A $2 million City grant for the Bi-Lo Winn-Dixie merged headquarters is based upon the company’s taxable investment of at least $79.8 million at the Westside headquarters and Baldwin distribution center as well as creation of 100 jobs and retention of the existing 891 positions, according to a project summary from the Jacksonville Economic Development Commission.
City representatives said last week that the almost 1,000 combined jobs would pay an average of $84,000, although documents with a City project summary released Monday refer to a total payroll for the 100 new jobs at $8 million, for an average of $80,000.
The commission is scheduled to consider the incentives proposal, called “Project Opal” on the JEDC project summary, at 9 a.m. Wednesday at City Hall in the mayor’s large conference room on the fourth floor.
Paul Crawford, the commission’s acting executive director, said Monday that a proposed City grant is tied to the company’s capital investment and job retention and creation, not the salaries.
“We’ve linked it to jobs because we want to make sure they maintain 891 jobs and create 100, but not necessarily to the salary,” Crawford said.
“And we are holding them to the capital investment. Those are the only parameters around the REV grant,” he said.
Jerry Mallot, president of the JAXUSA Partnership of the JAX Chamber and an economic development adviser to the mayor’s office, said the jobs were the focus, and the salary level an extra benefit.
“Our offer was based on total jobs and is derived from capital investment taxes. The fact that these are very high wages is a bonus, but not part of the deal,” said Mallot.
Mayor Alvin Brown and City and state officials announced last week that Bi-Lo intended to consolidate and expand its headquarters in Jacksonville. The announcement was made March 12 following the completed merger the previous Friday.
The City and state are offering a total incentives package of $6.64 million, including the $2 million City “Recapture Enhanced Value” grant payable over a period of up to 10 years.
Gov. Rick Scott’s office offered $3.6 million from the Quick Action Closing Fund and $1.04 million in a Quick Response Training Grant.
Joe Whitaker, the commission’s targeted industries coordinator, said the state fund and grant also are tied to the jobs that are created or retained.
He said the closing fund was based on the retained and created jobs while the training grant was based on up to $1,500 for each new employee trained or $1,000 for each retained worker trained, capped at $1.04 million.
Bi-Lo, based in Greenville, S.C., completed its acquisition of Jacksonville-based Winn-Dixie March 9, the day Winn-Dixie stockholders approved Bi-Lo’s $560 million purchase offer.
On March 12, Brown and other officials announced that the combined headquarters would be based in Jacksonville, pending the incentives.
The project summary refers to the Jacksonville headquarters at 5050 Edgewood Court and the Baldwin Distribution Center at 15500 W. Beaver St.
While the project summary refers to the $80,000 average salary, Crawford explained that it was for informational purposes, “as background.”
For the REV grant, “we don’t typically have any kind of requirement for income.”
Another incentive, the Qualified Target Industry Tax Refund program, is tied to income and that was not part of the Bi-Lo Winn-Dixie project.
According to the project summary that will be presented to the JEDC:
• The combined companies will become the 9th largest grocery chain in the country with 688 stores, about $10 billion in sales, 63,000 employees, six distribution centers and operations in eight Southeastern states. Winn-Dixie operated 480 of those stores and Bi-Li operated 208.
• The summary clarifies that of the proposed $93 million in capital investment, $79.8 million would be subject to real and personal property taxes with the remainder consisting of software and other non-ad valorem taxable purchases.
• The estimated $93 million in private investment in the proposed relocation-expansion is expected over five years, 2012-16, and primarily comprises purchases of information technology machinery, equipment, furniture, fixtures and software to support the consolidated headquarters. The investment would be made at the Edgewood Court headquarters building and the Beaver Street distribution center.
• The capital investment will generate more than $22 million in taxes over 20 years for the City, Duval County Public Schools district and other taxing entities.
• The majority of its Greenville headquarters operations would relocate and the surviving entity for both chains is Bi-Lo Winn-Dixie.
• Of the new jobs, 25 would be created by December 2013 and the remaining 75 by December 2015.
• The City’s grant requires Bi-Lo Winn-Dixie to retain the 891 jobs and create 100 new jobs by Dec. 31, 2015. Any shortfall in jobs would be result in a proportionate reduction in the grant.
• The City’s grant, capped at $2 million, is based on the incremental increase in the value of the real and tangible personal property investment at the headquarters and distribution center, together referred as the project site. The grant would be repaid annually and would be equal to 50 percent of the incremental increase in municipal and county ad valorem taxes paid on the real and personal property at the two sites. It would not affect school district or other taxes, only City and county taxes. Crawford said all taxes will be paid in full, and only the agreed-upon funds would be repaid.
• The average project annual wage is $80,000, almost double the county average wage of $44,221 and also higher than the $50,599 wage in the project Census tract.
Meanwhile, the draft economic development agreement contains much of the same information, including:
• Bi-Lo has submitted a proposal to the JEDC to renovate the Edgewood Court and West Beaver Street buildings, including installation of new equipment, at an estimated $92.8 million.
• Full-time equivalent jobs are defined as at least 35 hours a week. Permanent jobs are defined as the full-time equivalent jobs maintained for at least two years and filled by employees residing within a 90-mile radius of the Edgewood Court site.
• Headquarters jobs are defined as jobs created at the Edgewood site or, if the headquarters function is split or transferred to another location within the City, not to exceed one other location, jobs created at that other location that are headquarters related. The agreement specifies that these jobs are not clerks, stocking, inventory, general store management or similar personnel and are not distribution center or store location jobs.
• The grant repayment would end no later than 2028 and will be paid by the City by check in annual installments by May 15 each year. By April 1 annually, the company will notify the City in writing of the amount of the county ad valorem taxes paid the preceding 12 months, quantified by the real property and tangible personal property amounts.
• According to the agreement, “it is acknowledged and agreed that any of the New Jobs may be filled, in Company’s discretion, by persons employed by Company or by persons employed by any employee leasing company selected by Company.” Crawford said relocated positions from Greenville would be included in those new jobs.
• The company must provide jobs reporting forms to the JEDC by March 1 annually during the grant terms. It also must provide its community service activities.
On Monday, Whitaker said the Bi-Lo corporate headquarters consolidation also could qualify for another state program, a capital investment tax credit, should it change its corporate status from an LLC to a C corporation.
If so, it could become eligible to receive state corporate tax credits up to $2.8 million per year or 75 percent of the headquarters’ annual corporate income tax liability, whichever is lower, for 20 years.
Whitaker said that incentive could total $56 million over the 20-year period.
However, he said that since Bi-Lo remains an LLC, it is not eligible for the credit.
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