The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Tuesday, January 13, 2004

Kentucky package strong was one of the largest offered by state

By Bill Bartleman bbartleman@paducahsun.com--270.575.8650
Strong


Kentucky's incentive package to USEC Inc. was one of the largest the state has ever offered, according to Kentucky Economic Development Secretary Gene Strong.

"It was a very strong, competitive package, but we had some hurdles to jump over that dictated the decision by USEC" to build the plant in Piketon, Ohio, Strong said. The two biggest hurdles: Ohio already had a building that would cost $300 million to duplicate here, and Paducah's earthquake-fault proximity meant higher construction costs.

Strong would not reveal the value of Kentucky's package, saying former Gov. Paul Patton had signed a confidentiality agreement with USEC.

Ohio officials released details of their package, saying it was valued at a minimum of $125 million. The package is being made public, although portions of it will require formal approval by public agencies.

"Our package was more competitive than Ohio's," Strong said. "It was one of the highest packages I've ever seen."

Strong has been Kentucky's economic development secretary for 10 years. One of the largest packages offered and accepted by a private company was $147 million offered to Toyota in 1986.

Strong said that since Kentucky will not have to ask the legislature or any boards to approve any part of the USEC package, he feels it necessary to honor the confidentiality agreement.

Paducah Mayor Bill Paxton said he was pleased at the package. "I feel extremely confident that the state gave a very competitive package," he said. "I'm familiar with it enough to know that for a state this size (and) for the number of jobs that it (was) going to entail ... it was a very aggressive proposal."

McCracken County Judge-Executive Danny Orazine said "the word we got out of Frankfort was that it was almost excessive (because) it was such a good package."

After USEC stops production in Paducah around 2010, several hundred workers will be required to maintain the plant. Others are expected to be offered jobs assisting in contamination cleanup.

Strong expressed confidence that the region will rebound with new jobs. "The entire region is ripe for economic development," Strong said. "We'll redouble our efforts to help find new industry."

Gov. Ernie Fletcher, who took office Dec. 9, said there was little he could do to entice USEC. "This is a decision that was essentially made under the previous administration," Fletcher said. "Kentucky made a competitive offer, but USEC ultimately decided Ohio was a better fit. Clearly, it is another example of how we must make Kentucky more competitive and attractive for those types of economic opportunities and job growth."

U.S. Sen. Mitch McConnell and U.S. Rep. Ed Whitfield said they were disappointed but not surprised. McConnell said he would continue to seek cleanup funds and money to construct a plant to recycle depleted uranium.

"The excellent work force at Paducah has served our country well for decades and I am confident they will continue their outstanding work as long as USEC operates the Paducah plant," McConnell said.

Whitfield said the region will survive. "Paducah is a very progressive community that is moving ahead with the development of a major industrial park in Graves County to attract new business and industry," he said.

U.S. Sen. Jim Bunning said Paducah "deserved to have this plant" because workers "dedicated their lives to the security of our nation by helping to build a strong weapons system."

Ohio's incentive program was worth at least $125 million. Here's a breakdown of the incentives, followed by the value to USEC.

State Incentives

Job creation tax credit, $10.8 million.

Manufacturing machinery sales tax exemption, $53.48 million.

Research and development tax credit, to be determined.

Research and development sales tax exemption, to be determined.

Machinery and equipment tax credit, to be determined.

Grants

Business development, $5 million.

Three small grants, $850,000.

Infrastructure Assistance

 Roadwork, $2 million.

Water development, $5 million.

Financing

State financing assistance, $20 million.

Ohio Air Quality Development bonds, to be determined.

Work Force Development

 Employee training, $2 million.

Local Tax Incentive

Ohio Enterprise Zone Program, $26 million.