HP Job Clawbacks Minimal
RR Mayor Says City Still Got a Good Deal
Any penalty Hewlett-Packard might have to pay for failing to meet hiring goals at its customer support center pales in comparison to the $2.2 million in incentives the company received from the city of Rio Rancho.
For example, according to figures provided by the city, HP would pay a penalty of $16,484 next year if it misses its 2012 hiring goal by 10 percent.
The company has been laying off tens of thousands of employees worldwide as it restructures. A spokesman eventually confirmed layoffs were occurring at the Rio Rancho site, he but refused to say how many. Local reports indicate dozens of layoffs continue there.
The Palo Alto, Calif.-based high-tech giant opened its 218,000-square-foot Rio Rancho facility in late 2009 with a commitment to have 1,350 employees by the end of this year. Rio Rancho city officials said in July they had been told 1,230 were employed at the center. The company refuses to say how many work there.
If HP fails to meet that goal, its agreement with the city requires it to repay a portion of the value it received in land and building incentives.
A quick overview of the $2,183,442 in city incentives HP received for the project includes:
50-year lease of 17 acres of city center land appraised at $595,203 to HP for $1 per year for office building.
Waivers for impact fees and other permit and plan check fees value: $936,477.
Reimbursement of project grading costs: $625,000.
Fast-track building plan review, permit issuance and expedited construction inspection scheduling valued: $10,761.
Waiver of water meter fees and installation charges, value: $16,000.
Rio Rancho Mayor Tom Swisstack defended the penalties and incentives, noting many of the benefits were in the form of fees waived and a lease on otherwise vacant land.
“The incentives we gave Hewlett-Packard weren’t really cash incentives. (They were) incentives that if HP didn’t come we wouldn’t have those anyhow,” Swisstack said.
Moreover, the penalty agreement is written so that HP must pay back a portion of the incentives each year it misses the hiring target for up to 15 years, he said.
“Those clawbacks, if you total them, could be a substantial amount of money if they don’t sustain their goal of 1,350 (employees).”
A separate agreement related to industrial revenue bond financing for $63.5 million for building and equipment has its own clawback.
Under the agreement, HP pays property taxes for schools. If the company leaves its facility within five years of the 2009 bond issue, HP has to repay all property taxes that would have normally been due, city spokesman Peter Wells said.
By law, HP is required to provide quarterly reports to the state Department of Workforce Solutions showing the numbers of employees at the Rio Rancho facility.
The Department declined a Journal public records request to inspect the most recent quarterly reports, saying the information was protected from disclosure by the state Unemployment Compensation law.
Shortly after HP announced in late May that it would cut 8 percent of its 350,000 worldwide workforce by October 2014 and use the savings to develop new products and services, the Journal began receiving emails from Rio Rancho employees who said they and coworkers were being laid off. They indicated about 50 to 60 employees had been affected at the time.