Follow the Money: (Corporate Welfare Weekly: Issue 79)

Dec 18th, 2010
by Elizabeth Lincicome
from Corporate Welfare Weekly


“Follow the Money” Weekly (CWW #79): December 13-17, 2010


Dear Readers:


NCICL’s Corporate Welfare Weekly has had a slight facelift. The new name for our economic newsletter is Follow the Money. While the primary focus will remain tracking the state’s incentives giveaways, we will also focus on broader economic issues impacting North Carolina. Our goals remain the same: to hold our elected officials accountable, and help our readers follow where their hard earned money really is going. 


Opinion: No to WFU incentives


Winston-Salem Journal opinion columnist John Railey had a piece in Friday’s paper regarding “Phase 2” of Pepsi’s incentives package in which he exposes how Wake Forest University is also trying to squeeze money out of the city, but without even creating any new jobs. 


“Wake Forest University's request for taxpayers' money to help offset the cost of accommodating Pepsi's expansion at the WFU-owned University Corporate Center strikes us as stretching the government incentives argument too far.

Wake Forest wants $250,000 from the city of Winston-Salem to help in moving two BB&T Bank operations groups, or about 150 employees, from its University Corporate Center to its Reynolda Business Center. That would provide space at the University Corporate Center on Reynolds Boulevard for Pepsi's expansion of its vendor call center.

On Sept. 20, the city council approved $250,000 in incentives to Pepsi, which said it would add 195 jobs, retain 870 jobs and spend $7.5 million to renovate its call center over three years. Forsyth County commissioners added an additional $150,000 to the pot for a total of $400,000 in incentives.

Mayor Allen Joines told the Journal that the city always anticipated being involved in the relocations. If so, we question why these costs were not part of the original Pepsi incentives agreement. As it is now, the request from Wake Forest has no direct job-creation or retention component to justify giving it taxpayer funds.” Read the full column here.


State Incentives Giveaways: Quick Hits…


N.C. to give BAE $2.28 million: 


BAE Systems, a British defense and aerospace company, plans to open a facility in Charlotte. State officials Thursday morning approved giving the company incentives worth as much as $2.28 million if it meets hiring goals. BAE also considered sites in Rock Hill, S.C., and Austin, Texas, for the expansion. The company employs more than 107,000 people worldwide and more than 50,000 in the United States. Its U.S. headquarters is in Arlington, Va., outside Washington.


US Airways Requests $29,250 to Expand Winston-Salem Center:


Winston-Salem Deputy City Manager Derwick Paige tells WFMY News 2 city council members are meeting to get the details of a proposed incentives plan with US Airways. The council will hold a public meeting Monday, December 20 at 7 pm to discuss the $29,250 in incentives US Airways is requesting. US Airways is also considering Tempe, Arizona and Reno, Nevada for the jobs.


Americhem Receives $225,000 from One North Carolina Fund: 


Americhem, a provider of custom color and additives for the polymer industry, will open a new manufacturing plant in Randolph County. The company received a $225,000 grant from the One North Carolina Fund. The company will not be building a new facility, they are moving into an existing structure in the Liberty Business Park.

City and Lee County Give Coty Inc. $280,000 in Incentives:


A cosmetics company is planning a $12 million expansion at its Sanford manufacturing operations. Coty Inc. makes lotions and fragrances at its Sanford facility, which opened in 1971 and employs about 800 people. The expansion will add production lines to make nail polishes. City and Lee County officials provided incentives worth about $280,000 to attract the jobs. Some of the new jobs could be filled by employees at a factory that Coty is closing in the Pender County town of Rocky Point. That closure will mean 97 layoffs.


Shrouded in Secrecy, Company Forces Counties to Bid Against Each Other…


Wilmington’s StarNews recently reported on an economic development deal that exemplifies the destructive nature of incentives. As the paper’s Wayne Faulkner reports, Columbus County is just one NC county in the running to land an unidentified company that claims it would invest $100 million and create 1,100 jobs. One location it is looking at is the International Logistics Park of North Carolina, which straddles the Columbus-Brunswick County line. 


The Commerce Department's involvement indicates that some sort of incentive package is on the table. Based on Brunswick County’s Tier 1 ranking by the state, the company or developer would be eligible for tax incentives equal to $12,500 per employee. The Commerce Department ranks counties according to their economic strength, 1 to 3, with Tier 1 considered a distressed area.


While the company remains anonymous, the proposed deal is pitting Columbus County against Robeson and Scotland counties. The Fayetteville Observer reported that Dec. 16 was the deadline for the mystery company to receive proposals from several areas in eastern North Carolina, including Rocky Mount. 


Jim Graham, president and CEO of Waccamaw Bank said he did not have direct knowledge of the name or nature of the mystery company, although somehow he knew enough to say that proximity to the Port of Wilmington could impact their decision.


He also said that both the state and the Department of Commerce have courted the mystery company for three years.


Quote of the Week…


“We think it unwise to hand over public money to offset what essentially are a landlord's expenses normally recouped over time through rental fees. That would set a bad precedent.”


-John Railey,

Opinion columnist, the Winston-Salem Journal