The city of Sacramento has signed an agreement with health insurance company Centene Corp. that may bring up to 5,000 new jobs to the city, according to city officials.
“When completed, (the agreement) will represent the single biggest private-sector job recruitment in the city’s modern history,” Mayor Darrell Steinberg said.
The agreement is said to be a first big step toward establishing a regional corporate headquarters for Centene (NYSE: CNC) in Sacramento. The company's main headquarters is in St. Louis.
Centene has been offered up to $13.5 million in incentives in exchange for creating the thousands of new jobs, according to officials. The incentives would be paid for out of the city's Innovation and Growth Fund.The agreement does not specify a site for the new headquarters, but the city confirmed it will be located within a designated area of Natomas.
City officials said they are optimistic that Centene will reach a final decision on a location for the regional headquarters by late in the first quarter or early in the second quarter of 2018.
Sacramento was competing against other cities in the western U.S. vying for Centene's regional headquarters, including Austin, Texas, and Phoenix, according to Barry Broome, CEO of the Greater Sacramento Economic Council. Greater Sacramento, the region's main economic development organization, took part in the talks with Centene.
Steinberg will present the agreement to the city council on Nov. 28 for approval.
Centene, in an emailed statement, was measured in its characterization of the deal.
"We are evaluating the city of Sacramento as a possible location for a facility," the company stated. "This is a positive first step."
Centene provides health plans for participants in government programs, including Medicare, Medicaid and state health insurance marketplaces offered under the Affordable Care Act. The company is growing quickly, benefitting from the expansion of Medicaid and state health insurance exchanges under the ACA.
Centene's revenue rose 9.7 percent to $11.9 billion in this year's third quarter, and its net earnings grew 39 percent to $205 million. The company's stock has risen 66 percent over the past year.
In 2016, Centene generated total revenue $40.6 billion and net income of $562 million.
Centene's new agreement with the city may have been foreshadowed last December when the Governor's Office of Business and Economic Development approved a $7 million tax credit for the company if it chose Sacramento for an expansion that would bring 1,500 new jobs to the area. The city decided to pursue an employment incentive agreement in lieu of other options — such as tax credits or abatements —in part because the company had already received the tax credit from the state.
In March, the city received an inquiry for a development of up to 1.25 million square feet of office space on about 68 acres at 4201 E. Commerce Way, in North Natomas. That acreage, however, would seem to refer to a larger amount of land than what's at that address. The city also received an inquiry in May for construction of a six-story, 1,500-space parking structure at that address.
City Councilmember Angelique Ashby, who represents the Natomas area, said that the deal with Centene may be “a catalyst to identifying the northern I-5 corridor through North Natomas as an employment zone.”