The Mississippi Development Authority has released to the Mississippi Business Journal the “clawbacks” that TopShip LLC agreed to for state funding and other considerations.
The company, which will manufacture boats to service the offshore oil industry at the Port of Gulfport, promised to invest $68 million and create 1,000 jobs.
In return, the MDA and the State Port Authority agreed to give TopShip $11 million for plant construction, infrastructure, jobs training and other costs. The company would not have to pay state income tax for 20 years.
In the memorandum of understanding with the state, TopShip agreed to:
» Repay the amount the state had spent on the project if the company has not invested the $68 million by Dec. 31, 2020, in addition to interest, penalties and costs incurred by the state in issuance of bonds.
» Repay an amount based on a formula for failure to meet jobs creation goals.
TopShip will get $25 million from the port through a federal Community Development Block Grant fund derived from $566 million shifted to port restoration during the administration of Gov. Haley Barbour from an original allocation of $2.16 billion for low-income housing on the Mississippi coast after Hurricane Katrina struck in 2005.
The federal money was granted by the federal Housing and Urban Development department in exchange for 1,300 port jobs, 51 percent of which would be for low- to moderate-income indviduals.
Seven hundred of the 1,300 must be created within five years of completion of the port, no later than Dec. 31, 2020, according to the agreement with MDA.
Of that 700, 51 percent, or 357, must be for low- to moderate-income individuals. Another 300 are to be created within five years of the start of commercial production, but “are not required to meet a low-to-moderate income requirement since they are tied to state bond funds, not (HUD) funds,” the MDA said.
The MDA announced the TopShip project the same day in early February that it revealed that it had struck a deal with Continental Tire on a $1.45 billion plant in Hinds County that is targeted to employ 2,500. In each project, the average annual pay is supposed to be $40,000.
The Mississippi Business Journal reported the memorandum of understanding on the Continental project last month, but the document for TopShip was not available.
Mississippi will borrow $263 million to buy and prepare 900 acres for Continental, as well as contribute to building a 5 million square-foot plant. It would also build a new interchange off Interstate 20. Hinds County would repay $20 million of those bonds. The state will also grant breaks on income and franchise tax.
Clawbacks for Continental include $1 million each to the state and Hinds County for failure to meet end-of-the-year deadlines for commencing production for 2019, 2020 and 2021.
If the manufacturer has not invested at least $300 million within four years of the start of commercial production by the end of 2024 at the latest it will pay $2 million to the state.
If it has not created 400 jobs by the end of 2024, it will pay $2 million to the state. If the company has not invested $1.085 billion by Dec. 31, 2028, it will pay a penalty based on an algebraic formula.
Gov. Phil Bryant, the MDA and legislative leaders assured taxpayers that the deals offer ample protection for public investments.
House Appropriations Chairman Jeff Smith, R-Columbus said the incentives “have the strongest clawbacks we’ve ever had,” the Clarion-Ledger reported.
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