Corporate Welfare Weekly - August 21, 2009 – Issue 12

Recent Announcements…

$1,000,000 in state incentive grants to the Neighborhood Assistance Corporation of America (NACA) for on-the-job training. The Chamber of Commerce may issue the grant from the One North Carolina Fund. This grant is in addition to the $1 million state grant given to NACA earlier this year.

            ~Rick Rothacker, Charlotte Observer, August 21, 2009

The plan to reserve $1.3 million for small business grants in Guilford County has been delayed to ensure the legality of the process. The commissioners ordered county attorneys to review the plan. Tax money would be given to nearly any company that increased its property value. Former state Supreme Court Justice, Robert Orr says the plan “appeared too much like tax abatement.” Such tax abatements are illegal in North Carolina.

            ~Gerald Witt, News & Record, August 21, 2009

$100,000 to DuPont Corporation to expand their Fayetteville facility. $50,000 will be a grant from the One North Carolina Fund and the other $50,000 will be a matching grant from a local fund. This is at least the fourth grant given to the company from the One North Carolina Fund over the past six years.

            ~Amanda Jones Hoyle, Triangle Business Journal, August 20, 2009

$2,000,000 approved by Davidson County commissioners late last year for SunEdison LLC, a.k.a. “Project Power.” The commissioners then passed another incentive package for the company that would provide up to $159,300 over five years.

            ~Richard Craver, Winston-Salem Journal, August 19, 2009

2004 tax break extended for two more years. Carowinds amusement park received the extension from York County for their “fee-in-lieu-of-taxes” agreement that was granted in 2004 in order to build another ride at the park. The deal was set to expire December 31. “Fee-in-lieu-of-tax” agreements often shield a company from property tax increases for specified period of time.

            ~Rebekah Lewis, Charlotte Observer, August, 18, 2009

$8,500,000 in tax breaks to Mack Trucks Inc. from the Job Development Investment Grant (JDIG) to relocate its headquarters from Allentown, Pennsylvania to the City of Greensboro.

            ~Staff Reports, News & Record, August 14, 2009

$24,195 to Ethan Allen in order to expand its Maiden facility. Catawba County commissioners unanimously approved the incentives during an August 17^th meeting.

            ~Sarah Newell Williamson, Hickory Daily Record, August 18, 2009

$46,750 in county incentives is being considered by the Cabarrus County Board of Commissioners for Hendrick Motorsports. The company will be expanding its Cabarrus County complex.

~Ken Elkins, Charlotte Business Journal, August 14, 2009

Quotes of the week…

“History reflects that government solutions to market issues have often been hallucinogenic.”

~Senator Eddie Goodall, Joint Republican Caucus Leader about the Life Science Development (LSD) Corporation Act, Charlotte Observer, August 19, 2009

“The mix-up highlights the fast-moving, secretive nature of economic development negotiations, which can leave details of incentive packages unclear to the public – and even the players involved.”

~ Rick Rothacker, Charlotte Observer, August 21, 2009

“While there is no way to say for certain how a court would handle this particular incentive policy, I believe this cash grant policy is problematic.”

~Tyler Mulligan, UNC professor of public law and government regarding Guilford County’s desire to set aside $1.3 million for small business grants

Encouraging Tidbit…

Diagnostic Devices, a Charlotte-based company, is bringing jobs back to the U.S. from China. The decision is unique because not only is it uncommon for a company to “on-shore” after they have “off-shored,” the company neither sought incentives, nor were they ever offered any. One of the company’s main reasons for this surprising decision is nothing more than pure patriotism!

            ~Rick Smith, the Skinny at Local Tech Wire, August 20, 2009

Discouraging Tidbit…

Taxpayers may end up subsidizing big bank investors from losses sustained from risky loans. The legislation is called the N.C. Life Science Development (LSD) Corporation Act and would create a nonprofit corporation to manage as much as $100 million in investments. The LSD Act would make loans to start-up businesses as well as solicit outside investments to the fund. The problem lies in that the investors would be guaranteed a designated return, whether or not the fund produces enough to provide this promised rate of return. In the case the fund does not produce, the state will guarantee the return by issuing tax credits/equity certificates. Even though the state will be guaranteeing these returns, there is no requirement for the corporation to reimburse the state for those losses and no performance benchmarks for distributing the payments.

Although the bill was withdrawn from the General Assembly this year, it is likely to be reintroduced next year. NCICL attorney Jason Kay has been requested by both Democrats and Republicans in the House to research the legal problems, comment before a House committee, and raise the key constitutional concerns with the legislation.

~ NC Senator Eddie Goodall, Joint Republican Caucus Leader, Charlotte Observer, August 19, 2009