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If HCA Falls Short, Taxpayers Could Get Money Back

by Andrea Zelinski on October 2, 2012

A $7.5 million state economic development deal with HCA is one of the first such pacts with a provision for recouping taxpayer money if the company falls short of its promise of 1,000 new jobs.

The deal with Hospital Corporation of America will cost state taxpayers through so-called Fast Track grants and an undisclosed amount of tax breaks. Combined with incentives from Metro Nashville, the total package will cost taxpayers at least $59 million.

“This is a game-changing project for a company that’s been a game changer for Tennessee and Middle Tennessee for a long time,” Haslam said after the announcement.

The relocation, largely from Williamson County, means the development of two 20-story buildings just west of downtown Nashville, structures that will be full of employees and amount to an estimated $200 million private investment.

Tennesseans will reward a healthcare company $7,500 for each new employee it hires in its new Nashville headquarters, for a state total of $7.5 million, Gov. Bill Haslam announced last week.

Haslam admits that this project looked particularly juicy to warrant the state sinking its teeth and millions of dollars into.

“When we as a state look at what we’re going to jump in, the truth is not all jobs are created equal,” Haslam said. “These are numbers which are going to average near six figures with highly technical jobs and just the kind of jobs that any state or city would want. Because it was HCA and because those jobs were very high-paying, we thought it was something that we want to make certain would happen in Tennessee.”

Instead of waiting for each time HCA hires an employee to cut a check, the state is issuing much of the money upfront to Metro Nashville, which will handle its disbursement. The money is meant to defray costs involved with moving offices and retrofitting equipment.

If HCA fails to deliver on the 1,000 jobs in five years, the state will now have the power to ask for some of the seed money back through a “clawback” clause in the contract, said Clint Brewer, spokesman for the Department of Economic and Community Development.

“It’s just our department’s desire to implement best practices and safeguard taxpayer money, but it’s not a comment on any specific project or company,” he said, adding the state has full faith the healthcare provider will come through on all the promised jobs.

Economic development officials in July said they were working on such language to give the state leverage to recoup taxpayer dollars from companies who fail to deliver promised jobs.

Lt. Gov. Ron Ramsey, a Republican, was critical of the state for not exercising those tools during Democratic Gov. Phil Bredesen’s tenure after the state issued $101 million in handouts to Electrolux in exchange for 1,250 jobs. Under the contract, the state would not get any money back if the company falls short on job projections.

This year, lawmakers agreed to more than double the FastTrack program to $80 million. Since 2006, the state has allotted an average of $38.5 million in tax dollars annually to the FastTrack program.

The program offers businesses grants or loans for expenses like job training, infrastructure improvement, equipment, and temporary office space related to relocation or expansion. The taxpayer money is funneled through local governments or their economic development branches to companies.

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