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Lincoln Herald | Lincolnton, NC

home : opinion : opinion December 3, 2022

8/22/2022 10:41:00 AM
Those Incentive Grants Create Jobs
...and they don't cost taxpayers money

L. Wayne Howard
Staff Writer

When John Dancoff, Existing Business Manager for the Lincoln Economic Development Association (LEDA), presented requests for three Lincoln County Industrial Incentive Grants to the County Commissioners at their August 1st meeting, one of those on hand for the multiple public hearings scheduled that night objected to what he termed 'giving my tax dollars to industries who can afford to invest millions.'

The total investments by the companies that were included in those August 1st hearings will amount to just under $46 million and will create close to 80 new jobs.

The first went to Huber Technology. Huber is located in the Airlie Industrial Park and is a wastewater equipment manufacturer providing products and services to the US and Canadian
markets. They will be investing $39.5 million in the construction of a 122,000 sqft addition and equipment; creating at least 46 new jobs. In return, the county will provide $210,228 per year
for eight years after the completion of the project.

The second request was for Kirk & Matz at 3390 Denver Drive, in Denver, a manufacturer of awards and trophies. Kirk & Matz will be investing $775,000 in a new building and additional equipment at their current location. In return, the county will provide $3,027 per year for three years after the completion of the project.

The third request was for Race City Steel. Race City Steel at 4052 NC16-business north in Denver. Race City Steel will be investing $5.6 million in equipment and building a new facility creating 30 new jobs. In return, the county will provide $24,883 per year in grants for five years after the completion of the project.

At the City Council meeting on August 4th, the Council approved an incentive grant for Active Concepts located just off Lithia Inn Road. The company, which produces raw materials for the cosmetics industry, is investing $3,658,424 in new machinery and equipment and a new building, and the City will provide them an incentive grant of $15,365 per year for five years (after their City taxes are paid). Their project will produce 12 new jobs.

What the man who objected to the grants at the August 1st public hearings didn't understand--and a lot of others may not--is that those County Industrial Incentive Grants (and similar grants from the City) are NOT coming from the taxes paid by other property owners. They are essentially a 'rebate' to the companies who are investing large amounts, in some cases creating more local jobs, and who will first have to pay their County taxes (which will be higher because they'll include those new additions); then after the incentives are paid, the additional taxes they'll pay will continue--helping to reduce the tax burden of homeowners.

Unlike the local County grants, there are grants from the state of North Carolina that are not linked to tax payments by the industries. Those grants are intended to help attract new industries and growth of existing industries, and while there is no direct link to taxes paid, the companies and their additional employees made possible by the grants will be paying state income taxes on their earnings, so the state will profit much more than what it invests in the grants.

Huber Technology's exapnsion project was also award a state grant of $300,000 grant, largely because its expansion will create 46 new jobs.

Another thing many don't know is that North Carolina's grants to industries is based on a tier system. The North Carolina Department of Commerce annually ranks the state’s 100 counties based on their economic well-being. This tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state.

The 40 most distressed counties are designated as tier 1, the next 40 as tier 2 and the 20 least distressed as tier 3. County tiers are calculated using four factors:

Average unemployment rate
Median household income
Percentage growth in population
Adjusted property tax base per capita

One might reasonably expect that counties like Mecklenburg, home to the state's largest city, Charlotte, would be tier 3. Wake, where Raleigh, the state capital, is located is also tier 3; as are New Hanover (Wilmington); Buncombe (Asheville); Durham; Union; and Cabarrus. Lincoln County is also one of the 20 tier 3 counties in the state.

What makes it even more difficult for Lincoln is that with the exception of Mecklenburg, Lincoln is surrounded by counties with a lower tier ranking. Cleveland and Burke counties are tier 1; while Catawba and Gaston are tier 2. That means they are more likely to get grants from the state for industrial development.

The high tier ranking also makes it less likely for Lincoln to get any help from the state for infrastructure grants. The state has an Industrial Development Fund – Utility Account that provides grants to local governments located in the 80 most economically distressed counties (classified as either tier 1 or tier 2) for publicly-owned infrastructure projects that are reasonably expected to result in new job creation. The IDF – Utility Account is funded through a process tied to the state’s signature Job Development Investment Grant (JDIG) program. When Job Development Incentive Grants are awarded to companies who choose to locate or expand in a tier 2 or tier 3 county, a portion of that JDIG award is channeled into that Utility Account.

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