Thursday, March 18, 2004

Luken pushes tax breaks for LabOne

By Gregory Korte and Tim Bonfield
The Cincinnati Enquirer

WEST END - Cincinnati Mayor Charlie Luken proposed a $3.1 million package of tax breaks for a medical testing company to stay in the city, and asked City Council to act on the deal in seven days.

The incentive package for LabOne Inc. is unprecedented in one important respect: Even if approved by City Council, the company has made no promises that it won't move to Northern Kentucky.

"They have one caveat - they want passage of these ordinances before they firm up their commitment," Luken said. "I am reasonably optimistic that if City Council passes these agreements relatively quickly - meaning in the next week - we have an exciting opportunity to keep these jobs and allow this company to grow in the city."

Keeping LabOne means keeping 562 jobs in the city and could mean adding 500 more if LabOne grows as much as it hopes. The company would move to a site in the Techsolve Business Park in Bond Hill, freeing up its current space - the Jewish Hospital in Avondale - for needed expansion of the Health Alliance.

The package has two components:

• A job creation tax credit - giving LabOne a 75 percent rebate on city taxes paid by any new jobs for 10 years - worth $2.6 million.

• A property tax abatement - a 75 percent tax break on personal property and real estate taxes for 10 years - worth $525,600.

The state of Ohio has already pledged similar grants and tax breaks worth more than $5 million, plus low-interest loans of as much as $9.4 million.

City Development Director Chad Munitz, a former state development official, said it's common for the state to offer tax breaks without a firm commitment. Such a move is unusual for the city. "I wouldn't want to get into a habit of it," he said.

Unlike previous city incentive packages, the city has done a cost-benefit analysis. Munitz said the city would gain $4.8 million in tax revenues over 10 years.

LabOne is considering sites in Northern Kentucky, and the jobs pay well - an average of $16 an hour plus benefits.

LabOne said the new $20 million lab could be a hub for expanding its testing business into the eastern United States.

The city's biotechnology sector also sees benefits for keeping LabOne in town, and praised the city's quick action.

"I think they all have some understanding about what we've been doing here," said Dr. Jane Henney, senior vice president and provost for health affairs at the UC Medical Center. "I really think they are starting to sense that (biotech) could be an economic driver for Cincinnati."

LabOne needs to be in Ohio to take full advantage of some of the new developments in medical testing technology coming out of genetic, molecular and neuroscience research going on at UC and Cincinnati Children's Hospital Medical Center, university officials said. Much of that research has been funded with state grants that are intended to create jobs in Ohio.

"If LabOne isn't here, life will go on. But if LabOne comes here, we have the potential to do a lot of exciting things," Henney said.

UC and Children's Hospital have been lobbying for the incentives.


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