Dell Inc. has promised in writing to repay the $26.5 million in local economic incentives the computer maker received from the city of Winston-Salem, Forsyth County, the Millennium Fund and Forsyth County Development Corporation, according to a letter sent by Kip Thompson, Dell's vice president for global facilities and strategic growth, to Mayor Allen Joines earlier this week.
On Thursday, the city released the letter drafted by Thompson, which states the computer maker will repay $15,556,071 to the city; $7,916,328 to the county, $2,774,228 to the Millennium Fund; and $308,622 to the Forsyth County Development Corporation within 30 days after it closes its Forsyth County plant in January 2010. On Oct. 7, Dell announced it would shut down its Winston-Salem desktop computer manufacturing facility by January 2010. The plant closing will displace more than 900 local workers.
Six hundred employees will be released in mid-November and the balance of employees will be released in January 2010, said Dell spokesman David Frink. Full-time employees will be eligible for a severance package that includes two months of pay plus one week of additional pay for every year of service. Employees will also receive two months of outplacement assistance and a pro-rated annual bonus. Dell employees rehired in June will also be eligible for the company’s severance package.
The city’s incentive agreement with Dell required that the company create 1,700 jobs within five years of the plant opening in September 2005, and invest at least $100 million in the community. Under the terms of the agreement, Dell’s failure to meet these conditions would result in company forfeiting all upfront expenditures, incentive payments and title to the land it bought with city money.
Of the $15,556,071 paid by the city, $8.5 million was for land acquisition, site preparation, and other start-up costs. Annual incentive payments were based on the computer maker’s property tax payments.
Once the plant officially closes in January, the city will send a letter to Dell officials asking for reimbursement. Dell is required to make all reimbursement payments within 30 days of receipt of the letter.
Dell received approximately $281 million in local and state economic incentives to bring its desktop manufacturing facility to Forsyth County in 2005.
“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,” Joines said in a statement.
Winston-Salem City Councilman Dan Besse said in the future, city and county officials should recruit companies and industries that build on the area’s natural strengths as a center for biomedical research and transportation hub. Besse cited the Piedmont Triad Research Park in downtown Winston-Salem, Piedmont Triad International Airport and Wake Forest University’s Bowman Gray School of Medicine as critical infrastructure that should attract companies with long-term growth potential.
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