County To Catch Fish With New Rod
Jobs, jobs, jobs.
That’s the never-ending refrain heard from just about every politician in Guilford County, and, in an attempt to bring more jobs to the area, the Guilford County Board of Commissioners is now overhauling the county’s economic incentives policy, which has remained unchanged since 2008 – and which currently doesn’t appear to be working.
At their retreat, the commissioners began the task of forging a new policy, and they said one thing they want to see is more accountability from the companies receiving the incentives.
As a rule, any time a company comes before the Guilford County Board of Commissioners asking for incentives, the board grants the request, and that has been as true this year – with a supposedly conservative Republican majority on the Board of Commissioners – as it has been in the past, when the board was controlled by a Democratic majority.
There’s a feeling among Guilford County commissioners – based on reality – that the county isn’t creating enough jobs and isn’t recruiting enough new industry or seeing sufficient expansion of existing business. The goal of more jobs is something the commissioners desperately want to accomplish, and, in fact, one of the main reasons the board selected Guilford County Manager Marty Lawing last spring is because of his proven track record overseeing strong economic growth in Brunswick County, where Lawing was manager for 11 years before taking the job as Guilford County’s top administrator.
Since Guilford County has little hope of becoming a picturesque coastal community like Brunswick County, well publicized in Nicholas Sparks’ novels, the commissioners decided their efforts might be better spent revamping the county’s economic incentives policy.
The board discussed the issue on Thursday, Jan. 16 at the commissioners’ annual retreat, which this year was held on the campus of High Point University.
The county’s six-year old economic development plan is complicated and riddled with exceptions.
One option in the policy states that a company must invest at least $5 million in new equipment or facilities, and existing industry must invest at least $3 million. The policy also calls for those new jobs to be at or above the county’s average salary.
Another section of the policy allows for the board to grant incentives if a company creates at least 25 permanent full-time jobs.
The policy also addresses special situations. It has different criteria for businesses in industries the county considers highly desirable, such as green energy companies and certain high-tech businesses.
The existing policy also states that all requests are subject to a public hearing and the companies must open up their financial books enough to allow the county to verify that the conditions of the incentives agreement are being met. However, at the retreat, some county commissioners expressed concerns that that wasn’t happening.
At the retreat, Lawing noted that it had been five years since the board altered the policy.
Lawing said he and staff members surveyed other counties and cities to see what types of policies those counties use.
“It’s really all over the place,” Lawing said.
Mecklenburg County, for instance, offers grants of up to 90 percent of new tax revenue generated by investments for three years. In Beaufort County, incentives are limited to companies in certain industries, such as transportation, warehousing, information services and data processing.
Chatham County uses a “scoring system” to award incentives. That system takes into account the number of jobs, the amount of the tax base expansion and the annual property taxes paid by the company.
In Cleveland County, which is between Asheville and Charlotte, cash grants can be paid out for a maximum of five years if companies – either new or existing – add as little as $100,000 to the tax base. In Haywood County, on the Western border of the state, new businesses can receive up to 80 percent of property taxes paid over five years. The policy for Sampson County, in southeast North Carolina, calls for proposals to be judged on a case-by-case basis, with certain minimums that must be met before a company qualifies for incentives.
Lawing said Wake County, the state’s second largest county with Raleigh as the county seat, is one that has a high bar when it comes to granting incentives.
“They have set very high standards,” Lawing said. “New industry has to invest $100 million before it can even be considered.”
He added, “I don’t know if their economic development had anything to do with their incentives policy.”
While new companies must invest $100 million to qualify in Wake County, existing companies in that county can qualify with a mere $50-million expansion. The incentives paid can be up to 2.25 percent of the assessed value of the new investment.
Wake County has been growing so fast that it is not nearly as desperate as Guilford County and other counties for jobs and new business.
Lawing said that, in Guilford County, some businesses that got incentives fell short of their promised returns.
“We have some that did not meet their agreement, their performance criteria,” Lawing told the board.
Commissioner Ray Trapp asked if the number of minority workers hired ever played a part in the incentives policy.
Guilford County Planning and Development Department Director Leslie Bell told Trapp, “That’s definitely not been tracked on our spreadsheet.”
Commissioner Jeff Phillips said a conversation he’d had with one CEO, who he didn’t want to identify, had caused him concern. Phillips said the CEO informed him that his company had received incentives from Guilford County but had never been asked to show evidence it had been meeting the agreement’s criteria. Phillips said that conversation certainly raised a red flag in his mind.
Phillips said that, whatever the process is, the county needs to make sure the companies were held accountable.
“I imagine it’s improved since Marty has gotten here,” Phillips added.
Lawing has made it no secret that when he arrived in Guilford County he found many practices that needed correcting.
Commissioner Carolyn Coleman said the Planning and Development Department had lost key staff in recent years – for instance, long-term interim Planning and Development Director Betty Garrett retired in 2013. Garrett was named interim director after former Planning and Development Director Greg Niles died suddenly of a heart attack in the summer of 2008. For a while after Niles’ death, the department had two co-interim directors, but then Garrett was named interim director.
