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Local Tech Wire

WINSTON-SALEM, N.C. – Dell (Nasdaq: DELL) has agreed to repay more than $26 million in local lax incentives and grants following its decision two weeks ago to shut down its massive PC assembly plant in Forsyth County.

Dell is shipping the jobs to other countries, including Mexico.

The agreement does not include incentives from the state of North Carolina, but Gov. Bev Perdue has vowed that Dell will repay “every red cent” of any funds it received.

In an by Winston-Salem Mayor Allen Joines, Dell agreed to repay to:

• City of Winston-Salem: $15,556,071
• County of Forsyth: $7,916,328
• The Millennium (economic development) Fund: $2,774,228
• Forsyth County Development Corporation: $308,622

Kip Thompson, Dell’s vice president for global facilities and strategic growth, sent the letter of agreement to Joines. Joines had sent Dell a letter on Oct. 19 spelling out the amounts Dell would have to repay since it was closing the plant and had not fulfilled economic development agreements required for the incentives.

“Dell agrees and acknowledges that the amounts listed in your letter are the amounts to be repaid to the City, the County, The Millennium Fund and the Forsyth County Development Corporation,” Thompson said.

The shutdown will result in the loss of 905 jobs. The plant opened in 2005.

The state agreed to provide Dell more than $240 million in tax rebates and incentives.

Despite the plant closure, Joines said he remains committed to the use of incentives to lure new employers or expansion of existing facilities to add jobs.

"No one in government likes having to pay incentives to bring employers to a community," Joines said, "but it is necessary in order to be competitive. However, incentives must include the protection of strong performance requirements. Dell’s agreement to repay all local incentives validates the strength of our contract with Dell and shows that incentives are not inherently risky if properly structured."

The city’s agreement with Dell stipulated that Dell create 1,700 jobs within five years of the facility’s opening and invest “at least” $100 million. Failure to meet those goals required Dell to repay “all upfront expenditures, incentive payments and title to the land Dell purchased with city money,” according to the city.

Out of the $15.6 million from the city, $8.5 million went for land acquisition, site prep and other costs.

About 600 Dell workers will be laid off in November. Affected employees at the 750,000 square foot plant will receive severance pay, incentive payments, benefits continuation and outplacement services, they said.

The highest number of people employed at the plant was some 1,400, including 250 contractors, according to the Winston-Salem Journal.

The text of the letter from Joines to Dell says:

“This is to confirm our recent conversations regarding the reimbursement by Dell to the Winston-Salem Community of all upfront costs and expenses paid by the Community for the Dell Facility project and all of the Annual Incentive Grants paid to Dell by the City and County. My understanding is that Dell has reviewed the amounts paid by the City, the County, the Millennium Fund and the Forsyth Development Corporation and you are in agreement with said amounts to be repaid …

“The Community will send a formal letter for reimbursement at the time the Dell facility in Winston-Salem ceases operations. Dell will make the payments to the Community within 30 days from the receipt of said formal letter.

“As we discussed, it is appropriate for Dell to acknowledge immediately that we have reached an agreement on the amounts to be reimbursed.

“Please respond to this letter at your earliest convenience.”

The text of the letter from Dell:

“This letter confirms our receipt of your letter dated October 19, 2009, regarding the reimbursement by Dell to the Winston-Salem Community of upfront costs and expenses paid by the Community for the Dell Facility project and all of the Annual Incentive Grants paid to Dell by the City and County as outlined in your letter. Dell agrees and acknowledges that the amounts listed in your letter are the amounts to be repaid to the City, the County, The Millennium Fund and the Forsyth County Development Corporation. These amounts will be the full and final obligations by Dell to each entity, payable within 30 days from the receipt of a formal letter sent by the Community at the time the Dell facility in Winston-Salem ceases operations. When the formal letter is sent to Dell, please include the specific mechanics of payment for each entity, including any wiring instructions that should be followed.

“In order to prepare for the disbursements, if Dell does not hear from any of the parties to this letter within 20 days, Dell assumes all parties agree to the amounts listed in your October 19th letter, and that all parties agree that Dell’s payment of these obligations release Dell from any further obligations regarding the Dell Facility project.

“Thank you for your ongoing efforts to finalize and clarify the process for reimbursement on behalf of the Community.”