Taxpayers shell out millions to keep Vestas in Portland
City and state leaders are vigorously patting themselves on the back today upon the news that Danish wind energy equipment maker Vestas is keeping its American headquarters in Portland. The company's not heading to the city's doomed SoWhat District as once promised -- it's moving to the former Meier & Frank "depot" in the Pearl District instead. But at least it's not leaving for Denver, as Portland officials had feared.
According to Portland's often-fact-challenged mayor, the decision means that the city will "retain 400 living wage jobs, put 450 construction workers back to work and pave the way for 100 to 200 new jobs in the next five years." Perhaps. And if so, good.
But the jobs don't come for free. There will be plenty of state and local tax money sloshing around as part of the deal. Jim Redden of the Tribune describes at least some of it:
The company will receive $1.25 million in state tax credits and $1 million from the state’s strategic fund for the project, on the condition that it add at least 100 new workers to its existing 400 employees during the next five years.The benefit of that interest-free loan is huge. Our amateur calculations conclude that at 4% market interest, that's the equivalent of handing Vestas a check for about $2.1 million up front. And so the state and local handout described by Redden comes to around $4.35 million. If Portland gets 100 new jobs out of it, that's $43,500 per job. There may be more taxpayer subsidies as well -- one suspects that at the very least, some sort of property tax giveaway on the property is in the works.
The Portland Development Commission will also give the company a 15-year, interest-free loan of $8.105 million for the project.
Nor are the new jobs a sure thing. Vestas has been losing money hand over fist lately, its stock price dropped around 20% today, and it's talking about laying off 600 people at its home base in Denmark. But it's going to expand its staff in Portland? We'll see.
Meanwhile, the Usual Suspects from the Portland development gang will be there with their hands out. From the City Hall press release: "The building renovation team is led by Gerding Edlen Development, Inc., in association with GBD Architects, Glumac, KPFF, HHPR, Peter Meijer Architects, Skanska and Ankrom Moisan Architects." Of course, the building will be LEED-platinum, eco-roofed, solar-arrayed, and so on; employees will eat only sprouts grown on the premises and drink out of rain barrels.
The building was reportedly purchased by Gerding Edlen in October 2007 for $15 million. Given the city's track record, one has to wonder whether there will be some sort of land transfer deal whereby Edlen will make a profit on the property despite the real estate downturn over the last three years. It's the Portland way.
In any event, it's a relief that Portland's not losing another business. But the new worry is how much we're all going to pay to keep it here, and whether it is really going to expand as the bureaucrats are predicting amidst the popping of champagne corks today.