Hiring subsidies: SAP picks from Pa. cash offers

As I wrote here yesterday, Pennsylvania has offered to pay German business-software giant SAP up to $1.8 million — $600,000 in a Pennsylvania First program grant, $1.176 million in Job Creation Tax Credits — if the profitable multinational makes good on plans to add nearly 400 employees at its U.S. headquarters in Newtown Square and a planned satellite office in Pittsburgh. 

SAP hasn't always taken advantage of the state's cash offers. Plans change; in one case a better state grant deal replaced a smaller offer.

I asked state Department of Community and Economic Development spokesman David Misner to review. According to Misner:

"In 2014, the Governor’s Action Team provided a funding package to SAP that included a Pennsylvania First grant and Job Creation Tax Credits" at Newtown Square, "in exchange for SAP’s commitment to make a capital investment of $25 million and to create 178 new jobs" at a new $16 million data center, "and retain 2,890 existing positions."

However, SAP has not collected these credits, state records show.  It did better: Three weeks before the election in which voters replaced then-Gov. Tom Corbett with Gov. Tom Wolf , Corbett approved SAP for $2 million in matching funds for the data center from the Redevelopment Assistance Capital Program.

Under a prior arrangement, the larger RACP grant caused the state to "rescind" the Pennsylvania First grant, SAP spokesman Steve Collins told me. (The company had asked for $5 million, but RACP was oversubscribed.)

SAP still plans to claim the Job Creation tax credits, which could amount to several hundred thousand dollars: "We created 178 new jobs from 2014-2016," so the company will apply this year to take advantage of the state's 2014 offer, Collins said.

 

Back in 2008, Pennsylvania offered SAP "an Opportunity Grant, Job Creation Tax Credits, [and] Customized Job Training [WEDnetPA] funding for an expansion proposal in Newtown Square, with a capital investment of $106 million, that would create 268 jobs within three years and retain 1,692 existing positions," Misner noted. 

"The company applied for the Customized Job Training funding, but later withdrew the application. It did not apply for the Job Creation Tax Credits. SAP America applied for and received a $300,000 Opportunity Grant," Misner told me. The target period covered the financial recession, when SAP and other software companies cut back on hiring.

"Upon final monitoring, the company was found to be compliant with its job creation/retention and private investment commitments," and got to keep the $300,000, Misner concludes.