When business software giant Oracle Corp. asked for incentive money last year to build an impressive $300 million data center in West Jordan, state officials put together a hefty $15.1 million package to help seal the deal.

But even a large stimulus has been no match for the worst economic downturn since the Great Depression. Today, work on that 200,000-square-foot project -- only the foundation has been poured -- is on hold.

There is no shortage of stalled corporate expansion projects in this recession, in Utah or anywhere else. But the way the state has structured the increasingly large sums it offered as incentives in recent years has helped reduce its financial liability.

Oracle, for example, has not received a dime in state money. And KraftMaid Cabinetry, which mothballed its massive 840,00-square-foot facility in West Jordan less than three years after it opened, has received only $167,000 in taxpayer money, or only about 5 percent of the more than $3 million incentive it originally was promised.

That's because Utah's more recent offers are i n the form of a tax credit payable over a fairly lengthy period -- typically at least 10 years.

If a company doesn't expand as planned, it is likely to get only a fraction of the promised money -- or none at all. And that's especially important given how large incentive packages have become in recent years.

In the case of KraftMaid, "they still continue to pay property taxes on that building, whether or not they have employees there," said Derek Miller, managing director for corporate incentives for the Governor's Office of Economic Development. But the state won't have to kick in additional taxpayer money until the plant is once again producing cabinets, which state officials are confident it will do when the economy rebounds. KraftMaid isn't "going to walk away from a multimillion-dollar investment," Miller said.

KraftMaid hasn't said a whole lot about its plans for the facility, which undoubtedly hinge on how long the real estate downturn lasts and to what degree it rebounds. "The facility is not closed, it's idled," said KraftMaid spokeswoman Kim Craig last week. "That's all we can say."

The way the KraftMaid deal was structured represents a major departure from state economic development policy of the 1990s to early 2000s, when the state gave companies incentive packages payable in cash in a lump sum immediately after a company completed its expansion or relocation to the state. Most of the time, companies followed through on their plans.

But then came the Albertsons disaster.

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Painful lesson » The state agreed in the mid-1990s to pay nearly $3.5 million in cash to the grocery chain American Stores to entice it to build a corporate headquarters in downtown Salt Lake City that would employ 1,600 people.

American Stores did what it promised -- building a mammoth 620,000-square-foot high-rise at 299 S. Main St. and moving in by early 1998. And the state did what it promised, forking over the large sum of money.

But just a few months later, things went horribly wrong for the state. In August 1998, Boise-based Albertsons announced it was acquiring American Stores, adding that, by the way, it didn't need a huge office tower in downtown Salt Lake City. Albertsons soon transferred or laid off everyone in the building, which it later sold for $78.5 million.

The state tried unsuccessfully to get its $3.5 million back, saying American Stores, and by default, Albertsons, failed to meet the terms of its contract. But by 2004, Utah had lost a long legal tussle to force repayment.

What the state learned from that huge loss is apparent in deals that would come later. In 2004, KraftMaid was negotiating an incentive package for its West Jordan facility. The cabinet manufacturer was a particularly tough negotiator, seemingly intent on using its large project to press Utah officials for the best deal possible.

The state originally agreed on a $2.2 million incentive, but later increased that to $3.2 million after the company asked for more money. The company even got the state to lower wage requirements. (Companies that receive awards are required to meet minimum wage requirements, among other criteria.)

It seemed as though the state was caving to pressure from a large corporation dangling a plum expansion project. But there was one area in which the state wouldn't budge.

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A new direction » Officials told KraftMaid there would be no upfront incentive payments. And although the original incentive was payable over five years, state officials insisted that if they were going to give the company $1 million more, the amount would be payable over a longer period -- 10 years. That would protect the state's interests should KraftMaid run into trouble not long after opening its facility.

That long-payback provision did just that for the state when KraftMaid, which opened its plant in 2006, decided to mothball it last year, during the holidays.

Even though KraftMaid finished its 840,000-square-foot building and at one point employed hundreds of workers, the company has to date received only about 5.5 percent of the total incentive it was set to receive.

