March 20, 2010 State: create jobs or pay up GlobalFoundries signes agreements to repay $100M if it misses mark
By LARRY RULISON, Business writer
MALTA -- GlobalFoundries Inc. is now on the hook to New York state to the tune of $100 million.
The Sunnyvale, Calif., computer chip manufacturer, which is building a $4.2 billion factory in Saratoga County in exchange for more than $1.3 billion in state incentives, has signed agreements that would have it repay $100 million to the state if it doesn't meet job creation requirements.
The mortgage lien, filed in two parts with the Saratoga County Clerk's office earlier this month, would allow the state to recoup a portion of the cash it has been pumping into the project.
New York state has promised GlobalFoundries $650 million in cash to pay for construction of the building "shell" of the factory, which will end up costing about $800 million.
GlobalFoundries will pay for the manufacturing equipment to be installed in the facility at an estimated cost of $3.4 billion, although the company will also be eligible for roughly $700 million in state tax breaks at the 223-acre site at Luther Forest Technology Campus.
Under the terms of the state's grant disbursement agreement with GlobalFoundries, the company must employ 1,205 people at the factory by 2014 and maintain 85 percent of that number for at least seven years after that.
GlobalFoundries has already billed the state $108 million for the work it has done at the factory, which is expected to be fully operational by 2012.
Empire State Development Corp.'s "mortgage first lien allows ESD to secure its position with the building and stay ahead of other creditors should GlobalFoundries fail to meet its commitments," said ESD spokesman Warner Johnston. "Substantial progress has been made on the site to date, and we remain confident that GlobalFoundries will meet both the job and capital investment requirements set forth in our agreement."
