COLUMBIA — “Project Tiger” has a fine predatory ring to it. As everybody in Boone County surely knows by now, that’s the code name for the months of behind-the-scenes maneuvering that culminated Monday in the announcement that IBM is coming to town and bringing the promise of hundreds of good-paying jobs.
The announcement has led to communitywide celebration, and rightfully so. Still, there’s something we probably shouldn’t forget. In the world of flesh-and-blood tigers, as opposed to the football-playing variety, relationships generally come down to predators and prey. In the world of business, the current custom of providing lavish incentives to lure prospective employers can leave us ordinary citizens feeling less like hunters and more like a big cat’s midday meal.
That’s the worry that crossed my mind as I read in the Missourian about the invoice for $31 million promised by state and local recruiters. The worry intensified when I saw the warnings in Wednesday’s paper that, in the words of City Manager Bill Watkins, “IBM has the right to withdraw” if the City Council doesn’t move quickly to keep its promises.
So I called Bill and asked what guarantees we have from IBM in exchange for our cash and forgone tax revenue. I didn’t burden him with the tiger-prey metaphor, and his response to my question left me thinking that this might really be the win-win situation we all dream of but seldom see.
In the first place, he said, the state-level incentives are all based on IBM’s performance. “You don’t just say you’re creating 800 jobs and trigger the benefits,” he said. First the jobs, then the state payments. And much, if not all, of those benefits will actually be funded by the revenue from taxes paid by IBM and its new employees.
At the local level, the biggest chunk of Columbia’s cash commitment is the purchase of the old Tri-Con building on LeMone Industrial Boulevard, which will be leased for $1 a year to IBM. That’s really a good deal for us citizens, too, he assured me.
The building is conservatively appraised at the $3 million the city will pay for it. IBM will make, and will have to make, improvements worth upward of $10 million in order to use it. So when the lease period (10 years plus an option for another 5) expires, we’ll own a $13 million facility. That, Bill said, is “a good investment.”
Those Chapter 100 bonds, the same instrument used to encourage ABC Labs to expand, will mean that IBM will pay the same $25,000 a year in property taxes the building yields now and, in lieu of taxes, half the normal tax rate for new equipment for the first 10 years. In year 11, the full tax rate will apply.
Federal Reserve Board estimates, published Tuesday in the Columbia Daily Tribune, project about $12.3 million over 10 years in additional tax revenue for the city, county and schools if IBM does wind up employing the 800 new workers that are being speculated, though not actually guaranteed.
A bonus from the IBM deal, Bill added, is that it promises to jump-start a much-needed cooperative program of post-high school technical training. That could help with future business recruitment.
An essential piece of the incentive package was the controversial extension of Maguire Boulevard to connect the industrial park with Stadium Boulevard. “In a weird way,” Bill said, Jerry Wade’s tie-breaking City Council vote to proceed with that extension made the whole IBM success possible.
You’ll recall, of course, that Bob McDavid’s supporters beat Jerry up in the recent mayoral campaign for being “anti-business.” When I told Jerry of Bill’s comment, he laughed and reminded me that his environmentalist supporters hammered him almost as severely for that vote.
Those conversations left me thinking that politics is full of irony, and that sometimes a code name is just a code name.
George Kennedy is a former managing editor at the Missourian and professor emeritus at the Missouri School of Journalism.