East Baton Rouge Parish government intends to give IBM $4.5 million over three years as part of the state’s incentive package for opening offices in downtown Baton Rouge, a project expected to create an estimated 800 jobs.
The Metro Council will vote Wednesday on the city-parish’s contract with the state, the Louisiana Department of Economic Development, the Wilbur Marvin Foundation and IBM.
The city-parish’s allocation will be divided into $1.5 million payments, with $3 million ultimately going toward the cost of the building and $1.5 million to reimburse IBM for workforce development costs, according to the cooperative endeavor agreement.
The first payment will be funded from the city-parish’s undesignated reserve account, said William Daniel, chief administrative officer to Mayor-President Kip Holden.
The remaining $3 million will be included in the city-parish’s 2014 and 2015 general fund budgets, Daniel said.
Daniel said the investment is expected to yield a return of at least $15 million in economic impact over the next 10 years.
He said the city-parish is judicious about which companies are offered financial incentives.
“We selectively recruit companies that will contribute to Baton Rouge both economically and culturally,” he said. “We want good, quality jobs by reputable companies.”
Daniel said it’s unclear what would happen if the Metro Council were to reject the proposed agreement.
“I don’t know what the state or IBM would do, but I imagine it would have dire consequences on the deal,” Daniel said.
The state will be contributing $78.5 million in incentives for IBM.
Councilman Buddy Amoroso said he wouldn’t want to hurt the deal because he thinks it’s an important economic project for the region but said he has concerns about offering financial incentives to private businesses.
“I’m conflicted about the money. There are a lot of demands on the budget, lots of needs in the parish,” Amoroso said. “I have a real tough time with these economic development incentives.”
He said he was still trying to make his decision.
“I think this could be big for Baton Rouge, but at the same time we have to be fiscally responsible and I have to balance those facts,” he said.
Councilwoman Tara Wicker, whose district includes downtown where the IBM building will be built, said she believes IBM will deliver a return on the city-parish’s investment.
“It looks like it’s going to be a good deal for the city and will provide an economic boost,” Wicker said.
The $55 million development announced earlier this month will take up the block bounded by River Road and Main, North and Lafayette streets.
When it opens in 2015, IBM will employ 800 office workers in the eight-story building along North Street. An 11-story residential tower along Main Street will include 95 apartments and nine luxury town homes.
The IBM building will be at the former site of The Advocate, which is owned by Capital City Press.
A purchase agreement is in place for the sale of the property, said Richard Manship, president and CEO of Capital City Press, but he would not disclose the sale price.
The property has been vacant since September 2005, when the newspaper left its downtown office and moved to an office building on Bluebonnet Boulevard.