Cash to Recruit Companies Low in Utah

Economic developers worry that Utah’s budget woes will leave them with a dwindling supply of cash they can use to entice companies to the state.

BY LESLEY MITCHELL
THE SALT LAKE TRIBUNE

Neither the state’s Industrial Assistance Fund (IAF) nor the Custom-Fit Training Program is likely to receive its customary infusion of funding from lawmakers in the waning days of the Legislature, said Dave Harmer, executive director of the Utah Department of Community and Economic Development.

Without any new money, the IAF will be left with an available balance of about $6 million. The custom-fit program, which helps cover part of the cost of training Utah workers, has no money, said Todd Hauber, finance director for the Community and Economic Development Department.

The lack of new funding worries Chris Roybal, chief executive of The Economic Development Corporation of Utah.

"When corporate site selectors speak with us, they want to know if the state has a fund like the IAF and then they want to know about job-training dollars," he said. "Not replenishing those funds sends a message that we’re not open for business. Companies aren’t interested in the reasons we don’t have the money, just that we don’t have it . . . it puts us at a real competitive disadvantage."

Grants from the IAF and the Custom-Fit Training Program are given only to employers who provide a specified number of good-paying jobs in communities that need them.
How well state economic developers will cope with no training funds and the remaining $6 million in the IAF remains to be seen, Harmer said.

"Utah is a very attractive place with a growing, well-trained work force, which means we don’t have to buy jobs with high levels of incentives," he said. "But we do have to be competitive [with other states] or we’ll miss out on attracting more jobs."

Being competitive means providing money to companies to help defray the costs of setting up a new operation.
If no companies seek major expansions in Utah during the next year, the $6 million left in the IAF may be enough to fund a series of deals involving small companies. But one major deal — or a handful of fairly large deals — could quickly wipe out all the money left in the fund. Intel Corp., for example, was offered a $5 million IAF grant to build a research and development facility in Riverton.

While Intel never completed its ambitious expansion plans and ultimately did not receive the $5 million, many companies offered money from the fund are in a position to keep it. Printshop chain AlphaGraphics Inc., for example, received $450,000 from the IAF as part of an incentive package designed to encourage it to move its headquarters to Salt Lake City.

Recruiting just one big-name company can cost $1 million or more. Global retailer Wal-Mart, for example, has received a commitment for $1 million from the IAF to entice it to build a distribution center in the state. The center eventually may employ as many as 1,000 people.

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http://www.sltrib.com/2003/Feb/02192003/business/business.asp