Thursday, July 8, 2010

Incentives Key to US Bank Project

Thursday's announcement that U.S. Bank Home Mortgage will add 500 jobs in Owensboro wouldn't have been possible without a "robust" incentive package, Nick Brake, president of the Greater Owensboro Economic Development Corp., said Friday.

The company flatly said it had to be able to do a building project at low cost, Brake said. Without that ability, the jobs would go elsewhere.

"We were told by the company that was paramount," Brake said. "If they couldn't lower their capital cost, they would go elsewhere. ... Without that, Owensboro would not get the expansion. We were told it wouldn't happen."

Consequently, a state and local incentive package valued at more than $6 million was put together for U.S. Bank. The city's portion, which is valued at $1.7 million, will consist of building and leasing an 81,000-square-foot office building on a 13-acre site to the bank at a below-market lease.

The lease payments from the bank and proceeds from the city's occupational tax collected from the employees will be used to pay the majority of the debt service on the $10 million to $11 million cost to construct the building. The difference, which the city will cover, will come to about $1.7 million over 20 years.

As for the state incentives, the Kentucky Economic Development Finance Authority has preliminarily approved U.S. Bank National Association for state tax incentives up to $4.37 million through the Kentucky Business Investment program. Those will be earned over a 10-year period through corporate income tax credits and wage assessments.

U.S. Bank Home Mortgage will invest $14.1 million in the expansion.

At least two other cities where U.S. Bank has facilities with excess space competed with Owensboro for the jobs, Brake said. In the end, the incentives that were provided to lower the company's cost of doing business and the company's confidence in the local work force carried the day for Owensboro, he said.

"U.S. Bank likes the work force in Owensboro," Brake said. "We had to sell them on the number of workers (available). They had some reservations. But Bob Smiley is very sold on the work force here."

Smiley is vice president of U.S. Bank Home Mortgage and lives and works in Owensboro. He said the company's legacy in Owensboro, going back to the days when it was Lincoln Services, has resulted in a strong work force.

"When I got here (11 years ago) I found a very talented group of professionals," Smiley said. "I still have all those people."

Smiley said the bank has found 300 people for its new Highland Pointe location with few issues. He expects the same for the MidAmerica Airpark location at Tamarack and Carter roads.

"We seem to be able to attract good people," he said.

When the new building opens in March, the bank will be looking for loan counselors, loss mitigators and loan modifiers, customer service representatives, escrow processors and payment processors, among other workers.

Brake said the expansion will be done in two phases.

The first will be the building of a 47,000-square-foot building for 300 employees. That building is expected to be finished in March. The second phase will be a second building of 34,000 square feet for 200 workers. The timetable for the second phase depends on how fast the bank's mortgage business grows, Brake said.

The buildings will be built by private contractors chosen by a bid process. U.S. Bank will supply the specifications for the building.

Smiley confirmed that other cities with U.S. Bank facilities had room for the jobs that will be coming to Owensboro. Cities in Kansas, Idaho and Wisconsin had available space, he said.

"We do have opportunities to grow other places," he said. "We needed to look at other options and other sites were considered. All the other places were looked at, and we shared that with the state and city. We wanted everyone to put their best foot forward, and that's what they did. I do know Kentucky had a good showing. That's why we're here. This is one of the largest expansions we've done."

Brake said his office and state officials began working closely with U.S. Bank in March. He and Larry Hayes, secretary of the Kentucky Cabinet for Economic Development, went to Milwaukee to speak to U.S. Bank site selection officials.

"From our vantage point, we were looking at a very competitive situation," Brake said. "We saw this as too good of an opportunity to pass up. It positions them for more growth here. We couldn't afford not to put this deal together."

Forty more acres are available next to the site of the U.S. Bank expansion, Brake said.

Steve Vied, 691-7297,