State Awaits $459K Incentive Payback From Hewlett-Packard

The check is in the mail, or will be soon, according to state officials who negotiated with Hewlett-Packard to repay part of the $10 million in state incentive money the company received in 2008.

The Arkansas Economic Development Commission said the publicly traded computer manufacturer and information services firm owes Arkansas $459,000 after falling short of employment levels it agreed to maintain at its customer-service center in Conway. 

HP, of Palo Alto, Calif., received $10 million from the Governor's Quick Action Closing Fund as part of an incentive package to attract the company to Conway. To keep the full amount, HP had to employ 1,000 workers by the end of 2013.

HP opened its 150,000-SF, $28 million center with 1,400 workers at the Meadows Office & Technology Park in Conway in 2010. But in July, it announced it would lay off 500 as part of a companywide cost-cutting initiative.

Arkansas Business reported in August that the state was in negotiations with HP to get back some of the incentive money. Sarah Pompei, HP's manager of global media relations, said HP fully intends to honor the terms of the deal.

AEDC spokesman Scott Hardin said Wednesday that there are no official steps to finalize the HP payback. The state used a formula based on full-time employees and overall payroll at the end of 2013 to determine the $459,000 figure.

Hardin said he can't make the exact formula public because it would reveal HP's specific employment and payroll information.

"To get to the 459 figure, we take two things into consideration: the number of full-time, permanent employees and the overall payroll," he said. "We weigh both of these numbers against the number that was in the agreement, which was 1,000 full-time, permanent employees in five years.

"Although the company did fall short of the 1,000 employees, which requires them to pay back a portion of the $10 million, we do consider the strength of the overall payroll, which makes the payment slightly less," he said. "Our formula weighs each of these factors -- payroll, full-time employees -- against the 1,000 jobs in the agreement, and that is how we came up with $459,000."

Hardin said the deal was made to encourage hiring, which HP plans to do in 2014. In December, HP announced it would add 200 high-paying jobs to its Conway center. Those jobs will support the company's growing health care services business.

HP said the jobs will pay more than the customer service jobs it cut.

Now, the state awaits a payment and more growth at the Conway facility. This week, HP hosted a job fair in Conway to try and attract potential candidates for the 200 planned new jobs.

"We sent the $459,000 figure to HP and now the company simply provides a check to us, which we understand they are in the process of doing," Hardin said. "HP has worked closely with us throughout this process, and the company has always said it will honor the exact terms of the original agreement."