State chips in for H-P plant
Posted on Friday, June 20, 2008
CONWAY — The state will provide $ 10 million to build a Conway facility for computer giant Hewlett-Packard Co., marking the first time Arkansas has landed a major high-technology firm, Gov. Mike Beebe and others said Thursday.
The operation, to be located in a $ 28 million building at the city’s technology park in south Conway, will employ about 1, 200 people in what Hewlett-Packard described as “highly skilled technical positions.” The center will provide sales, service and technical support for the company’s customers.
“The 21 st century in Conway and, to a degree, the state of Arkansas, starts today, and that’s exciting,” Conway Mayor Tab Townsell said. “We have been preparing for this day in Arkansas for years.... Hewlett- Packard is a dream come true for us.”
Gary Fazzino, vice president of worldwide government affairs for the Palo Alto, Calif.-based company, said he hopes the 150, 000-square-foot facility will open by the end of 2009 and be at full capacity in four years.
Salaries will start in the lower $ 40, 000 range, “with many being much higher,” said Beebe, addressing more than 1, 100 people crowded into Reynolds Performance Hall at the University of Central Arkansas. Beebe said the annual payroll is to be more than $ 48 million.
Fazzino declined to be more specific on salaries. He said he suspects that “a significant percentage [of the work force ] will be local.”
As part of the deal, the state and the city agreed to some sales-, income- and property-tax incentives during more than four months of negotiations aimed at attracting the world’s largest personal-computer maker to Conway.
Further, the Conway City Council, in a meeting less than two hours before the announcement, authorized almost $ 5. 2 million in incentives — primarily for street improvements in the area of the technology park in south Conway and for on-site landscaping, parking and other work.
Beebe told reporters that he knows that many people dislike such incentives, but “I don’t think you can spend taxpayers’ dollars on anything more important than education and jobs.”
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, said in an interview, “When you’re going to lure a namebrand company that’s going to create a thousand jobs, there’s going to be a significant incentive package, or your state won’t be in the running.”
Indeed, the governor said Arkansas competed with at least 26 other metropolitan areas for the facility. He said three Little Rock-area cities, including Conway, sought it. He would not identify them and said, “Conway had to sell itself” because the state does not lobby for one Arkansas city over another.
Townsell said in an interview that Conway has agreed to give Hewlett-Packard a 65 percent break in property taxes. The city will own the 12 acres donated to it by the nonprofit Conway Development Corp., and Hewlett-Packard will in turn lease the building and the land from the development corporation.
The governor noted that the nonprofit Conway Development Corp. doesn’t now pay taxes on the land.
Even so, the mayor said, “Some county tax assessors assess property that’s owned by a public entity if it’s used for profit.”
So, he said, the city advised Hewlett-Packard that “more than likely” it would be liable for the taxes but that it could mitigate the cost by using Act 9 bond financing. That way, he said, Hewlett-Packard would have to pay 35 percent rather than 100 percent of the property taxes it might otherwise be assessed.
“That is what I expect them to do,” he said.
According to the city, the land where Hewlett-Packard will locate is worth about $ 1, 250, 000. Fazzino, the Hewlett-Packard executive, said factors in Conway’s favor included the availability of affordable land and infrastructure; a highly skilled, technologically literate work force; the incentive package; and the city’s three colleges: UCA, Hendrix College and Central Baptist College. He also cited “a political will, a commitment to economic development.” Hewlett-Packard also announced Thursday that it will open a center in the Albuquerque suburb of Rio Rancho, N. M., where about 1, 300 employees will work.
FAST-GROWING SCHOOLS In Arkansas, the bulk of property-tax revenue funds public schools.
Greg Murry, superintendent of Conway Public Schools, declined to comment on the property-tax break, saying, “Our focus right now should be on the fact that we have a major industry coming to town that can certainly complement the economics of the city” and perhaps lead to other industries coming to Conway.
Murry said he expects the new industry to mean a bigger enrollment in an already fastgrowing school system. That, he said, could necessitate more construction than otherwise would have happened.
If just half of the 1, 200 employees have an average of 1. 5 children each and move to Conway, he said, that would mean a 10 percent increase in the school’s current 9, 000-pupil enrollment. The school’s growth has reflected the city’s, from 26, 841 residents in 1990 to 55, 334 in 2006.
Murry said he looks forward to partnering with Hewlett-Packard in ways that will help prepare students in technology. He said the school system would like to expand its computer program.
“This is a time to draw partnerships,” he said. DRAWING HIGH-TECH FIRMS
Hewlett-Packard will become tied with the Conway Human Development Center as the city’s fourth-largest employer, according to the Conway Area Chamber of Commerce.
Beebe noted that Acxiom Corp., a data-management company — which has 2, 100 workers and is the city’s biggest employer —and Little Rock-based Alltel Corp. are “homegrown” firms.
Joe Holmes, spokesman for the Arkansas Economic Development Commission, said Hewlett-Packard, which ranks 14 th in revenue on the Fortune 500 list, is the first major hightech company that Arkansas has attracted to the state.
“It’s a movement in the right direction,” said Deck, the economist. “When you look at the target industries that AEDC has identified, high-tech is certainly among them.... I would imagine that the economic-development officials will continue to focus their efforts on making this a bigger and more important cluster in Arkansas.”
The news about Hewlett-Packard opening a facility in Conway came on the same day that the California-based Milken Institute released a study showing Massachusetts was the leading state for mining economic growth from technology and science while Arkansas again ranked in the bottom five, according to an Associated Press article.
The news also came at a good time for technologically trained workers in central Arkansas. Acxiom, for example, has experienced some layoffs, and the employee impact of Verizon Wireless’ plans to buy Alltel Corp. remains unclear.
Updated unemployment rates are due out today, but the Arkansas Department of Workforce Services said Thursday that Faulkner County’s jobless rate for April was 4. 1 percent compared with 4. 5 percent for the state. Those numbers are not seasonally adjusted.
Holmes said the $ 10 million from the state will come from the Governor’s Quick Action Closing Fund, created during the last legislative session for economic development.
Other companies to benefit from that fund so far have included LM Glasfiber, a Danish windmill-blade manufacturer, which got $ 6. 9 million; Future Fuels of Batesville, $ 2. 1 million; Texas-based American Airlines, $ 250, 000, related to a facility expansion in Northwest Arkansas; and Daisy Products of Rogers, $ 150, 000.
OTHER INCENTIVES Holmes said other state incentives offered to Hewlett-Packard, contingent on their meeting specified terms, include: A state income-tax credit for job creation, based on new full-time permanent employees hired. Holmes said terms of the agreement are private. Sales-tax and use-tax refunds, which in this case probably will apply to any expenditures for computers and other equipment. A rebate equal to 5 percent of the payroll for 10 years if the company meets terms of a private agreement.
Training assistance if requested. A company spokesman declined to say whether the Arkansas facility is an expansion or the result of another operation’s closing or scaling down. Hewlett-Packard has about 172, 000 employees worldwide and does business in more than 170 countries. Its Web site says it spends $ 3. 6 billion a year in research and development of products, solutions and technology.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
