The second brand new idea that Chairman Nick Picerno floated during the Moore County Board of Commissioners September 19 Critical Issues summit got a chillier reception than his notion of creating a County capital fund for school construction.
During a discussion of economic incentives for businesses expanding in or relocating to Moore County, Picerno suggested merging the the County's Economic Development partnership, Partners in Progress, with the Convention and Visitor's Bureau [CVB].
Unlike Partners, Picerno noted, the CVB has its own revenue stream, being funded from the occupancy tax levied on hotel room rentals. Moore County's representatives in the NC General Assembly championed a 2011 bill that allowed up to one-third of the proceeds from the tax to be used for "tourism-related expenditures," including improvements at the Moore County Airport.
Picerno asked whether it might make sense to also tap that funding source for economic development.
After a long pause, Corso said, "That's a big one."
"If Moore County tried to do that in a big way," he continued, "then you would face opposition from the tourism industry."
He explained that the industry was opposed to the imposition of the occupancy tax when it was first approved in the state. When it became clear that it would nonetheless be imposed, the industry organized to make sure the funds collected were used solely to promote travel and tourism. The coalition that led that fight is still quite active, Corso said.
On the other hand, he explained, the Commissioners in Buncombe County persuaded state legislators to authorize an additional tax levied specifically to fund economic development efforts. None of Moore County's Commissioners appeared to express any interest in the idea of a new tax.
Crafting an incentive policy
Corso was present at the meeting to present his recommendation for a formal economic development policy that the Commissioners could adopt, the County could publish, and Corso could rely on when recruiting businesses.
Chairman Picerno, in particular, has often expressed his skepticism concerning grants that transfer taxpayer dollars to companies, and voted against incentives the Board provided to First Bancorp and International Tray Pads earlier this year.
"I wish the Supreme Court would outlaw giving taxpayer money to companies," he said during the September 19 summit.
That portion of the meeting began with a presentation by Brian Godfrey, an intern in the County Attorney's Office, that detailed the economic development policies of a number of North Carolina counties.
Godfrey explained that counties cannot, under North Carolina law, abate property or sales taxes. What they can do is make cash grants to new or expanding businesses that, in effect, reimburse a portion of property taxes the business has paid.
Counties that have a published incentive policy generally rebate a percentage of the property taxes generated by the business relocation or expansion. Often a minimum level of investment — for example, opening a manufacturing plant valued at $1 million — is required to qualify for an incentive. In some cases, the company is also asked to guarantee the creation of a certain number of jobs.
Rebates range from 30 percent to 120 percent of the taxes the company would have paid. In some cases, the company may be rebated ninety percent in the first year of a project, eighty percent in the second year, seventy percent in the third year, and so on.
Policies vary widely among NC counties. Some are relatively simple, and some involve complicated point systems for factors like job quality and environmental friendliness.
Incentives for new and existing companies
Corso recommended that the County adopt a policy aimed at both attracting new companies and encouraging existing companies to expand their Moore County operations. He also urged that it include a discretionary component, to give the Commissioners the leeway to respond to unique situations.
Companies eligible for the programs would include those in manufacturing; information technology; warehousing and distribution; research and development; call centers; wholesale trade; and company headquarters that create at least seventy-five new jobs. It would not include retail and service businesses, Corso noted.
Companies that invest at least $1 million in real property assets — that is, land and buildings -- would be offered a five year grant, reimbursing them for a percentage of property taxes according to the following scale: year one, 90 percent; year two, 80 percent; year three, 70 percent; year four, 60 percent; year five, 50 percent.
Noting the importance of supporting the expansion of existing companies in the county, Corso said that very few such expansions involve investments of more than $1 million. So he suggested that the grant percentages be the same, but that the threshold be reduced to $250,000 in real property.
For both new and existing industries investing not in real property, but in machinery and equipment, Corso recommended that the grant be 50% of property taxes rebated over a five-year period, adjusted for yearly depreciation of the equipment.
Corso said it is important that Moore County have a relatively generous incentive package, because the County is surrounded by poorer counties that are able to offer companies more in the form of state grants. He also noted that the recent dismemberment of the NC Rural Economic Development Center will deprive Moore County of what has been a valuable business recruitment resource.
After the session broke up, Commissioners Picerno and Saunders, who together make up the Board's economic development task force, told The Times that they would work with Corso and the legal department to develop a proposal that could be brought back to the Commissioners for a vote. Picerno said that could come as early as the October 15 Board of Commissioners meeting.
Promoting Moore County during the US Open
Responding to Picerno's suggestion that a portion of the occupancy tax be used to support economic development incentive, Corso said, "What would I really like? We've developed with the Realtors, homebuilders, and CVB, a committee called 'Moore Forward.' The idea is to promote the county as a whole."
Corso explained that Wake County has developed a website aimed at what they call "talent recruitment.'' The site, at www.workinthetriangle.com, focuses on what it means to live, work, and play in Wake County. Based on research into what drives the decision making of key target groups, the site provides first person testimonials from individuals representative of those targets.
By contrast, "if you ask folks being recruited to come here, it is difficult finding out anything about us, "Corso said.
He suggested that the the dual 2014 US Open Championships presents a unique opportunity for Moore County to enhance its visibility.
"We need to find a way for us to be able to put a website like that out there, "Corso said. "We are putting out RFPs to get this done." He noted it might cost as much as $50,000.
The website would need to be up by the end of first quarter 2014, he added, in order to benefit from the publicity surrounding the US Open.
Investing in the County's 'business'
Commissioner Saunders said he had looked into the tax value of the previous US Open championships hosted in the county and found that the 2005 Men's US Open generated an extra $325,000 in sales tax, while the Women's U.S. Open generated an additional $160,000 dollars.
"So, we are looking at potentially an extra $500,000, "Saunders said. "We have a captive audience of people that are coming . . . if we can promote ourselves . . . we need to look at a way to invest some of this $500,000. If this is a business, we need to invest some of this extra revenue in our business."
He noted that the County will have a kiosk inside the gate at the Open, as well as a US Open-related kiosk at Raleigh-Durham International Airport.
Corso asked that he and CVB Director Caleb Miles be invited to present the concept for the website project to the Commissioners.