 million in U.S. tax credits through 2032 under the federal Inflation Reduction Act.

South Carolina law forbids industries from paying consulting fees to third parties for helping to arrange such incentives, and the state Commerce Department said it “does not condone contingency fee arrangements in connection with discretionary incentives” that it approves. 

A JLL spokeswoman said the company does not comment on pending litigation.

The lawsuit was originally filed in April in state court in Colleton County and was transferred to federal court this week.

JLL has asked a judge to move the case to Illinois, and Kontrolmatik has until June 12 to respond to the request.

Kontrolmatik hired JLL in May 2022 to help the company find a site for its first U.S.-based lithium-ion battery manufacturing site. The real estate firm ultimately led the company to Colleton, the lawsuit states, where the battery plant went by the code name Project Quartz and was publicly announced that December.

With an investment of $358 million and the promise of 600 jobs over a five-year period, the battery plant was deemed a home run by local officials.

JLL and Kontrolmatik also touted their partnership when the project was announced, with Keith Stauber of JLL’s national site selection group saying his company is “thrilled to have had the opportunity to advise and support” the battery firm, according to a written statement.

Bahadir Yetki, Kontrolmatik’s CEO, called the relationship a “most pleasant experience,” adding in a statement that “JLL made a very difficult and lengthy process joyful and easy for us.”

But by February 2023, JLL started demanding payment for the financial incentives awarded to the Pomega plant, billing the battery firm $5 million — the maximum amount allowed under a non-binding agreement between the two sides.

Kontrolmatik balked at the invoice, according to the complaint, saying JLL didn’t actually negotiate the incentives for which it wanted payment, adding in court documents that the amount “is plainly excessive and unconscionable.”

Kontrolmatik paid a $750,000 fee for incentives the battery firm said could be directly tied to JLL’s work, but “JLL has demanded that (Kontrolmatik) pay additional funds and has threatened litigation.” The battery firm is asking a judge to declare the memorandum of understanding unenforceable because South Carolina prohibits such fees for public incentives.

The S.C. Commerce Department did not comment specifically on the Kontrolmatik case, saying it is never a party to nor does it review agreements between prospective industries and site selection consultants.

“SC Commerce cannot comment or speculate regarding what the parties agreed to or intended,” the agency said, adding it has “no knowledge of other instances in which contingency fee arrangements may have been agreed to between a site consultant and prospective company.”

JLL has not filed a response to the lawsuit but said in its request to move the case to Illinois that it has the right to choose the venue in any legal dispute under a memorandum of understanding.

“The bulk of JLL’s witnesses and documents … are located in Illinois — not in South Carolina,” Stauber said in a court filing, adding his company only interacted with Kontrolmatik employees in Turkey and Washington, D.C., never in the Palmetto State. “It would be substantially inconvenient for JLL witnesses if the case remains pending in South Carolina.”

In addition to “declaring that JLL is not entitled to receive a contingency fee on any economic incentives because such an arrangement violates South Carolina law,” Kontrolmatik is asking a judge to award unspecified financial damages, tripled under the state’s Unfair Trade Practices Act.

The Lowcountry plant will build lithium-ion batteries that can be used to power electric grids, either paired with renewable energy installations or as stand-alone facilities. It will produce 3 gigawatt hours of capacity, or enough to power roughly 900,000 homes.

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