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Photo by Robin May
CGI's James Peake announced Monday that the Canadian company is bringing a technology center and 400 high-tech jobs to UL's Research Park

CGI Federal executive James Peake announced in a press conference Monday that the company has selected the UL Research Park to establish a technology center that will create 400 direct high-tech jobs with average salaries of $55,000 a year. The technology center, which will become an anchor tenant of the 143-acre Research Park, will develop complex business and IT solutions for clients seeking services from a technology partner that shares a common time zone and language. Peake, joined by Gov. Bobby Jindal and other local officials, made the announcement at the Lafayette Economic Development Authority’s office.

CGI, the fifth-largest IT company in the world, selected Lafayette after a two-year nationwide site-selection process, according to a press release. The total investment, including government incentives and contributions, is about $25 million.
 
A key part of the project includes a state-funded, 10-year, $4.5 million higher education initiative led by UL that will result in a tripling of the number of undergraduate computer science degrees awarded annually by the university. That growth is anticipated to place the university’s computer science program among the Top 25 such programs nationally for the number of bachelor’s degrees awarded annually.

At full employment, the center will have a total annual payroll of about $22 million, according to Peake. Louisiana Economic Development estimates the project will result in an additional 405 new indirect jobs, for a total of more than 800 new permanent jobs in Acadiana.

Founded in 1976, CGI is based in Montreal with U.S. headquarters in Fairfax, Va. The company employs more than 68,000 professionals in 40 nations and counts major government agencies (it is the company behind the glitch-ridden Obamacare website healthcare.gov) and corporations among its clients. In its 2013 fiscal year, CGI recorded revenue of approximately $10 billion. Its shares are listed on the TSX (GIB.A) and the NYSE (GIB).

“We welcome the opportunity to contribute to the economic growth and vision of Lafayette and the surrounding region,” said Peake, a U.S. Army retired lieutenant general and the president of CGI Federal, a wholly owned subsidiary of CGI serving clients in the civilian, defense and intelligence sectors of the U.S. government. “Our partnership with Lafayette represents a groundbreaking model for CGI — bringing together the local community to identify opportunities for innovation that can be applied globally, while tapping the talent and resources of Louisiana. As a continuation of our relationship with the state, this partnership will help create 400 jobs and serve as a model of corporate-community cooperation for keeping technology jobs in America. We congratulate the state of Louisiana and the Lafayette community on this comprehensive, innovative program.”

LED began discussions with CGI about a potential Louisiana technology center in August 2012. To secure the project, LED offered the company a competitive incentive package that includes a performance-based grant of $5.3 million to reimburse personnel relocation, recruitment, training and building operating costs. CGI will receive the comprehensive workforce solutions of LED FastStart and is expected to utilize the state’s Quality Jobs and Digital Interactive Media and Software Development incentives.

Local incentives for the project will include a grant not to exceed $1.1 million from LEDA, for the reimbursement of relocation costs and operating costs in a temporary location. UL will provide a 10-year land lease that will include a $600,000 in-kind contribution by the university for the first five years of the project, matched by a $400,000 performance-based state grant to the company over the sixth through 10th years of the lease.

“CGI’s decision to locate more than 400 jobs in Lafayette is another step in keeping our highly trained graduates in the area and in attracting those who want to make their home in Acadiana,” LEDA chief Gregg Gothreaux said in a prepared statement.

CGI will lease space for its center in a new 50,000-square-foot, $13.1 million building that is being funded by the state at the UL Research Park. The building will be owned by UL or its affiliated, nonprofit support organization, Ragin’ Cajun Facilities Inc. Construction will begin this year and will be completed by year-end 2015.

CGI will begin hiring in the next few months and begin operations at a temporary location in late 2014. The company will reach full employment within the next four years. Additional information about the company’s hiring plans will be made available online in the coming months.

Comments   

+2 #2 GREGORY FOREMAN 2014-04-30 12:01
(continued FM previous post)
A Digital Interactive tax credit allowing a 100% or 85% income tax refund depending on how the company files for the credit, plus, an additional 35% payroll tax credit($7.70 million) and a production tax credit 25%(cost unknown).
An Industrial Tax Exemption Program exempting CGI from LOCAL property taxes for the next ten years(cost unknown).

Where cost can be calculated, LED's incentive programs provide CGI additional financial benefits of $21.00 million dollars a year for the next ten years. With a projected employment base of 400 employees, Louisiana is paying an average of $52,500 per employee, per year in incentives. With an average payroll of $55,000,the state “footing the bill” for 95% of CGI's payroll, $52,500+.

Is it any wonder CGI selected Louisiana?
+1 #1 GREGORY FOREMAN 2014-04-30 11:57
In addition to the CGI financial package presented, CGI will be benefit from additional incentives not highlighted in the press release. The additional benefits and their application can be found on the LED website. Two factors should be kept in mind when reviewing these benefits. First, the tax credits are all refundable credits meaning the credits will be paid regardless of the companies income tax position and, second, this is but one company, however, it provides a window into why Louisiana doesn't have the monies to operate.
Payroll Incentive Program granting a 15% tax credit based on the gross payroll of the company( $3.30 million). Free Enterprise Zone tax credit granting a $2,500 tax credit per employee($10.00 million)and a 1.50% investment tax credit based on total capital expenditures(un known).

(continued next post)

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