‘These are exciting times’: How have county’s 2018 tax incentives offers turned out?
Reflecting on 2018, Rowan Economic Development Commission Vice President Scott Shelton said it was one of the busiest he’d seen in 10 years.
The agency was managing over 80 economic development projects by the start of 2019, he said. Some were at the earliest stages of requesting information about Rowan County and all it had to offer — available land or buildings, permitting processes, the labor force and more.
“It shows that RoCo is an attractive destination, that the Charlotte region as a whole is an attractive destination for companies,” he said. “These are really exciting times.”
Other companies were further along on a trail toward beginning or expanding their businesses locally. Yes, they had decided, Rowan County was a place they could see themselves. But what could the county and its municipalities offer in return?
Enter the economic development incentive — the grant-like tax breaks or forgivable, capital loans offered nationwide as towns, cities and states attempt to lure business growth and investment.
Seven of these were requested from Rowan County in 2018, and county commissioners were quick to approve each. All told, the county board offered $200,000 in equipment grants and $8.3 million in tax incentives to potential or current Rowan employers.
This combined $8.5 million was offered in attempt to attract $386.5 million in business development to the area, along with 978 new jobs.
“These projects are really competitive,” Shelton said. “You’re competing with everybody else in the country for these things. Everybody’s got great sites and great schools. We’re just trying to put ourselves in a unique position, to sell ourselves and to take advantage of our location, manufacturing history and our supportive local governments to try to present a compelling package.”
Tax incentives were structured as a percentage return on property taxes paid over five years, ranging from 75 to 85 percent based on the potential level of investment.
Equipment grants were structured as forgivable loans, with clawback requirements tied to job growth and other measures, Shelton said.
By the start of the new year, the first two of these seven projects had moved forward, a potential $37 million capital investment score for the county in exchange for $656,500 in grants and incentives.
That’s just over $56 returned for every $1 offered for those keeping track.
The following are details from the two progressing projects, as well as updates from the remaining five:
Project Wheel (New York Air Brake)
Potential investment: $11 million
Potential new jobs: 94
Incentive offered: $100,000 equipment grant
Project Wheel first came across the commissioners’ desk in late 2017, with the then-unknown parent company seeking a 75-percent break on property taxes paid over five years — a sum of $273,281. In return, it would chose Rowan as the site of its $11 million expansion.
Commissioners approved the request, but the company returned Jan. 16, 2018, with an additional request: $100,000 in economic development grant funds for trade-specific equipment and fixtures to fill its potential 100,000-square-foot facility.
The county has money earmarked for these and similar projects, coming from service sales taxes and evenly divided between education and economic development.
The request was again met, with the parent company — New York Air Brake — announcing Rowan County to be its site of choice in March of that year.
Shelton reported that the company is now in its new facility on Summit Park Drive and is rapidly approaching its new job creation goal: The company promised 94 additional jobs to Rowan County with an average salary of $33,334.
Project D2 (Daimler)
Potential investment: $26 million
Potential new jobs: 50
Incentive offered: $556,500 return on property taxes paid
Started as Project FMT in 2009, a 75-percent tax break for Daimler in Cleveland was meant to bring $15.9 million in investment as the company upfitted its facility to produce a new military truck line.
When the investment proved lower than anticipated, no incentive was offered, so the company tried again in 2015. Project D2 sought to bring $38 million in improvements to company facilities, including a new vehicle logistics center.
Construction was delayed until late 2017 and the capital investment was changed to $26 million with 50 employees being called back to work.
On March 5, commissioners approved amending the D2 project agreement so the start date would coincide with construction completion at the end of December 2018. This allowed Daimler to capture a higher tax break — $556,500 over five years compared to $427,313. The county retained $185,02 under the new agreement, compared to $142,239.
Project Frozen (WJD Cold Storage)
Potential investment: $9 million
Potential new jobs: 40
Incentive offered: $166,878 return on property taxes paid
Project Frozen, a request from startup company WJD Cold Storage, crossed the commissioners’ desk in mid June.
Company owners sought a 75-percent return on property taxes paid as they constructed a new 42,000-square-foot cold storage facility in Granite Quarry, with plans to expand to 81,000 square feet in two to three years.
The warehouse would result in $9 million in county investment, as well as 40 new jobs with an average salary of $41,469.