Phillips said, “I don’t think the people of Guilford County would be very happy if we said, ‘Well, we didn’t have staff.’”
Phillips added that, in addition to the problems with enforcement, the county’s economic development policy also needs work in other respects.
“We should wring this policy out,” he said, adding a moment later, “I do believe this policy is weak and that we have not done the kind of monitoring the citizens deserve when it comes to payout.”
Commissioner Kay Cashion said she agreed there was a lack of proper oversight. She said the Board of Commissioners was supposed to hear back on the progress of these companies but never did.
“I don’t remember getting any reports,” Cashion said.
Cashion said incentives were controversial and, if there were positive results that could be publicized, it might help citizens understand the upside of incentives.
Lawing replied, “We can make it a requirement that they come back and give us a report – on actual jobs, actual investments.”
The manager added that when a company was doing poorly and not meeting its projections, company officials might be reluctant to take the podium at a public meeting and make an announcement to that effect. However, Lawing said, the company would no doubt be willing to offer reports to county staff on a regular basis.
Lawing didn’t make the point, but any report to county staff from a business would be a public record, and members of the media or others could always request that information and make it public.
Commissioner Bruce Davis said he thinks it’s important for citizens to realize that there are controls in place.
“We’re not just handing out checks and not following up,” he said. “Surely there are gaps and we need to tighten it up, but we need to help deal with the naysayers who are against incentives. These are not handouts – they’re incentives for economic development.”
Despite Davis’ comment, it does sound as if the county has in fact been handing out checks and not following up in some instances.
Lawing pointed out that, in some cases, companies that receive incentives had created more jobs than were called for in the contract with the county.
Commissioner Hank Henning made what is perhaps the most relevant and important point of the entire conversation – that the companies take advantage of incentives when they locate to a county, however, it’s highly unlikely those incentives actually play a role in the decision to choose that county.
“My impression is that certainly they are not making decisions on this small amount,” Henning said.
Chairman of the Board of Commissioners Bill Bencini said that in developing its new economic policy, Guilford County should use area economic development officials as a resource.
Greensboro Economic Development Alliance President Dan Lynch and High Point Economic Development Corporation President Loren Hill were sitting in the audience during the discussion, and Hill took the opportunity to offer his input.
He held a copy of the county’s current economic incentives policy high over his head and said the policy was too intricate and convoluted.
“It’s so long and complicated,” Hill said. “The High Point jobs’ policy is one page.”
He added that there’s “too much verbiage” in the county’s document, and said that it “goes on and on.”
Guilford County’s economic development policy is 14 pages long and has several sections devoted to different industries and includes many exceptions.
Cashion said she thought job creation should be an essential component of any new incentives policy.
“People understand jobs,” Cashion said.
Lawing suggested that one change the board might consider would be to emphasize jobs in general rather than insist on high-paying jobs, as the policy does now. Lawing said that, in some cases, a company might offer high paying jobs but area applicants lack the skills necessary to fill them.
“Some people would be satisfied with a low-paying job,” Lawing told the board.
Phillips said he thought the current policy’s minimum of job creation of 25 full-time jobs was way to low. Phillips, who’s been a commissioner for over a year and a month now, has never voted for an incentives payout, and he has repeatedly stated his philosophical opposition to corporate welfare.
At the retreat, he said that, if the board felt compelled to offer incentives, it should only do so in cases where there were many more than 25 jobs created.
“I think this ought to be significantly higher,” Phillips said.
He also said the job creation timeline should be reduced from four years to three years, or even two, so the county would see a quicker return on its investment.
“I’m not saying I would vote for it,” Phillips said, adding that those changes would at least make the policy “more agreeable” to him.
Both Trapp and Phillips said they would like to see something that helps small businesses rather than simply offers perks to big companies.
That desire is one that precedes those two relatively new commissioners by many years. It has been a subject of conversation over the last decade, and, about five years ago, the Board of Commissioners finally adopted a policy – thought to be unprecedented – that offered tax breaks to all companies no matter what their size. That policy was passed at the urging of former Guilford County Commissioner Steve Arnold. It allowed for a company to apply for a tax break if that company added at least $10,000 in value to the county’s tax base.
That policy, however, was enacted in the wake of the economic collapse and it was virtually ignored. The small break provided apparently wasn’t worth the red tape necessary to collect it.
Commissioner Linda Shaw pointed out at the retreat that only two businesses ever applied for those incentives geared toward small businesses.
“We discontinued the policy,” Shaw said.
The board voted to end that policy after it was in effect for a couple of years, since it was hardly ever used.
BY Scott D. Yost
January 23, 2014
Looking for an Article?
©Copyright 2014 Snap Publications | 406 N. Eugene Street, Greensboro NC 27401 | P.O. Box 9023, Greensboro NC 27429 | (336) 763-4170