New major heathcare employer marks construction milestone for Natomas headquarters
Four years ago under former Mayor Kevin Johnson, city officials established what they called an Innovation and Growth Fund. The goal: Compete for new businesses with higher wage jobs by offering cash and other incentives.
On Thursday, the city welcomed its first major catch, Centene, a Missouri-based national healthcare insurance giant and Fortune 500 company that had been looking for a place to build a West Coast headquarters.
Company executives held a cornerstone unveiling ceremony on a 68-acre field just west of Sleep Train Arena in North Natomas, where the company plans to employ several thousand workers in the next two years in a campus-like setting of five buildings.
Mayor Darrell Steinberg called Centene’s arrival a victory for the city, and evidence that Sacramento can vie with other cities as an attractive place to plant and grow a business.
“We can compete for top-flight industries, for more high-wage jobs ... and we can win here,” Steinberg said. Local officials said Austin, Texas, and Phoenix were in the running as well. Steinberg said the city focused its incentive offer in a way that would encourage Centene to bring well-paying jobs.
Sacramento will pay the company $9,000 for every job created at the headquarters that is new to the Sacramento area. To qualify for the incentive, the median salary for those positions must be at least $61,515 and the average salary must be above $64,078 a year, city officials said last fall in announcing the deal.
Most of the positions at the new headquarters would be in health care, accounting and information technology.
Centene would receive $2.7 million in city incentives every time it assigns 1,000 workers to the North Natomas campus, but only if 300 of those positions are new to the Sacramento region and are paid above the salary requirements. The incentive would be available for 12 years and would be capped at five payments, or $13.5 million. If Centene does not maintain the local workforce levels, the city can ask for the money back.
The city established the Innovation and Growth Fund in 2015, based on an idea from Councilman Jay Schenirer, with an initial chest of about $10 million from the sale of the former Army Depot site and the sale of a few other city-owned properties, according to former City Manager John Shirey. The city subsequently added property tax revenues to the fund after that money became available when the state eliminated the redevelopment law that formerly funded local investment to eliminate blight and encourage housing and jobs.
The fund is now fed by general city taxes, at council discretion.
Steinberg said the city would be willing to offer more incentive packages to companies.
“You judge each opportunity on its merits,” the mayor said. “We have to be good stewards of taxpayer dollars, and at the same time we have to be aggressive about defining our economic destiny. This is what we need more of. We need more high-wage private sector jobs period.”
Centene also secured a $7 million tax credit from the Governor’s Office of Business and Economic Development.
Centene, which insures 14 million people nationwide, already has a substantial presence in the region with 3,000 workers. It merged four years ago with California-based Health Net, now a subsidiary, and maintains a facility in Rancho Cordova. Ultimately, officials say they plan to hire 2,000 net new workers for the Natomas site, and will employ 5,000 there overall.
Centene CEO Michael Neidorff said some other cities offered bigger incentives, but his company chose Sacramento because it is the state capital, it has a strong economic base and because the company insures a substantial number of people in California and wants to have facilities near its clients.
“We like being visible in the capital,” he said. “We set a high standard. We like it when government officials see how well we are doing it.”
Neidorff said his company seeks to employ people from low-income neighborhoods. Construction has begun on site, and the company is expected to begin hiring in early 2020.
Steinberg said 2,000 new jobs represents the most jobs in one fell swoop since the former Packard Bell computer company opened a facility in south Sacramento, also with state and local incentives.
Editor’s note: This story has been updated with additional information about the origins of the fund.