By Gregory Korte
The Cincinnati Enquirer

Convergys Corp. wants a package of incentives worth $63.4 million from the city of Cincinnati to keep from moving its headquarters to Northern Kentucky.

A report outlining the long-awaited deal went to Cincinnati City Council late Tuesday. If approved at a special meeting next week, the package would be the largest tax break ever approved by the city.

With $131.5 million in tax credits from the state of Ohio, the customer-service company would save $195 million over 15 years. In return, the company would agree to spend $100 million to buy and renovate the 20-story Atrium One Building at 201 E. 4th St.

Some council members are already balking at the price tag, and Mayor Charlie Luken has been preparing City Council for the sticker shock for months.

"The city needs to be the heart of the region, and keeping a (large) company is critical to our success. We were faced with the stark reality that Convergys was going to leave for Kentucky," he said.

"It's a win for Cincinnati. There is a cost," he said. "This report is eight pages long and brutally frank."

Key details of the package:

• Convergys would get a 15-year, 80 percent tax credit on the city earnings tax it pays for every new employee added.

So, for example, if Convergys hired 225 new people at $71,000 a year apiece (its average downtown salary), 80 percent of the city payroll taxes those workers pay - or $268,380 - would go back to the company.

• The company would also get a 75 percent tax credit for its 1,450 existing workers, using the same formula. Those credits could cost the city $1.7 million to $2.8 million a year in existing revenue.

• Up to $4 million in cash grants, to be taken out of a special property tax fund paid by the Atrium building's owner, would go to Convergys. In effect, these grants would allow Convergys to reinvest the property taxes it pays back into its property.

In return, Convergys would agree to spend $100 million to buy and renovate the Atrium One Building for its new world headquarters. The company now has its executive offices there, but employs most of its downtown workers at Convergys Center, at the northeast corner of Sixth and Vine streets.

The company promises to add 225 jobs in the next three years and another 1,225 in the 12 years after that.

The jobs must pay at least four times the federal minimum wage (or about $43,680 a year). And Convergys must try to fill at least 75 percent of the new jobs with city residents, and at least 10 percent with minority or disadvantaged workers.

The Convergys deal comes just two weeks after City Council approved the broad outlines of a deal to spend $15 million for a new parking deck at Vine Street and Central Parkway.

Without it, the Kroger Co. threatened to move its headquarters to an unspecified location outside the city.

And in 2002, the city voted to spend $6.5 million for new furnishings for Saks Fifth Avenue to keep the downtown department store happy.

But the Convergys package is a different kind of tax break. Most of the package rewards Convergys for making investments and creating new jobs in the city.

It's the job retention tax credits - which give the company a 75 percent tax break just for keeping the jobs it already has - that are likely to draw the most scrutiny from City Council.

"We're rewarding people to go look elsewhere," Councilman David Pepper said. "It says to companies, 'If you shop around and are successful enough to get an attractive deal, then come talk to us.'

"We need to be very serious about trying to keep Convergys. But I think everyone's asking whether this is an up-or-down deal or whether there's some room to maneuver," he said.

Luken said Convergys gave him the impression that it was a take-it-or-leave-it proposal. Convergys lobbyists did not return phone calls, but a Convergys spokeswoman said, "Until it's final, it's not final."

"Our feeling is that this is a good deal for the city. It's a good deal for Convergys. We're just hoping City Council sees it that way as well," spokeswoman Renea Morris said.

City officials acknowledge that there's a risk that other companies might ask for similar deals. The report to council says simply: "The city has limited ability to provide any future packages."

If City Council rejects the deal, it risks losing Convergys and its 1,450 employees. The company and its workers pay about $4 million in earnings taxes a year.

Luken said he would call a special session of City Council for next Tuesday. The Planning Commission, which must approve the sale of a city-owned parking lot and other easements, will vote on the deal this Thursday.

If Convergys buys the Atrium One tower and consolidates its work force there, it could force a massive shift of downtown workers.

Cincinnati Bell employs about 1,500 workers at Atrium One and the adjoining Atrium Two tower on East Fourth Street. Most of the Bell employees work at Atrium One, where the company leases 360,000 square feet. Its lease expires 2010.

A Cincinnati Bell spokeswoman declined to say whether the telephone company has talked to Convergys or the city about a potential move. The city report refers to coming "relocation decisions" but did not elaborate.

Staff writer Ken Alltucker contributed to this report. E-mail gkorte@enquirer.com