Starbucks given tax break by Nevada board

Thursday, Nov. 15, 2001 | 10:59 a.m.

CARSON CITY -- At a time when state and local governments are feeling a pinch because of sagging tax collections, the state Economic Development Commission Wednesday handed a near $2 million tax break to Starbucks to build a coffee roasting plant in Douglas County.

Lt. Gov. Lorraine Hunt, chairwoman of the commission, said she concurred with the philosophy that granting tax incentives creates new jobs and spurs the economy, which has been soft since the Sept. 11 terrorist attacks.

She said she agreed with Vice President Dick Cheney that the economy is stimulated with tax breaks.

All didn't go smoothly at the meeting in Las Vegas for Starbucks, which reported revenue of $2.2 billion for the fiscal year ending Oct. 1. Commissioners were concerned that the majority of the 88 jobs to be created initially were low paying.

And union members were unhappy they didn't get a chance to express their opposition on the application, prior to the vote. They said they would file a complaint with the Attorney General's Office that the open meeting law was violated.

Starbucks paid $4.5 million for the land and intends to spend $26 million on the 350,000-square-foot plant. Hunt said construction alone would generate an additional $800,000 in sales tax.

As approved, Starbucks won't have to pay $1.3 million on sales tax on equipment purchases; will receive a $17,600 break on the business tax and will receive a personal property tax abatement of $590,000 that stretches over 10 years.

Commissioner LeRoy Goodman raised the issue of the low-paying jobs. To qualify for tax incentive, a company must pay above the state's average wage of $15.09 an hour. The average wage at Starbucks will be $16.38 an hour.

But Goodman said that 83 of the 88 employees would not receive a salary that equals the state's average. At the same time the company's human resources director will receive $100,000. He said, "That's heavy for a company with 88 employees."

Some of the workers will be earning $9.50 or $11.93 an hour.

But Thomas Pasinger, to be manager of the plant, said it was unfair of the commission to raise that issue. He said his company pays as good or better than other firms that have received the tax incentives from the state.

Starbucks, he said, has other programs that provide benefits to workers. The firm pays 90 percent of the premium for health insurance for the employee and the family; has a 401 (k) program and also gives stock options.

Goodman said he doubted those making the low wages could afford a 401k program. And he said he was not singling out Starbucks. Other firms have the same wage pattern of high salaries for management but low pay for workers.

"We see it all the time. But you're just first out of the box," Goodman told Pasinger.

Andy Barbano, a spokesman for organized labor, attempted to speak on the application. But he was cut off by the lieutenant governor, who noted the applications had already been approved and public comment wasn't scheduled until the end of the meeting.

Barbano called the action by the commission a "railroad job."

Before the meeting, Barbano said the Legislature didn't create the tax break program to encourage low-paying jobs; Starbucks new plant will pump 100 tons of new pollutants into Nevada air; the company has "stonewalled" for two years signing a contract with workers at its Kent, Wash., roasting plant and the company has been cited for health code violations in Washington.

Starbucks had the support of Douglas County but the school district did not take a position in backing the proposed application.

Goodman and other commissioners said that was strange since the schools would be receiving less money in taxes if the incentive were approved.

The commission also voted unanimously to grant a $157,479 in tax breaks to Tsuda Surface Technologies, which is locating a manufacturing plant in Henderson. It will employ 40 people with an average wage of $15.57 and provide health and 401(k) programs.

The company makes a plastic surface treatment product to cover cellular telephones and cosmetic kits.

The state abated $78,898 and deferred $30,000 in sales and use taxes on $1.5 million in equipment, and abated $8,000 in business taxes. Tsuda also received a $40,581 personal property tax abatement that had been previously approved by the city of Henderson.

Parent firm Tsuda Industrial Co. Ltd is headquartered in Japan and commissioners urged company officials to spread the word in that country that Nevada is a good place to locate.