BY LISA BIANK FASIG
The Cincinnati Enquirer
Whether it is Ohio's or Kentucky's incentive package that attracts Gibson Greetings Inc.'s new corporate office, the assistance plan likely will have more "ifs" than dollar signs.
Contingencies and growth projections determine the real value of a state's incentive package. In the case of Ohio and Kentucky, which are both vying to attract Gibson Greetings headquarters, it is impossible to determine immediately which offer would be more attractive.
Gibson is considering moving its headquarters after shutting its Amberley Village factory at year's end. Its building is 600,000 square feet, but only 150,000 square feet is used by white-collar workers.
Kentucky last week approved a $5.3 million incentive to attract Gibson to RiverCenter in Covington. Ohio is expected to soon weigh in with its own enticement.
But it isn't guaranteed to be the same -- or similar. Ohio and Kentucky use different formulas to determine their incentives for attracting companies.
"When we put the numbers on the table, as long as the company realizes its projections, it can realize everything that we offer," said Todd Ward, the governor's regional representative for the Ohio Department of Development.
Simply, Ohio bases its incentives on the number of new jobs created in three years. Kentucky figures its on an estimation of occupancy costs. How much the company gets ultimately is based on the number of jobs created, and in Kentucky's case, the company's profitability. But there are other intangible factors that will influence the decision.
Consider Jacor Communications Inc. and Omnicare Inc., two Ohio companies that recently relocated to Northern Kentucky. Cheryl Hodges, an Omnicare senior vice president, said the company didn't receive equivalent offers from both states. But, she said, the talks with Kentucky were far along by the time Ohio made an offer.
Meanwhile, Pam Taylor of Jacor said space availability, the company's lease at RiverCenter and taxes motivated the radio company's decision.
"All decisions are economically based, let's face it," she said.
John Boyd, president of the Boyd Co., a Princeton, N.J., corporate location consultant, agreed.
"Based on my experience, the incentive package will not be the determining factor," he said.
Rather, he thinks that state discretionary funds will swing the vote. Such money goes beyond incentives and can be used for infrastructure improvements or travel enhancements.
Here's a look at each state's job-creation incentive program in detail.
Ohio's Job Creation Tax is based on the number of jobs projected to be created in three years, but other factors apply.
The state considers the company's investment, employee salaries, a commitment to hire disadvantaged or minority workers, and, to a lesser extent, competition from other states.
The credit amount will equal a projected maximum of 75 percent of income tax generated by new employees over a period of no more than 10 years, Mr. Ward said. But even that figure is generous.
"It's rare that 75 percent is offered," he said.
Kentucky's Jobs Development Act allows a company to recoup up to half its occupancy costs and relocation expenditures, based on the number of existing and created Kentucky jobs over 10 years. In Gibson's case, the state arrived at and approved a package of about $5.3 million.
Dan Tobertge, senior vice president of the Tri-County Economic Development Corp., said the incentive is paid down in two ways: through a 10-year abatement on local and state new-employee taxes; and through a 10-year, 100 percent corporate income tax abatement.
Could Gibson raise that amount in 10 years?
It depends in part on how many Kentucky workers it hires over 10 years and how profitable the company becomes. The state would require Gibson to hire 40 Kentucky workers as part of the package, but Mr. Tobertge thinks that the company could hire more.
In 1997, Gibson's more than 800 workers paid $802,137 combined in earnings tax to Amberley Village.
"We are making an offer that we are bound by," said Mr. Tobertge, who worked on the Gibson case with Bryan Quinsey, Tri-Ed vice president. "If the company doesn't create the jobs and doesn't create the corporate income tax, they aren't out anything.
"This is an earn-as-you-go program."
