Corporate Welfare Weekly - July 5th, 2010 – Issue 57

 

July 5-9, 2010 – Issue 57

Forsyth Would Give Caterpillar Millions if it Chooses Winston-Salem…

 

Last week, Winston-Salem joined the Forsyth County Commission in extending a $23.4 million incentives package to Caterpillar Inc. if the company builds a new manufacturing center there. As more details come out, it appears Forsyth County will be in a blind bidding war against Montgomery, AL and Spartanburg, SC for the $426 million plant that would employ 510 workers.

 

Winston-Salem is offering $9.57 million in incentives over a 10-year period, with payments beginning at the end of the operation’s first year. The county is offering $6.4 million in incentives over a 10-year period.  

 

Meanwhile, Winston-Salem just announced it is considering offering city employees the option of working four-day weeks in order to compensate for another year without pay raises. Maybe Caterpillar would give up a little incentives sugar money in order to assist the city employees who once again get shafted while tax money goes to multimillion-dollar profit centers.

 

Economists and site selectors say that Winston-Salem should not assume it is the front-runner for the Caterpillar plant based on the fact that legal notices for incentive packages appear to require more details there than other communities.

“Caterpillar likely has made a similar commitment to the other communities, said John H. Boyd, the president of The Boyd Co. Inc., a site-selection company in Princeton, N.J. 

He said he believes Spartanburg may be the front-runner at this stage because of its background in metal working and automotive manufacturing compared with the Triad. 

"Because of the differences in the legal requirements, the other communities' offers staying off the radar screen for a longer time could work to Winston-Salem's disadvantage," Boyd said.”

 
Incentives Major Component for Durham Inn Deal

 

As reported in The Business Journal, Durham-based Greenfire Development, is looking for up to $25 million to complete the financing package it needs to transform the city’s iconic 17-story SunTrust tower into a 165-room, five-star inn. Durham residents would have a stake in the project in the form of millions of dollars in tax credits and other incentives. William Kalkhof, the president of Downtown Durham Inc. said details of the incentives package are still up in the air as negotiations continue with both the city of Durham and Durham County. However, an earlier summary put the value of public incentives at well over $12 million.

 

“According to a term sheet for the deal prepared by New Jersey-based Bergen Capital, the investment group that would market the bonds, Greenfire would sink $7.7 million of its own money into the project and defer its $1.2 million in developer fees until the latter stages of the work.

At the same time, the developer would receive $10.8 million in historic structures tax credits and $1.5 million in local incentives to guarantee completion of construction and take care of any cost overruns. The historic structure credits are offered by both the state and the federal governments.

Kalkhof says project backers are ready to forgo the landmark status tax break as they iron out a new incentives deal.

The Local Government Commission, which reviews and signs off on debt packages in North Carolina, is expected to deliver a verdict on the Greenfire plan by October.”

Microsoft Eying Mebane for New Data Center

 

According to a report in Burlington’s Times-News software powerhouse Microsoft is considering a site at an Alamance County industrial park near Mebane to build a massive data storage facility. One source said the project would cost $120 million to build, while another said it would run into the billions. While Microsoft has not confirmed its plans to build in Mebane, a state official told the Burlington newspaper that the company is seeking both state and local incentives for the project, which is code-named Deacon. Perhaps the code name implies that once again a corporate giant will be passing the collection plate to taxpayers. 

 

“On Tuesday, Alamance County Manager Craig Honeycutt said officials at the state Department of Commerce asked him to cancel a commissioners’ meeting scheduled for earlier this week that would have set a July 12 public hearing on granting incentives for a proposed project in the Mebane area.

Per the county’s incentive policy, a representative requesting the incentives would have been required to identify the company at Tuesday’s meeting.

A Commerce official told him the company wasn’t ready to make a public announcement, Honeycutt said.

Microsoft representatives have twice declined to say whether the company is considering Mebane as a possible data center site.

The second refusal to comment came roughly 90 minutes before Honeycutt notified the Times-News that Tuesday’s commissioners’ meeting had been cancelled.

A data center Microsoft opened in suburban Chicago in 2009 cost a reported $500 million.

Such storage centers typically employ few workers compared to other large-scale projects, but they offer the prospect of huge property tax revenues for local governments.

For example, a $500-million data center in Mebane would net the county $2.6 million and Mebane $2.35 million per year in property tax revenues.”

 

However, if the incentives package includes property tax breaks then these figures may be totally wrong. 

 
Good Luck and Thank You, Shelley!!

 

NCICL wants to thank Shelley Gonzalez for her work on Corporate Welfare Weekly over the past year. Shelley’s outstanding effort has dramatically improved the CWW email newsletter and we are very appreciative for all Shelley has done for NCICL. We wish her luck in her exciting new job and recent move to Arizona. Shelley is working at the U.S. Airways Headquarters in Tempe, Arizona as a Sales and Planning Analyst. Her responsibilities include managing large databases, forecasting, and ad-hoc analysis for Caribbean, Latin America, and European sales. This includes maximizing revenue and minimizing costs through a variety of travel agency sales programs. Shelley will conduct market research, monitor the effectiveness of current sales programs, and identify ways to improve these programs.