Posted by R. Neal
As a follow up to Chris's post about the big news that Nissan is moving its U.S. headquarters to Tennessee, the Nashville Tennesseean has details on the incentives offered by state and local governments:
Tennessee will give Nissan North America close to $200 million in incentives over 20 or more years as part of the deal that snared the automaker's headquarters and its nearly 1,300 jobs.
That's almost enough money to cover Nissan's headquarters payroll for two years, according to a state-commissioned study by the University of Tennessee's Center for Business and Economic Research.
Though large, the incentive package is in line with what other states are paying to lure high-impact operations, site consultants familiar with incentive packages nationwide said yesterday.
"That's very aggressive," said Michael Cutri, national director of the business incentives group for Cushman & Wakefield Advisors.
The incentives have drawn the ire of at least one Tennessee lawmaker, who says the payments amount to corporate welfare.
"That is ridiculous for 1,300 jobs," said state Rep. Glen Casada, R-Franklin. The incentives amount to roughly $155,000 per job.
What's more, the funding was apparently passed by the state legislature in secret:
Casada was among 17 Republican House members who voted against a major portion of the incentives package when it was included in a Senate tax bill this past summer. The law change, which amounted to millions of dollars in extra benefits for relocating companies, went largely unnoticed during a legislative session preoccupied with ethics reform and the arrests of a handful of lawmakers on bribery, extortion and conspiracy charges. Nissan was not mentioned in the legislation.
Casada said lawmakers were kept in the dark about the potential financial impact of the changes and who might benefit. The additional incentives were added to a Senate bill on May 25 as an amendment on the Senate floor and were approved unanimously. The next day, they went before the House, where the measure passed 75-17 on the same day that indictments in the FBI's Operation Tennessee Waltz case were made public.
"We tried to slow the process down," Casada said. "They said, 'No, we're not referring it back to committee.' It's just one secret deal after the other."
And not only that, there are claims that the legislation was specifically tailored so that only Nissan would qualify:
The law is a major policy change for Tennessee, which up until now limited its incentives to payments for property, construction, roads, other infrastructure and employee training. Under the new law, Tennessee can give a company cash if its relocation costs are more than its state tax liability.
The law was worded in such a way that only Nissan qualifies for the payments. It ties in with another state law, passed in 2000 to accommodate Nissan's manufacturing expansion plans. That law gives a $5,000 annual tax credit for 20 years for each job created for a company that spends $1 billion or more on an expansion project and creates more than 1,000 jobs.