HCA incentives package sails through final council vote

Wednesday, December 5, 2012 at 12:01am

Economic incentives for Nashville-based Hospital Corporation of America breezed through the Metro Council Tuesday night with little discussion and even less opposition.

The deal is estimated to total $66 million over 20 years, making it one of the largest Metro has ever offered to a company. Three separate portions of the package, including tax abatements and cash grants, each passed Tuesday night by a vote of 34-1.

The package includes a 100 percent property tax abatement of up to $3 million per year for 15 years — with a five-year extension available if the company continues to occupy the space — a $1 million one-time payment to cover relocation costs, and an annual payment of $500 per employee. In addition, the state is providing a $2.1 million incentive grant.

Councilman Josh Stites was the lone council member to vote against the deal. He welcomed the council to “look at the math” and urged them, in vain, to vote against the deal because it’s “not fair for every business owner who works hard to beat out a living in the city.”

The math, Stites argued, shows how economic incentives are awarded to a very small group of companies and result in a relatively small amount of the city’s jobs. Out of 8,900 for-profit companies in the city — a number Stites sourced to the Secretary of State’s office — only 12 are currently taking advantage of active incentives deals, meaning less than one percent of Davidson County for-profit companies have access to taxpayer-funded economic incentives.

Addressing the argument that the companies awarded with such deals provide the most jobs, Stites conceded that they do indeed provide jobs, but noted that out of 537,000 jobs in the county, according to a Chamber of Commerce study two years ago, the total number retained or created as a result of such deals is 14,000.

With that in mind, Stites is planning to file legislation next year that he said would broaden the access to incentives, if they’re going to exist.

Metro Finance Director Rich Riebeling addressed the council at the request of Councilwoman Edith Langster, a sponsor of the incentives package.

"This project will create jobs,” Riebeling said, “will create more revenue for the city than we're currently getting and it will take an area of the city that is underdeveloped now and turn it into, I think really, one of the more important developed areas in the city."

Also speaking in support of the proposal, At-Large Councilman Ronnie Steine said that each incentives deal should be considered on its own merits, and that the HCA deal would result in more jobs, more revenue and development in an area that needs it. He also responded to a comment Stites made that the debate wasn’t about specific companies.

"I admire the philosophy and consistency of my cohort behind me but there is one thing I would differ with him,” Steine said of Stites. “I think it is very important who our partner is in this. And I think that as you look at the relationship of this company to this community and the measure of their dedication to this community since they were born in our town, is one of the reasons that this particular arrangement is particularly important and particularly attractive to our community."

9 Comments on this post:

By: Ask01 on 12/5/12 at 4:49

No surprises here, just business as usual for Metro Council.

By: treehugger7 on 12/5/12 at 7:23

Well, if nothing else, at least "Lake Palmer " will no longer exist!

By: govskeptic on 12/5/12 at 8:15

Noted they picked the "Smartest" member of the Council to introduce this legislation.
Must have been some serious deals or threats made to get such an overwhelming
vote in support. That makes it so much more acceptable for the public and taxpayers to swallow and now ante up for.

By: pipecarver on 12/5/12 at 8:37

Pretty sad when only 1 out of 35 Council Members understands Basic Math 101. I would have loved to receive economic incentives as a small business person, but when you are part of the 99-percent, unable to draw a decent salary yourself, and not considered valuable to the community (simply because you ARE a small business with virtually no employees); then we, as a group, continue to struggle.

So much for Capitalism.

By: Moonglow1 on 12/5/12 at 8:50

Moonglow1: I commend Mr Stites for defending capitalistic principles and the are as follows:

Finance your business without taxpayer funding

Do not redistribute taxpayer funds away from essential govt functions such as police, fire, and education to a for profit business

Specifically do not give away taxpayer money to a business previously under investigation by the Justice Dept for defrauding Medicare

Do not pick and choose whom to give away taxpayer money - it should never be given to a private business

Why are people receiving unemployment (whom may have worked all of their lives but are now laid off) being demonized for collecting a benefit paid into by employers yet the Republican Council sees nothing wrong with Corporate Welfare to a company worth billions

By: bfra on 12/5/12 at 11:23

Because Karl told them how to vote! A bunch of worthless suck-ups!

By: Bill Bernstein on 12/5/12 at 12:26

I run a small shop in Nashville. Where are my incentives? Where are my tax deferments? Cut corporate welfare now!

By: amoobrasil on 12/5/12 at 2:52

Thank God for Josh Stites, the sole council member who retains a sense of principle, duty, and service to the taxpayer. The others do not see their true constituents as the people who elect them to office; their true constituents are HCA and other oversized mega-corporations demanding what amounts to "protection money".

Blatantly evident is the absence of a cost-effective analysis of what Mr. Stites calls the math. How much are we taxpayers forced to shell out for these jobs? How many net new jobs will be created? What will they pay? How many more jobs would be generated if the money given to bullying corporations were instead invested in areas of this county needing more assistance for schools, better infrastructure, more safety, more accessible health care, etc.?

By using taxpayer money to lower the business costs of a select few privileged corporations (or giving them money they waste on further enriching unimaginably overpaid executives who do not spend their massive compensation in ways that create new jobs, but--rather--put it in accounts paying passive, capital-gains income, or in accounts in island nations with no income tax), we place the 99% of our honest local businessmen in Davidson County at a competitive disadvantage.

Recently, New York Times' investigative reporter Louise Story showed that states and municipalities spend (waste) a total of 80 billion a year on subsidies and "incentives" leeched from taxpayers on the false pretext that they attract jobs.

So-called "conservatives" claiming to champion the efficiency of the competitive free market are often the first to defend payment of what seems to me the equivalent of “protection” money. TRUE conservatives believe that competition must take place on a level playing field. There is nothing level about the playing field when our government takes money from taxpayers' (our) pockets to lower only the costs of one business. The honest businessmen left out of these sweetheart deals lose coming or going: they must pony up more money to offset the advantage given to a major competitor by a government that chooses winners and losers, or they lose customers because they are forced to raise prices. The only sin of these honest businessmen is lack of clout.

As long as HCA finds it profitable to do business in Davidson, it will stay. If the profits it makes depended on taxpayer-funded "incentives", HCA would have long since been gone; the "incentives" are just gravy to it. It gets them because its wealth and power leave it feeling entitled.

As Mr. Stites, knows, we do not have to give in to such unconscionable demands. If HCA leaves in spite (it won’t—remember, its decisions are based solely on profits), good riddance.

Demand—generated mostly by the spending of salaried, working people—is what attracts investment and creates jobs. Legal bribes do not bring in jobs. The SOLE factor that attracts job-creating investment is increased consumer demand. When a locality pays higher wages or enjoys high employment, demand grows, the econ-omy grows, and the number of jobs grows. When purchasing power decreases enough to affect profits adversely, jobs are lost. No amount of "incentives" and subsidies will save those jobs.

We can make much better use of precious taxpayer resources than just giving it away to an enterprise wealthy and powerful enough to demand preferential treatment amounting to payments of legal extortion.

We citizens need federal, state, and local legislation criminalizing solicitation of payments to enterprises demanding special favors just because they can get away with it.

By: NewYorker1 on 12/6/12 at 10:40

I want something free from the city. I pay taxes so why can't I get any handouts?