Dell Inc. has committed to paying back $26.5 million in local incentives within 30 days of closing its Forsyth County assembly plant in January, Mayor Allen Joines said in a letter today.
The commitment initially had been made by Kip Thompson, the vice president for facilities of Dell, shortly after the company said on Oct. 7 that it would close the plant and eliminate 905 jobs.
Thompson repeated the commitment in a letter mailed to Joines on Tuesday.
Thompson's letter was in response to Joines' letter from Monday informing Dell of payback amounts for upfront costs and incentive grants from the city, county, Millennium Fund and Forsyth County Development Corp.
Those amounts are $15.6 million to the city, $7.9 million to the county, nearly $2.8 million to the Millennium Fund and $308,622 to the development group.
"Dell agrees and acknowledges that the amounts listed in your letter are the amounts to be repaid," Thompson wrote. "These amounts will be the full and final obligations by Dell to each entity, payable within 30 days from receipt of a formal letter sent by the community at the time the Dell facility in Winston-Salem ceases operations."
Dell had left itself some wiggle room at that time when it said it planned to meet with local government officials to determine its responsibility regarding the incentive agreements.
That response led to some speculation that Dell might try to either negotiate to keep some of the incentives or require local government agencies to pursue the money in court.
"No one in government likes having to pay incentives to bring employers to a community. But it is necessary in order to be competitive,'' Joines said in his letter. "However, incentives must include the protection of strong performance requirements. Dell's agreement to repay all local incentives validates the strength of our contract with Dell and shows that incentives are not inherently risky if properly structured."
Because Dell is not keeping the plant open for five years, it is obligated in its contract to repay 100 percent of the payments and incentives that it has received from the local community. It would have had to pay back just 50 percent if the plant stayed open past October 2010.
Gov. Bev Perdue has expressed a similar plan for state incentives.
The state has paid out a total of $8.5 million in grants and tax incentives, and expects to get back $1.5 million that it gave to Dell for job creation.
It's not clear if the state will recoup money for its other tax credits and incentives.
The state's incentive package, valued at as much as $267 million over Dell's stay in North Carolina, was offered based in part on projections of 1,700 Dell jobs and from 4,500 to 6,500 indirect jobs being created related to the plant. It also has to spend at least $100 million on the plant.
The state package also was tied to the number of computers the plant churned out.
As it turned out, the peak of employment in Dell's plant was 1,400, including 1,150 Dell personnel and 250 contract employees. No more than 500 indirect jobs were believed to have been created as a result of the plant being here.
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