Avago Expansion Creates Big Economic Benefit
by David May, Fort Collins Area Chamber of Commerce President & CEO
October 14, 2012
On Tuesday evening the City Council has an opportunity to secure for our community 535 jobs, $165 million in private capital investment and millions of dollars of tax revenue for the city and county governments, the school district, the library district, and the sanitation district, among others. And it basically costs Fort Collins taxpayers nothing while bringing a sizable return to the community.
Avago, an existing Fort Collins company which is a progeny of Hewlett-Packard, wants to on-shore jobs and is considering doing so in Fort Collins. The company would like to build-out 12,160 sq. ft. in an existing building and install equipment valued at $165 million.
In addition to Avago hiring 135 people, 127 secondary jobs would be created along with 129 construction and 144 equipment installation jobs. That’s 535 jobs the community sorely needs.
To encourage that to happen, the City administration has proposed a ‘business assistance package’ which would rebate to Avago $3.9 million in use tax revenue collected on the purchase of the manufacturing equipment and $629,100 of business personal property tax.
Some have characterized this as a cost to the public, but it’s not. The City is simply rebating to Avago taxes the company doesn’t have to pay elsewhere. By removing this self-made barrier, the City enables the project to get done in Fort Collins. Even after rebating those taxes, the city government still nets $2.6 million from real property tax, construction use tax, sales tax and some business personal property tax.
And, if Avago doesn’t hit its hiring projections, the rebate is prorated.
The millions netted by the City is a conservative number and does not include the secondary benefits to city government and the community. For instance, simple extrapolation shows that PoudreSchool District would see an additional $10 million of revenue. Add in all of the other taxing agencies and the community benefit exceeds $15 million.
To most us, a positive, quantifiable financial result is called a return on investment. Some, however, label this as ‘corporate giveaway’ or a ‘corporate welfare.’ Nonsense. This is just common sense and good math. By eliminating a barrier for an existing primary company, one with a sterling reputation, Fort Collins gains millions of dollars of community benefit and 535 jobs. Both parties benefit.
It gets even better because the community is saying to Avago and other existing primary employers “We want you here, and we’re invested in helping you succeed.” That leaves the door open for future investments and jobs.
And let’s put all of this in perspective. While some communities offer free land, free buildings and bales of cash as ‘incentives,’ Fort Collins doesn’t have to do that. We can accomplish our community’s job creation goals by abating taxes we wouldn’t receive anyway and by being nice to an existing neighbor. That’s it. Simple, elegant, smart.
The Avago package is a no-brainer. The benefits of doing this far outweigh any objections.