COLUMBIA — IBM expects to save millions in tax concessions from the deal that saw the global tech firm agree to open shop in Columbia, but the company will also have to meet its end of the bargain.
“Big Blue,” as the international information technology company is often referred to as, will be required to create 600 jobs within three years and maintain that number for 10 years to qualify for all the state tax breaks promised in a $31 million incentives package announced Monday.
IBM will also have to pay a minimum average annual wage of $43,750 to its employees, Mike Golden, a finance officer at the Missouri Finance Development Board, said in an interview on Thursday.
The state government offered IBM more than $28 million in tax incentives that include $8.6 million under the Missouri Business Use Incentives for Large-scale Development, or BUILD, program; $14.7 million under the Missouri Quality Jobs program; and $4.2 million under the New Jobs Training program.
“The BUILD program requires that the company brings the jobs promised within three years,” Golden said.
Eligibility for the tax exemptions will be assessed each year, added John Fougere, director of communications at the Department of Economic Development.
Timothy Shaughnessy, senior IBM vice president for Global Technology Services, said during the Monday announcement that IBM expects to hire at least 800 employees by 2012 in a new service delivery center on LeMone Industrial Boulevard.
A statement by Regional Economic Development Inc., a nonprofit group involved in negotiations for IBM’s coming to Columbia, indicated the company had offered to pay its employees an average annual salary of $55,000.
Fougere said the Missouri Development Finance Board gave its initial approval of the agreement between IBM under the BUILD and Quality Jobs programs at a board meeting on May 17, and signing of the final agreement is expected in June.
The city government is also expected to spend $3 million to buy the building at 2810 LeMone Industrial Blvd. and lease it to IBM for $1 per year for an initial term of 10 years with an option to renew it for five additional years at the same rate.
Mike Brooks, president of Regional Economic Development Inc., said the city would also require IBM to maintain a minimum employee roll of 600 for 10 years before renewing the lease contract at the $1 per annum rate.
“If the number of workers fall significantly below 600 after 10 years, then the city will negotiate for a market-rate lease,” Brooks said.
He added that IBM indicated it might hire 200 employees on a contract basis, which ties in with Shaughnessy’s promise to create 800 jobs.
Columbia residents will have the chance to give their views on the agreement between IBM and the city in a public hearing before the City Council, which meets in special session at 6 p.m. Monday at City Hall.
A first reading of the resolution seeking to appropriate a $500,000 down payment for purchase of the vacant building formerly used by Tri-Con was held on Monday evening.
Brooks said more details of the IBM deal will be presented as an attachment to the ordinance that will be presented for public hearing on Monday.
The Columbia IBM service center will be the third such facility that IBM has opened in the U.S. in the past 18 months. The others are in Lansing, Mich., and Dubuque, Iowa.
Mike Blouin, president of the Greater Dubuque Development Corp., a nonprofit organization that was involved in lobbying for IBM’s move to the city, said the company was on course to achieving the job promise of 1,300 jobs by the end of this year.
“The actual numbers will be known when the company submits its annual report to the Iowa Department of Economics by the end of June,” Blouin said. He estimated that IBM has hired about 800 employees in Dubuque.