State paying $17.5M to New York firm for moving to Nashville — along with targeted tax break

The state Department of Economic and Community Development has agreed to give $17.5 million to AllianceBernstein for moving its headquarters from Manhattan to Nashville, reports the Nashville Business Journal.   A bill approved by the legislature this year also gives the company a tax break that served to “sweeten” state support for the move, says the state’s ECD commissioner.

The Beacon Center of Tenessee, which has been crusading against “corporate welfare,” had urged that AllianceBernstein get nothing in the way of taxpayer-funded incentives. The global financal firm announced with Gov. Bill Haslam last month that it will bring 1,050 jobs to the state’s capitol city, investing about $70 million.

From the Business Journal:

The five-member State Funding Board is set to formally approve the grant at a May 16 meeting, according to a newly released agenda. (Update note: They did approve it.)

The pending grant is the first slice of the government incentives AllianceBernstein is poised to receive for its move — which has received its fair share of attention on Wall Street and in Charlotte, which was the city multiple sources identified as the other finalist the company considered. That’s part of the desired effect government officials hoped for, as they’ve framed the AllianceBernstein deal as the first of several similar companies civic leaders hope to recruit.

“It’s hard for me to overstate how important this is. This opens up an entirely new type of company that would locate here,” Gov. Bill Haslam said at the formal announcement of AllianceBernstein’s move.

Further underscoring that point, the $17.5 million grant for AllianceBernstein is 17 percent larger than the grant Bridgestone Americas received for keeping its headquarters in Nashville and moving to a newly built downtown tower, adding more than 600 jobs from out-of-state.

A state database of incentives indicates that since the start of 2011, only Eastman Chemical Co. (NYSE: EMN) has received a larger FastTrack economic development grant. That is one of three types of grants the state awards; all told, AllianceBernstein would rank as the third-largest grant recipient since 2011, behind Eastman and Hankook Tire Co. Ltd. (the latter for its Clarksville factory). The state weighs a company’s investment, number of jobs, wages and location when determining grant amounts.

… CEO Seth Bernstein said he plans to move in 2020, and the company is awarding bonuses of between $4 million to $14 million to other C-level executives if they also make Nashville their primary residence, according to regulatory filings.

Company officials have said the average salary of those jobs will range between $150,000 to $200,000, with bonuses and other compensation pushing that tally even higher. Bridgestone, for comparison’s sake, said its new jobs would average pay of $93,000.

The federally owned Tennessee Valley Authority also is providing an undisclosed amount of incentives to AllianceBernstein, as indicated by quotes from TVA‘s senior vice president of economic development in the formal announcement of the headquarters move.

It’s not immediately clear if AllianceBernstein will receive other state incentives. The state offers a “super job tax credit” of $5,000 per job if a company exceeds thresholds for the size of its investment, number of jobs and salary levels.

Also unclear is the amount of Metro incentives the company is poised to receive. The city offers grants of up to $500 per job, per year, for a time period of up to seven years. At that math, AllianceBernstein could receive as much as $3.7 million from Metro if it creates as many jobs as the company says it will.

The most valuable incentive heading AllianceBernstein’s way may be a new state law that reduces taxes for financial-asset management companies.

The legislation (HB2112) was filed at the end of January. The month before, AllianceBernstein executives told state officials that Nashville was a leading contender for the headquarters and asked the state to “sweeten our offer,” said Bob Rolfe, commissioner of the state’s economic development department.

“It was really specifically targeted at AllianceBernstein,” said State Rep. David Hawk, who said he introduced the bill at Haslam’s request. “We hoped something was coming and we hoped the legislation we put in place was the deciding factor in bringing them here. This was something [Haslam] really took personally, to bring this industry to Tennessee.”

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Press release from Beacon Center of Tennessee (dated May 8)

NASHVILLE – With the recent news that Wall Street firm AllianceBernstein will be moving its headquarters to Nashville and that the company is in discussions with the city of Nashville and the state of Tennessee on an incentive package, the Beacon Center is formally calling on the state and local government to not to offer any taxpayer dollars to the company in their relocation. The company has already announced its intention to relocate to Tennessee, yet officials say discussions continue about potential taxpayer handouts.

Mark Cunningham, spokesman for the Beacon Center stated, “While the Beacon Center welcomes AllianceBernstein to Nashville with open arms, it should not be on the backs of Nashville and Tennessee taxpayers. The company is leaving high-tax New York City and coming to Nashville because of our extremely favorable tax structure that includes no state income tax and the phase-out of the Hall Income Tax on stocks and bonds. Their decision to already relocate here before any incentives are awarded proves that we can attract businesses with our economic climate, tax structure, and fiscal responsibility, and that we do not need to give them the tax dollars of hard-working Tennesseans on top of that. At this point, taxpayer handouts would be nothing but window dressing.”

Cunningham went on to note, “At the very same time Nashville is booming, the city has a budget shortfall, in part because of the multi-million dollar taxpayer handouts that the city government has given to specific businesses at the expense of businesses that have been here for generations. If we can’t meet our budget at a time when Nashville is one of the hottest cities in America, what is going to happen when things start to slow down? Companies should succeed or fail based on what they offer consumers, not how much money they can get out of taxpayers. The Beacon Center wants the same low tax rate for all businesses, which is why we are calling on the state and city government to take a stand against corporate welfare.”