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Senate revises plan for Bombardier plant

Thursday, May 1, 2008 | 3:32 p.m. CDT; updated 4:55 a.m. CDT, Tuesday, July 22, 2008

By DAVID A. LIEB

Associated Press Writer

JEFFERSON CITY — In an effort to win legislative approval of the deal, Missouri has scaled back the incentives it is offering Canadian airplane maker Bombardier Aerospace to open a plant in Kansas City.

Under a revised plan debated today by the Senate, Missouri would provide significantly less money in tax credits to Bombardier, with greater protections for taxpayers, but also could receive significantly less money from Bombardier in future royalty payments.

A Bombardier spokesman confirmed today that the Montreal-based company still has its sights set on Missouri.

“We believe that their offer will be a very, very serious and interesting one,” said spokesman Marc Duchesne.

The original enticements for Bombardier ran into opposition from some senators, partly because of costs and partly because lawmakers felt left in the dark on the details.

On Wednesday, officials from the Missouri Department of Economic Development briefed senators on the revised plan in separate closed-door meetings with the Republican and Democratic caucuses. Sponsoring Sen. Charlie Shields also distributed a new draft of the legislation.

Instead of granting tax credits of up to $40 million annually for 22 years, the new proposal would cap the tax credits at eight years and a total of $240 million. It also would halt the tax credits if Bombardier does not make sufficient repayments to the state.

Like the original deal, the revised one anticipates that Missouri will begin paying out tax credits only after Bombardier has built its projected $375 million assembly plant and started employing a work force that eventually could reach 2,100 people.

Bombardier is to fully repay the state aid, plus a 5.1 percent rate of return, by giving Missouri a fixed amount of money for each of the new 110- or 130-seat passenger jets it sells from the Kansas City plant.

Although not spelled out in the legislation, the old plan called for Missouri to continue receiving those payments indefinitely, said Greg Steinhoff, director of the economic development department.

Under the revised plan, Bombardier could stop making those payments once it fully repays the tax credits and meets the state’s positive rate of return, Steinhoff said.

If at any point the state is out more than $155 million to Bombardier, any additional tax credits would be suspended, according to the new legislation.

The revised plan “is an extraordinary economic development opportunity for the state of Missouri,” Steinhoff said.

Shields, R-St. Joseph, expressed confidence that the new legislation would pass the Senate with bipartisan support. If so, it would return to the House.

This is “a better deal for the state of Missouri,” Shields said.

But Sen. Matt Bartle, R-Lee’s Summit, said it still is not a good deal.

The state would be better off directing incentives to information-based ventures, rather than large manufacturing projects, he said. Additionally, the Bombardier deal would set a precedent for other companies to seek bigger and bigger state tax breaks, he said. Bartle suggested the money could be used in better ways.

“Instead of giving a tax cut of a quarter billion dollars and spreading it across all Missouri employers — large and small and medium — we are giving it to one company,” Bartle said as the Senate debate opened. “We are putting 240 million eggs in one basket.”

At least one senator who had been at the forefront of raising concerns about the old proposal seems to have warmed up to the revised plan.

Sen. Jason Crowell, R-Cape Girardeau, had complained that Gov. Matt Blunt’s economic development officials hadn’t provided many details about the proposal and were essentially asking lawmakers to sign a mortgage without knowing the terms. Administration officials outlined many of those confidential details Wednesday in the private meetings, he said.

“I am much more comfortable,” Crowell said.

Even if Missouri lawmakers approve the incentives, there is no guarantee Bombardier will choose to locate its new assembly plant in Missouri instead of its home country.

Bombardier has shown significant interest in Missouri.

On Tuesday evening, Bombardier executives had dinner at the Governor’s Mansion with Blunt and Missouri’s economic development officials, Steinhoff said. On Wednesday, Bombardier’s top executives toured the potential site for their facility at Kansas City International Airport.

Economic development officials from Missouri have been meeting on a daily basis with Bombardier officials for a long time, Steinhoff said, with those discussions especially intensifying last week.


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