In its last meeting of the year, the state Bond Commission approved $1 million in borrowing Friday to help an emergency home repair company move its headquarters from Stamford to Norwalk.
The bonding will assist the HomeServe USA Corporation in relocating its headquarters as part of an agreement to create 130 jobs and maintain another 109. In addition to a $1 million grant, the company is also eligible for a $3 million, partially forgivable loan and up to $5 million in tax credits. The project was the only item on an unusually short bonding agenda to be opposed by the group’s two Republican members.
Senate Republican leader and gubernatorial candidate John McKinney raised questions about HomeServe in a press statement Thursday evening. McKinney pointed to news articles on questionable business practices by HomeServe USA and its UK-based parent company.
The company has been fined and has been investigated by government agencies in the UK and states including Massachusetts, which fined the company $85,000, as well as Kentucky, and Ohio. The Better Business Bureau also has warned consumers of complaints against the company in various states across the country.
Among the allegations against Homeserve are claims the company sent communications to customers falsely appearing to be from local utility companies, or using logos intended to look governmental. The company also is accused of misleading customers on their insurance products.
“Here we are, handpicking another company for state funding even though that company has had several questions raised about its business practices. It is reckless and careless,” McKinney said in a press release.
A spokeswoman for HomeServe declined to comment on for this story. However, McKinney also leveled criticisms against Gov. Dannel P. Malloy’s administration for entering into the deal with HomeServe.
“Does the Malloy administration vet the companies it is providing millions of our taxpayer dollars to? Did anyone do any research or did they just write out the check?” he said. “Through a simple Google search, this is what I found.”
Economic and Community Development Commissioner Catherine Smith said the state was aware of the issues McKinney detailed Thursday.
“We looked at and discussed with the company pretty much all the issues that you have seen,” Smith told reporters after the Bond Commission meeting. “We became satisfied that they had dealt with and managed, to the satisfaction of their customers . . . all of the issues that were raised.”
Smith said the administration researched the company before it engaged them on the economic development deal.
When picking companies to partner in economic development programs with, Smith said the state prioritizes practical issues like whether the company is following state rules and regulations, is doing appropriate business, paying their taxes, and has a business plan that seems likely to succeed.
But she said the department also considers the public image of a company it plans to help financially support.
“And yes, do we also look at the softer side of this? Yeah, we learned from TicketNetwork that it’s a good idea to do a little bit of research and make sure we understand who we’re doing business with,” she said.
TicketNetwork is an online ticket exchange company that withdrew last year from a state economic development agreement following the arrest of its CEO Don Vaccaro. Vaccaro also had a lawsuit pending against him at the time his company entered into a deal with the state.
“To be honest with you, in HomeServe’s case, they raised the issue with us, which I found was extremely useful,” she said. “It is something that we want to take into consideration. Why? Not because we’re worried about [news reports] when we do the deal, but because we want to make sure the taxpayer dollars are being managed in a fiduciary sense, in a smart and careful way.”
Despite concerns about the HomeServe agreement, Friday’s Bond Commission meeting was not marked by partisan arguments. The commission ended up borrowing less than $1.8 billion in 2013. That number was a self-imposed bonding limit the governor set back in January.
During the meeting, Sen. L. Scott Frantz, R-Greenwich, thanked Malloy for not exceeding the limit.
“When I received the agenda for today’s Bond Commission meeting I felt like it was an early Christmas or holiday gift, at only $10.5 million. Clearly, this is below your soft bonding cap you gave us in the month of January,” he said. “I just want to say thank you for respecting it.”