Wednesday, June 22, 2005
Va. seeks refund of incentive grant
The state says Johnson & Johnson did not reach its employment obligations at its Roanoke plant.
Virginia wants payback and Roanoke's Industrial Development Authority is, in effect, the collection agency.
State and city officials contend that health care and consumer products giant Johnson & Johnson has broken a promise and is obligated to refund $1.4 million, or 70 percent, of incentive money received from the Governor's Opportunity Fund - a grant that was tied to job creation.
They say Johnson & Johnson failed to deliver on a 1999 commitment to provide at least 600 jobs within three years of shipping eyeglass lenses from the company's Spectacle Lens Group division in Roanoke. And now that former competitor Essilor has signed an agreement to buy the Spectacle Lens Group - a deal announced June 8 - state and city officials want to get back a portion of the incentive money paid to encourage Johnson & Johnson's development in Roanoke.
Mark Kilduff, executive director for the Virginia Economic Development Partnership, wrote city officials June 9 that although Johnson & Johnson had met an incentives-related investment goal of $125 million for its Roanoke plant, the company had not reached its jobs target. He wrote that "only 30 percent of the job creation goal has been attained."
In a letter to the Spectacle Lens Group dated June 16, Sam Darby, a Roanoke lawyer representing the city's Industrial Development Authority, cited an April job tally in Roanoke of 179 full-time employees at the Spectacle Lens Group's plant in Roanoke. The three years were up and the jobs weren't there and, in view of the Essilor deal, Kilduff had informed the city he wanted the refund issue to "be resolved in a timely fashion."
The 179 jobs, observed Darby, were "421 short of the goal of 600 provided for in the performance agreement [of 1999]."
By the terms of that agreement, the Governor's Opportunity Fund appropriated $2 million to Roanoke's IDA, and the IDA, in turn, granted those funds to Johnson & Johnson.
Now, the IDA is after the $1.4 million refund, a figure linked to the percentage of jobs created. If Johnson & Johnson pays the refund, the check eventually will end up with the treasurer of Virginia.
Dennis Cronk, IDA chairman, said this is the first time during his 10 years with the authority that it has asked for the return of incentives money. He said he anticipates the authority will discuss the refund request at its next meeting, set for July 13.
But both Christie Collins, a spokeswoman for the Virginia Economic Development Partnership, and Anne Piedmont, director of research and communications for the Roanoke Valley Economic Development Partnership, said such refund demands are not unprecedented.
Asked Tuesday whether Johnson & Johnson will repay the money, Jeff Leebaw, a company spokesman, replied, "It is premature to speculate." Leebaw was similarly noncommittal when asked whether Essilor's acquisition of the Spectacle Lens Group and its Definity brand progressive addition eyeglass lens will include the Roanoke plant and its production line.
"As you know, Essilor will take 30 to 45 days to get to know the employees, processes and capabilities," Leebaw said. "That's where we are right now."
Heather Allen, a spokeswoman for Essilor, said the company remains in an evaluation mode in Roanoke. She said executives are at the plant this week.
Leebaw said Tuesday it was "business as usual" at the Spectacle Lens Group facility off Frontage Road Northwest.
Brian Wishneff, a member of Roanoke City Council and an economic development consultant, was a consultant to Johnson & Johnson when it weighed whether to locate its Spectacle Lens Group division in Roanoke. Wishneff was not on the city council at the time.
On Tuesday, speaking as a city councilman, Wishneff said he hopes focusing on a refund of incentives money won't lessen efforts by the city and state to persuade Essilor executives to continue eyeglass lens production in Roanoke.
"Obviously, the goal here is to keep the plant open, not to get money back from the performance agreement," Wishneff said.
Brian Townsend, city planning director and interim director of economic development, said city officials will meet with Essilor executives as soon as they are available for and open to discussion.
"I'd like to be able to find the time to introduce them to the city and the benefits of doing business here, but I'm not going to push myself on them," Townsend said.