HP, Nordex Expected To Refund Incentive Funds After Failing to Meet Goals

by Mark Friedman  on Monday, Aug. 26, 2013 12:00 am  

Pinnacle Foods was awarded $500,000 in April 2010. It was supposed to retain and maintain 594 full-time employees, “and they fell below that for a period of years,” Holmes said.

The clawback payment of $59,550 was received this month.

Allied Wireless was awarded $5 million in December 2010 and was supposed to create 200 jobs.

“They fell below that number, but I can’t tell the exact staffing numbers,” Holmes said.

Allied repaid the fund $60,000 in March.

Protect the Investment

When economic developers insert the clawback provisions, they aren’t trying to create an adversarial position, said Tracey Hyatt Bosman, managing director for BLS & Co. of Chicago, which handles incentives and location selection strategies for companies.

During the Great Recession, she said, a number of companies across the country triggered clawback provisions, but most economic developers were willing to work with the companies to renegotiate the terms.

The developers might give the companies more time to hit the job creation numbers, Bosman said.

“It isn’t the state’s intent to be the final nail in the coffin if the company is struggling,” she said.

Good Jobs First of Washington, D.C., a nonprofit organization that works for economic development accountability, said clawback provisions are effective.

“The whole point in giving public money to private parties is to get results in the way of job creation and so forth,” said Philip Mattera, the research director at Good Jobs First. “If companies feel like those obligations are optional, we’re going to get a lot less job creation.”

He said that these days he is seeing more economic developers willing to apply the clawbacks provisions. Before the Great Recession, economic developers feared enforcing clawback provisions because such action might scare off future businesses and site location consultants who would think that the area has a “bad business climate,” Mattera said.

“Everyone expects government to be more accountable,” he said. “This is public money that’s involved. There’s an increasing feeling that the public money can’t be wasted.”

 

 

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