Friday, July 18, 2003

Convergys execs reassure Norwood

By Ken Alltucker
The Cincinnati Enquirer

Convergys Corp. executives said Thursday that the company will meet all terms of a tax-break deal for its Norwood call center even after the company moves many of those jobs to a new downtown office tower.

Convergys met with Hamilton County and Norwood officials this week to hash out details of three existing "enterprise zone" agreements administered by the county. The deals require minimum job, payroll and investment requirements in exchange for tax breaks on property, equipment purchases and other personal property.

Norwood officials are worried that Convergys' plan to buy the Atrium One tower - which hinges on a lucrative $207 million package of incentives and loans from Ohio and the city of Cincinnati - would effectively gut the Norwood call center and drain the city's earnings tax collections. Furthermore, city officials question whether Convergys has kept enough jobs in Norwood to meet terms of the existing agreements.

But in the company's first extensive public comments about the downtown consolidation plan unveiled last month, Convergys chairman and chief executive officer James Orr said Thursday that the billing and customer management firm will make good on all tax-break requirements.

"We are clearly and fully in compliance with it," Orr said of the Norwood deals. "We are not in breach of any agreement. We are an honorable company."

Orr answered questions about the Norwood tax deals and the firm's downtown consolidation plan, which Orr hopes Cincinnati City Council will vote on quickly. If City Council rejects a city-negotiated deal of $63.4 million in incentives, Orr warned that it would cost his company millions of dollars and prompt the relocation of more than 1,400 Cincinnati workers to an undisclosed site in Northern Kentucky or a Southwest Ohio suburb.

Orr said the company's payroll in Norwood exceeded $32 million in 2002, or more than $8 million above the $24.1 million goal outlined in a 1996 enterprise zone agreement. The extra payroll was generated, in part, by high-paying finance, accounting and sales jobs that the company couldn't fit at its crowded downtown buildings.

The company acknowledges that it didn't meet its job total goal, but it says the shortfall isn't enough to be considered a violation of the deal.

The 10-year pact requires the company to maintain 1,051 full-time jobs and 401 part-time jobs. At the end of 2002, the company counted 886 jobs in Norwood, according to William H. Hawkins II, the company's general counsel and secretary. He didn't immediately know how many employees now work in Norwood.

The county said in its 2002 audit that the company provided 724 full-time jobs. No part-time count was given.

But Hawkins said the minimum job goals are not absolute requirements. The county and city must consider other factors such as the struggling economy and industry trends, too.

"These numbers are not absolutes, not drop-deads," Hawkins said. "These are goals we agreed to try and reach."

Hawkins added that neither Hamilton County nor Norwood objected to Convergys' Norwood job count during an annual audit of the enterprise zone conducted earlier this year. The county recommended that the deal continue unchanged.

"That is yet another reason why nobody is in breach of anything," Hawkins said.

But Norwood officials say they're more concerned about the company's future plans. The company said it can only guarantee 100 jobs will remain in Norwood if the firm buys the Atrium One building in downtown Cincinnati.

Norwood's development director Rick Dettmer and assistant law director Ted Kiser shared their concerns with Convergys and Hamilton County officials Wednesday. Kiser said keeping just 100 jobs in Norwood is "unacceptable" under the existing enterprise zone deals.

"It's in everybody's best interest if Convergys, in good faith, tries to work everything out here," Kiser said.

Kiser said Norwood leaders plan to do more than protest. The city wrote a letter to the Ohio Department of Development contesting the state-approved tax-incentive deal for Convergys, in part, because the city claims it would encourage Convergys to violate existing Norwood enterprise zone deals.

Also, Norwood might hire a private lawyer to pursue a "clawback agreement" that's included in the 1996 pact. That agreement allows the county to halt all tax breaks and pursue the collection of tax dollars the company saved under the deal.

But Hamilton County Administrator David Krings said it's too early to tell whether the county would consider pursuing a clawback.


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