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Incentive program pays dividends for city
(by Sue Reid - November 29, 2010)
Incentive program pays dividends for city
By SUE REID
Solon Councilman William D. Mooney told City Council's finance committee last week he's concerned that the job-creation grant program is over budget.
The committee discussed amendments to this year's annual appropriations and found that the job-creation grant program, which is one of the incentive programs offered by the city, was $100,000 over budget.
"That is an estimate," Finance Director William Weber said of the grant money the city will return to employers for creating jobs.
That's a "good thing," Mr. Weber added. "That means that more jobs are created than were expected."
Economic Development Director Peggy Weil-Dorfman said Tuesday the program has been very popular. It is intended for new businesses or existing ones that are expanding. The general guideline is that the company has to be creating at least 50 new jobs or 20 new jobs with at least $1 million in payroll. That would be by the end of the third year of the project. the incentive is an annual grant for a specified number of years and is a percentage of the new payroll that the project creates.
The city awarded just over $825,000 in grants in 2009. The program resulted in a net gain of a little over $1.07 million for the city, she said.
"That's additional income for us," Mr. Weber said.
Projections for last year ranged about $974,000 at the reasonable projection level, and $750,000 was put into the budget, Ms. Weil-Dorfman said.
Nobody likes the connotation of going over budget, Councilman Lon D. Stolarsky said, but "I think it's spending money to make money."
"The whole theory of the program is that the company has to be bringing new payroll tax to the city in order to get grant money," Ms. Weil-Dorfman said. She said there are checks and balances within the program. "If the company doesn't do what they say, they either get a reduced grant or none at all, depending on their performance."
Mr. Mooney said that while he is not an expert on the program, he believes it is a small piece of the decision-making process for businesses considering moving to Solon.
"Would jobs be here without the grant?" Mr. Mooney asked.
"That goes to the theory of the program in general, not the financing of it," Mr. Weber said.
"All incentive programs are based on the theory that this is something that weighs in the decision-making process," Ms. Weil-Dorfman said, although that is something that is not known for sure.
"Generally, when a company comes to us for incentives, they represent that they are looking at other communities as well," Ms. Weil-Dorfman said.
"It is a bit of a chance you take that the project would not have taken place without the incentive," she said. Ms. Weil-Dorfman also said there are a lot of other communities that offer similar programs.
"Incentives are important to be on a level playing field with other communities," she said.
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