ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, October 30, 1996 TAG: 9610300042
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
First Union Corp. must repay Roanoke part of the money used as an incentive to lure 200 banking jobs to its downtown offices.
Although the amount the Charlotte, N.C.-based company will be asked to return has not been calculated, First Union spokesman David Scanzoni said the bank will "absolutely meet the terms" of its 1994 agreement with the city. "We definitely will fully comply."
The matter stems from Roanoke City Council's authorization in 1994 of an incentive grant up to $500,000 to First Union to train 200 new workers. The money was based on the bank's promise to locate its mortgage loan servicing operation with 200 workers in First Union Tower.
The bank announced Monday that it is abolishing that unit, moving some jobs to a First Union operation in Raleigh, N.C., and contracting with another company for the rest. Employment in the Roanoke mortgage unit is already down to 121 people through attrition.
Scanzoni said the salary range of those 121 jobs is $18,500 to $36,400.
The bank also said it would hire 62 people for new positions in its customer calling center, but that facility is on Plantation Road in Roanoke County.
The city's agreement with the bank set up a fund of $500,000 for training by the Fifth District Employment and Training Consortium. First Union drew down only $326,000 of it, said Philip Sparks, Roanoke's director of economic development.
In return, the bank promised to add 200 jobs to the existing 359 at First Union's facilities downtown. The company promised to maintain 559 jobs downtown for at least five years.
The agreement was effective Oct. 1, 1994, and extended to Oct. 1, 1999. Sparks said the bank created slightly more than the 200 additional jobs, but that number began to decline this year.
Under the agreement, Sparks said, the bank must refund the city $400 a year for each job fewer than 559. But the amount recovered cannot exceed $326,000.
Neither Sparks nor Scanzoni knew the number of people the bank has working downtown now, so the amount the bank owes could not be calculated immediately.
Sparks said the city puts such recapture clauses in all of its incentive packages for industry because business prospects are uncertain.
Such terms, called clawbacks, bind a company, before it receives incentives, to hire a certain number of workers and invest a specific amount in construction and equipment by preset dates.
Robert Skunda, Virginia's secretary of commerce and trade, last summer pledged to see that all companies sign the agreements before they benefit from state economic development grants such as those from the Governor's Opportunity Fund.
Even though downtown Roanoke will lose the jobs, Sparks said, the community still will benefit from having trained workers available for industry.
First Union said Monday that it expects few, if any, people to be fired as the result of the proposed changes. The 121 workers affected by loss of the mortgage servicing center will have first option on the 62 new jobs at the bank's operations center on Plantation Road and on 32 jobs with a company that will take over some of the work. The bank also expects to have other job vacancies to fill over the next year.
Staff writer Jeff Sturgeon contributed to this report.
LENGTH: Medium: 65 linesby CNB