"Things could have been a lot worse with KraftMaid," said attorney Jerry Oldroyd, a longtime member of the GOED board, which is made up of private-sector business people who have final say over incentive deals. "We could have paid out much more money or even have already handed over the entire amount. ... We'd be suing KraftMaid right now."

Other things have changed since the 1990s and early 2000s in regard to incentives. Back then, the state not only paid cash upfront, through the Industrial Assistance Fund, but economic developers were dependent on the state Legislature for annual appropriations, which ended up being pittances compared with other states.

In 2005, under former Gov. Jon Huntsman Jr., the state switched primarily to a tax-rebate program. With a tax rebate, companies could get a partial rebate of state taxes for a specified number of years once they expanded here .

No longer dependent on appropriations, economic developers could finally give much larger incentives on par with other states.

Offers jumped from $25.1 million in fiscal 2007 to $172.2 million in fiscal 2008.

For the first time, the state was coming up with incentive offers that were more competitive. And although there is debate over how effective incentives really are, companies that received large sums have made or plan to make high-profile investments, including Procter & Gamble with its huge plant under construction in Box Elder County. Another undisputable fact is that the state has attracted more high-profile deals since it began offering larger incentives than it did in prior years.

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Bang for the buck » "If you look at the companies we have been able to recruit in the last couple of years ... when you think about names such as eBay, Disney Interactive, Procter & Gamble, Hershey and Goldman Sachs ... the new program enabled us to compete at a level that we've never been able to compete at before," said GOED's Miller.

Household products company Procter & Gamble, for example, was pledged a whopping $85 million incentive payable over 20 years for its facility, which is set to open next spring and eventually employ nearly 1,200.

Online auctioneer eBay was promised $27.3 million payable over 10 years to add a new Salt Lake County data storage center that would create 50 high-paying jobs.

And Goldman Sachs was pledged $400,000 around the time it opened an office in Salt Lake City in 2001 and another $20 million over 20 years to expand in Salt Lake City and create nearly 400 jobs. In early September, the company was offered another $27.3 million, which would be rolled into the earlier $20 million offer and paid out over 20 years in the form of a state income tax credit. That brings the total amount offered to $48 million.

The company is searching for new digs in Salt Lake to accommodate that expansion.

In 2008, the tax rebate program was tweaked a bit and became a tax-credit program. Instead of having companies pay the full amount of state taxes owed in one year and getting a portion of that payment back later on, companies now simply pay less tax when their tax return is filed. It's still taxpayer money, of course, but it's paid out only after a company has actually expanded in Utah and filed its state income tax return.

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The future of incentives » Howard Stephenson, a Republican legislator and president of the Utah Taxpayers Association, said there are no easy answers when it comes to incentive policy and measuring the value of incentives.

"It's a difficult situation to compete with other states and other countries for the high-paying jobs we want to have in Utah," he said.

Stephenson, who would like to see a tax cut for all companies instead of tax breaks given to the select few, said it is tough to evaluate whether a company would have expanded in Utah without incentives. For their part, the recipients all say incentives played a significant role in their decisions, although tax rates, quality of labor, utility costs and other factors also were key.

In recent years, most companies that have been offered incentives accepted them and went on to expand in the state, but Utah has lost a few deals. ATK Aerospace, which was offered an incentive of $32.7 million, ultimately expanded in Mississippi, and recessionary pressures prompted Jet Aviation to pass on an $8 million incentive offer.

Given that the move toward larger incentives occurred during the Huntsman administration, will things change much under new Gov. Gary Herbert, who has said he wants to put more emphasis on companies already here?

When it comes to incentive money, perhaps not as much as one might think. Many of the companies getting incentives, such as Goldman Sachs and eBay, already operated in the state and used the new money to expand.

"We will have a renewed emphasis on working with companies already here to see how we can help them," Miller said. "But we can help companies here to grow and continue to recruit new companies. We can do both."

lesley@sltrib.com