Burbank Agrees on Subsidy Deal to Keep Firm From Leaving : Business: Under the agreement with an IBM subsidiary, the city will sell land for a $2.3-million loss and forfeit about $1.25 million in property tax revenues.

The Burbank City Council has agreed to sell a city-owned parcel to a developer for a loss of $2.3 million as part of a larger deal to subsidize a high-tech company so it will stay in the recession-battered city.

As part of the deal, approved by a 3-1 vote Tuesday night, Cadam Inc., a software subsidiary of IBM, has agreed to move its headquarters to a three-story office building to be constructed at the city-owned site at Ontario Street and Empire Way, near Burbank Airport.

The city sold the 10-acre parcel to a partnership headed by developer Lew Wolff for $4.2 million, $2.3 million less than it paid Lockheed for the land in 1988.

City planners said land values for that type of commercial-industrial property have dropped by one-third in the past four years.

“We bought this property when land values were at their height. But land values have gone down,” City Manager Robert Ovrom said.

He said the city had been trying to make a deal on the land for four years.

To retain Cadam, the city also agreed to forfeit about $1.25 million in property tax revenues from the high-tech firm over the next 12 years. Ovrom said the tax money that the city will lose amounts to about a $5,000 subsidy for each job the deal will keep in Burbank.

“In a broader sense, it was very important for us to keep this kind of company,” Ovrom said.

“We just felt that this is the kind of investment that we needed to make. Cadam is just the kind of company we need to keep. It’s clean. It’s high-tech. It’s high paying. Jobs there pay an average of $50,000 a year.”

Ovrom said the subsidy needs to be viewed in perspective to what other cities and regions offer high-tech companies such as Cadam.

“These kinds of clean jobs are being lured away by cities in Nevada and Utah all the time,” Ovrom said. “We felt we had to compete on an uneven playing field.”

Mayor Robert Bowne joined council members George Battey and Michael Hastings in supporting the deal, while Councilman Tim Murphy was opposed. Councilman Tom Flavin left during discussion of the item and did not vote, saying he had a potential conflict of interest.

Murphy criticized the project, saying the council had gone overboard in trying to promote business.

“I’m all for reasonable incentives, but I’m against giveaways,” Murphy said Wednesday. “It makes sense to subsidize some things when you’re getting something. But what are we getting? Nothing. It borders on lunacy. This deal has just gotten worse and worse and worse for us.”

In other action, the City Council deadlocked 2 to 2 on a proposal to allow Fantasia Billiards at 127 N. San Fernando Blvd. to serve alcoholic beverages. The council then voted 4 to 0 to postpone action on the item until Tuesday’s meeting in the hope that an agreement can be reached.