Express-Scripts weighs two offers for new facility
ST. LOUIS POST-DISPATCH
Friday, Sep. 04 2009
By Tim Bryant
Express Scripts is weighing competing offers of tax breaks from Missouri and Pennsylvania in deciding whether to build a drug distribution center -- with an annual payroll of almost $14 million -- near its north St. Louis County headquarters or in suburban Philadelphia.
Both states are poised to grant tax abatements or other benefits to snag the nearly $60 million development, which will bring about 270 new jobs. In addition to state aid, St. Louis County and Bucks County, Pa., are dangling tax-assistance offers.
Competition will be fierce during these tough economic times. Express Scripts has enjoyed steady growth, with $22 billion in revenue last year and a profit of $776 million, up 37 percent from the year before. It hopes to complete by the end of this year its $4.7 billion purchase of NextRx, part of health
insurance giant WellPoint.
St. Louis County leaders claim a hometown advantage, but Express Scripts, among the nation's largest pharmacy benefits managers, also employs hundreds of people at a distribution facility and a call center in the Philadelphia area.
Regardless, County Executive Charlie Dooley said he believes Express Scripts is close to choosing to build on 12 acres at NorthPark, a 550-acre business park across Interstate 70 from the company's headquarters at the University of Missouri at St.Louis.
"We're not there yet but we're working on it," he said. "It's not a done deal, you know what I'm saying? Everybody is working very diligently to make this thing happen. We are very excited."
Robert Cormack, executive director of the Bucks County Economic Development Corp., said he is confident Express Scripts will expand an existing drug distribution facility by moving it to a Bristol, Pa., warehouse vacated two years ago by apparel maker Jones New York.
Express Scripts' spokeswoman, Maria Palumbo, refused to give clues about where the expansion will occur.
"It's still really too early in the process to comment on any particular locations," she said.
Wherever it is built, Express Scripts hopes to have in operation by April its third "high-volume filler" facility turning out as many as 75,000 prescriptions daily. If built in St. Louis County, the center would add to Express Scripts' local employment of about 3,000 people, a fourth of the company's total.
FOREOVER GROWING
Don Phares, a professor emeritus of economics at UMSL, said a new Express Scripts facility near its headquarters would benefit the entire area. Getting a hometown company to grow locally is a sign of regional vigor, especially when Express Scripts "looks like it's going to forever continue to expand," he said.
Making the project even more coveted by local governments is the "solid middle income" the Express Scripts' jobs will provide, Phares said. The company's average annual wage is nearly $40,800, a third higher than the average wage for similar jobs in St. Louis County, according to the Missouri Development Finance Board.
Luring Express Scripts to NorthPark could make it a "nexus" for other pharmaceutical or transportation businesses considering expansion or relocation, Phares said. Where Express Scripts expands will probably hinge on its evaluation of the competing government incentives, he added.
"I suspect the bottom line is going to come down to the cost differences to the company and what benefits it is going to get from this region as opposed to the other region," Phares said.
HELP FROM MISSOURI
Missouri officials are moving to grant the company $3 million in BUILD Missouri bonds. The Missouri Development Finance Board gave the bonds a preliminary nod on Aug. 18 and could give them final approval at its meeting Sept. 15. Such bonds are, in essence, a corporate income tax credit Express Scripts would earn over 15 years.
Pennsylvania already has approved what it calls a Keystone Opportunity Expansion Zone for Express Scripts. State and local property taxes within such zones are eliminated for 10 years although Express Scripts has told Bucks County officials it would pay the local school district, township and county a total of about $250,000 a year in lieu of taxes.
In addition to getting BUILD Missouri bonds, Express Scripts is in line to get tax relief from St. Louis County. Dooley has asked the County Council to give the company a 50 percent tax break on equipment that would be installed in the NorthPark facility. This week he asked the council to grant the company half off on the center's property taxes. Spread over 10 years, the tax breaks would save Express Scripts more than $4 million.
Denny Coleman, president of the St. Louis County Economic Council, said the company has "our full support and attention." He noted that Express Scripts officials have said they are eager to begin the project.
"The one thing that has been impressed on us is the speed they wish to be up and operating," Coleman said.
Cormack said he knew little about the Missouri and St. Louis County efforts to coax Express Scripts to expand near its headquarters. Dooley, in turn, said he knew little of Pennsylvania's competing effort.
"I'm not concerned about Pennsylvania," he said. "I'm concerned about St. Louis County."
Dooley said adding Express Scripts to NorthPark, a project of Clayco Realty and developer Paul McKee's McEagle Properties, could spur further development there.
"One thing leads to another," he said. "It all works for the good."
