Last week’s relocation announcement of a Sprint call center from Bristol, Va., to Bristol, Tenn., means potentially millions of dollars in state and local tax credits to the company, although it’s only moving a couple of miles down the road.
Tennessee Economic and Community Development spokeswoman Laura Elkins declined to discuss any specific economic incentives packages offered to the company because nothing is official between the state and Sprint at this point.
“It doesn’t become public until a contract is signed,” she said, adding that the company and state discussed potential numbers but “it’s all speculation.”
To qualify for a state excise and franchise tax credit, Sprint must invest $500,000 in a new facility. The project is estimated at between $4 million and $6 million, Networks – Sullivan Partnership CEO Richard Venable said.
The company must also hire at least 25 people. In a statement from Tennessee Gov. Bill Haslam’s office, the facility, which should be completed in 2013, will employ around 600 people.
Normally, a company would qualify for a state tax credit of $2,000 per new employee. But because Sullivan County is economically depressed, the company qualifies for $4,500 in tax credits per employee, Elkins said. If Sprint hires 600 employees, it can potentially receive $2.7 million in excise and franchise tax credits.
The company was also offered a complete abatement of local property taxes, Venable said, but the length of the abatement would not be finalized until the project is finalized. The company qualifies for other potential benefits, including tax credits for software, hardware, other technological investments, tax credits for job training and local infrastructure grants.
Virginia offered the company a tract of land worth $255,000 and state incentives worth $1.4 million, Bristol, Va., City Manager Dewey Cashwell said earlier.
Tennessee Department of Revenue Communications Manager Billy Trout said the company qualifies for the state tax credits even if the current employees in Bristol transfer to the new facility.
“These are new jobs in Tennessee,” Trout said.
Venable said local economic development officials were not aware initially that Sprint was the company that was being offered an incentive package. He said the company wanted to stay in the region because of the quality workforce at the Bristol, Va. facility and the incentive package allowed that to happen.
Venable said he did not want to compete with a neighboring community for the call center but was pleased with the outcome.
“The second best thing is for the jobs to stay in the area,” he said. “The worst thing that can happen is the jobs go to Kentucky, North Carolina or someplace else.”
Not everyone thinks the deal is good for Sullivan County or Tennessee taxpayers. Good Jobs First is a Washington-based organization that researches economic incentive packages across the country. Executive Director Greg LeRoy said he is not opposed to all economic incentive packages, but believes call centers are not a smart use of them.
“Call centers are notorious for being risky, because they are so easy to pull out,” LeRoy said. “We recommend communities be careful when dealing with call centers.”
He suggested that terms be put into the contract that requires a company to pay back the tax credits if it leaves before a certain length of time.
Besides the ability for a call center to leave quickly, LeRoy was also concerned about the pay scale. A call center typically does not pay high wages and is not a solid foundation for a local economy, LeRoy said.
LeRoy was also critical of the company pitting one state against another for economic incentives.
“It’s crazy how states do this,” LeRoy said. “The quality of the job for call centers is so low they should not be eligible.”
jshea@bristolnews.com
(276) 645-2511
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