Corporate Welfare Weekly - February 1, 2010 – Issue 35

 

Millions likely to be disbursed under JMAC…

 

The Triangle Business Journal reported in a January 22 article that the time has come for two tire plants to receive millions in promised incentives.

 

“A state committee is gathering data to determine whether two large eastern North Carolina tire manufacturing plants each will receive their first $2.5 million in cash payments under a program aimed at retaining jobs.

 

The General Assembly created the program back in 2008, agreeing to give Goodyear Tire inFayetteville and Bridgestone Americas in Wilson $30 million each over the next 10 years if they continue to employ at least 2,000 full-time workers at the operations and meet other requirements.

 

…The decision on whether the first incentive installments will be paid to Goodyear and Bridgestone is in the hands of the North Carolina Department of Commerce’s five-member Economic Investment Committee, or EIC, which also approves Job Development Investment Grants, or JDIG’s, in the state.

 

Unlike JDIGS’s, which provide cash to companies for creating jobs, the so-called Job Maintenance and Capital Development program, or JMAC, covering the two tire companies, pays cash to keep jobs already in place.

 

Aimed at keeping Goodyear and Bridgestone from moving their operations elsewhere, the incentives marked a new approach for North Carolina.”

 

Recent Announcements…

 

$120,000 in state and local incentives has been approved for ACW Technology Ltd. to build its new factory in Durham. Durham City Council approved $70,000 in incentives on January 26 and Governor Perdue announced a $50,000 grant from the state’s One North Carolina Fund on January 28.  In December, the town of Cary rejected an economic incentives package for the contract manufacturer. The company was deciding between Wake and Franklin counties. Although Franklin County was offering $150,000 in incentives, more than double the City of Durham’s offer, the company decided to build their factory in Durham citing more advantages, such as airport, interstate highways and amenities for visiting clients.

                ~ Jim Wise, Cary News, January 24, 2010

                ~ Alan M. Wolf, News & Observer, January 28, 2010

 

A $250,000 N.C. Rural Economic Development Center grant has been approved to assist in the renovation of the former Carlton House motel and restaurant.  . Three business partners purchased the building with plans of renovating the property into the new Four Seasons restaurant and ConferenceCenter. The $250,000 incentive requires a 100% match from the business owners.

                ~ Mike Hixenbaugh, Rocky Mount Telegram, January 25, 2010

 

Quotes of the Week…

 

“Franklin County is considering an offer of $150,000 in incentives, which the state could match. While Franklin’s incentive is bigger, Durham has the advantages with its airport, interstate highways and amenities for visiting clients.”

~ Kevin Dick, Economic Development Director for the City of Durham, as quoted by the Cary Newsregarding the ACW Technology incentives deal.

 

This is just more proof that companies will ultimately choose a location that provides them the greatest long term benefits. Short term benefits in the form of incentives are rarely a deciding factor.

 

“From where I sit and from where most conservatives sit, it’s a waste, it’s unnecessary and it’s not fair. And experts have proven that there is no advantage to it, even from a competitive standpoint.”

~ Scott Keadle, newly elected at-large member of the Iredell County Commission, as quoted by a recent Statesville Record & Landmark article regarding corporate incentives giveaways.

 

Corruption causes states to rethink film tax breaks!

 

Variety.com, a recognized and respected source of entertainment news, reported in a January 25 articlewritten by Dave McNary and Sam Thielman that some states are beginning to scrutinize their film tax credit policies.

 

“Last April, producer Malcolm Petal was sentenced to five years in federal prison for conspiring with a local attorney to bribe the head of the Louisiana State Film Office, both of whom were sentenced in July.

 

The scheme focused on $1.35 million in tax credits, far more than it cost Petal's company to film a local music festival. Mark Smith, who headed the state's film office, was paid $67,500. The sentencing was the culmination of a years-long federal probe into the tax credit program, which also resulted in an infamously generous check of more than $27 million to "The Curious Case of Benjamin Button."

 

…As the recession begins to take its toll on less film-centric areas of the country, other states are studying their tax credit programs’ results and finding them lacking.

 

In Iowa, for example, the film tax credit has been suspended since last fall amid allegations of misspent money and the unceremonious dismissal of Iowa Film Office head Tom Wheeler by Gov. Chet Culver.

 

The Iowa Dept. of Economic Development commissioned a report on the film office from private consulting firm Clifton Gunderson, which cited ‘incomplete or inadequate records’ for 20 of the 22 projects the state had approved, as well as dummy companies set up so film productions could claim in-state expenditures on out-of-state costs – sometimes more than $1 million, according to the report.

 

…The Massachusetts Dept. of Revenue commissioned a study, which resulted in a sternly worded report that took issue with a widely quoted Ernst & Young survey putting New York’s return on investment at $1.90 for every $1 spent. While it doesn’t specifically analyze the New York program, it points out that another Ernst & Young study claims New Mexico’s tax credit generates 94¢ per $1 spent even while a study by New Mexico State U’s Arrowhead Center sets the figure closer to 14¢ on the dollar.”

 

Usually, when one gets caught doing something illegal, most likely there are many others doing the same thing; they just have not been caught. Mr. Petal is just one man, but represents a much larger problem yet to be uncovered.

 

Monsanto brings R&D facility to Kannapolis

 

The Charlotte Business Journal reported in a January 28 article written by Jennifer Thomas that

 

“Agricultural-technology giant Monsanto Co. will establish a research-and-development operation at the N.C. Research Campus within six months.

 

The St. Louis-based company says it has signed a long-term lease and plans an 11,000 square-foot lab on the third floor of the David H. Murdock Core Laboratory on the Kannapolis campus.

 

Financial terms were not disclosed.”

 

The article states that the financial terms have not been disclosed so be alert for subsequent issues of the Corporate Welfare Weekly for any announcements regarding incentives for the company.

 

Around the country…

 

The Austin Business Journal reported in a January 29 article written by Jacob Dirr that the city ofAustin and the state of Texas are considering more than a million dollars in incentives for LegalZoom.com Inc.

 

“LegalZoon.com Inc. is in the final stages of cementing local and state incentive deals, reportedly worth $1.2 million, that would establish a regional base in Austin, President Frank Monestere said.

 

…Monestere said his company knew the city would release information soon, to preface a city council vote on incentives. … The city council will likely take up a vote in the next three weeks about the incentives.”

 

 

 

Reminder…

 

The Corporate Welfare Weekly recently launched an effort to identify ANY company doing businesses in North Carolina who plans to expand, relocate within the state, or simply create new jobs – but ISN’T getting any incentive from the state or local government.

 

Email Shelley Gonzales at gonzales@ncicl.org