City of Salinas Sues Green Vehicles
August 30, 2011
About six weeks after Salinas' Great Green Hope sputtered to a stop, the city is suing Green Vehicles, the electric car maker that announced July 12 it was closing down. Green Vehicles had plans to plan to make thousands of cars and hire 50 workers at the old Firestone Business Park and to build a showroom on Abbott Street.
The city is seeking $534,500 in damages for breach of contract, fraud and other charges, and the complaint names CEO Mike Ryan and former CEO Ehab Youssef. Salinas first contributed $300,000 of federal Community Development Block Grant funds to Green Vehicles in exchange for a commitment to toward create nine local jobs.
The city later paid an additional $235,000 to help Green Vehicles meet its matching fund obligations toward a $2.1 million grant from the California Energy Commission, which had ranked the company as the top applicant among 23 start-up competitors in 2010. The city of Salinas was surprised to learn the Energy Commission didn't hand out the cash up front, and rather required that grant recipients raise matching funds first.
“[Startups] have one high-priority need, and that’s cash,” says Jeff Weir, Salinas’ community and economic development director. “To ask them to spend money so you can reimburse them really seems kind of silly. There will be more companies like Green Vehicles that will fail because of that.” Energy Commission spokesperson Adam Gottlieb says the terms of the grant were clear from the outset, and there should've been no surprises.
The first signs that Green Vehicles was struggling came back in April, when the company became delinquent on rent payments and offered to barter a car in exchange for rent.
City Council had plans on Tuesday to discuss crafting a set of guidelines regarding how to invest public money in public-private business ventures in the future.