Commissioners approved the request, offering $166,878 over five years while retaining $55,625.
Shelton said this project is currently on hold as the company seeks additional financing.
Potential investment: $55 million
Potential new jobs: 600
Incentive offered: $1.3 million return on property taxes paid and a $100,000 equipment grant
With the potential to bring an unnamed e-commerce company along Interstate 85, Project Kodiak was one of three projects approved for tax incentives during the Board of Commissioners’ Oct. 1 meeting.
The potential development could bring $55 million in investment and 600 new jobs by 2022, qualifying the applicant for a Level 2 incentive grant or an 80 percent return on property taxes paid.
Over five years, the company would therein receive $1,388,600, while the county retained $350,150.
Commissioners revisited the project on Oct. 15, approving an additional $100,000 grant for trade-specific equipment of fixtures or for tenant upfits.
Shelton said a decision on this prospect is expected by the end of March, as the parent company is considering additional sites in South Carolina and Georgia.
Potential investment: $188 million
Potential new jobs: 77
Incentive offered: $3.6 million return on property taxes paid
The second of three projects approved Oct. 1, Project Arizona would see the expansion of an existing advanced manufacturer in Rowan County. The parent company is currently considering Rowan and multiple facilities in Europe.
If Rowan is selected, the expansion would lead to $188 million in investment through a new facility, new equipment and other improvements. The facility would also bring 77 new jobs by 2022, with an average salary of $59,000.
The large potential investment qualified the project for a Level 3 incentive grant, or an 85-percent return on property taxes paid. In Rowan, this amounted to $3.6 million over five years, with the county retaining $629,144.
Shelton said that local management of Project Arizona’s company has extended Rowan County’s offer to the parent company.
“We’re just waiting to hear,” he said. “There’s no real time table.”
Potential investment: $68 million
Potential new jobs: 59
Incentive offered: $2 million return on property taxes paid
The third Oct. 1 project approved for incentive funds went to another existing Rowan County manufacturer. The project’s parent company is considering Rowan alongside a western United States location for expansion, as well as facilities in three foreign countries.
When presented in October, the company anticipated the expansion would bring $68 million in investment through improvements to its existing facility and major equipment upgrades. Project planners also forecast and additional jobs by 2020 with an average salary of $46,000.
The numbers meant a possible 80-percent property tax break, or $2 million over five years.
The project has since been amended to Level 1 grant numbers as the anticipated investment has reduced to $45.2 million, with 35 jobs.
Commissioners approved this amended request at their Jan. 22, 2019, meeting, offering $1.3 million over five years, a 75-percent return on property taxes paid.
Shelton said that the lacking $20 million and 20 jobs could yet come through the transfer of an existing production, but a company spokesperson said the move is “on hold indefinitely.”
As the project is within the city of Salisbury limits, a similar amended incentive request will be requested from the city on Feb. 5. Shelton said a decision from the parent company should be made shortly following the City Council’s decision.
Potential investment: $29.5 million
Potential new jobs: 58
Incentive offered: $674,095 return on property taxes paid
The final approved incentive of 2018 occurred in mid November and was extended to an advanced manufacturer with an existing presence in the county.
Rowan is among three of the parent company’s current facilities under consideration for $29.5 million in expansion and investment. If selected, Rowan could also see an additional 58 new jobs paying an average annual salary of $42,000 with benefits.
Shelton reports that the parent company is currently in negotiations with potential business partners and customers before deciding to proceed with the project.
“They have no time table, so we have no time table with that one,” he said.
The secret to success
Reflecting on Rowan’s “Project Wheel” win, Shelton said that, although incentives had played a factor, the county landed the project for a different reason.
“We were told it came down to the company really liked the workforce in this area,” he said. “That’s the primary driver now for a lot of these companies. It’s really not incentives, it’s just available workforce.”
Shelton said that incentives didn’t even make the top three when it came to economic attractiveness.
“It’s building and sites, permitting and workforce,” he said, and Rowan had a lot to offer in terms of all three.
“Overall, Rowan County has lot of people interested,” Shelton said. “I really think it’s a logical progression from Charlotte to Cabarrus to Rowan County and I think growth is coming. … I think we’re going to see a lot more as far as speculative projects for the county.”
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