Companies Courted by City May Not Be Looking for Sites
Economic boosters and city officials unveiled proposed guidelines for spending $10 million in incentives – narrowly approved by voters last November – for the development of corporate parks at a city council briefing on Feb. 27.
Assistant City Manager Ben Brown and his staff in the economic development office presented a plan to help developers ready tracts 300 acres or larger for office or industrial buildings. Developers could apply for funds to grade the land, run water lines, extend sewers and build roads on large properties, making them “pad ready” in development parlance. In exchange for the city’s financial help, developers would be forbidden from using the land for housing or retail for 15 years.
The lack of construction-ready sites has hampered the community’s ability to attract large employers, said Dan Lynch, president of the Greensboro Economic Development Alliance. He pitched the program as a way for the community to partner with private industry on a risky investment with the potential to greatly benefit Greensboro.
Tom Phillips, a staunch opponent of economic incentives, said private industry – not the government – should accept uncertainty when preparing lots for corporations.
“They’re not taking any risk,” Phillips said of developers. “The public is taking all the risk.”
During the first five years after a developer receives money, it would only be able to use the land for a corporate or industrial park. If, during the next 10 years after that, the developer decides to develop the land for something other than a corporate or industrial park, they would have to pay back 100 percent of the public investment.
Although the current guidelines say the incentives should be restricted to developments of 300 acres or more, the city council could consider smaller, so-called catalyst developments that might attract satellite investment.
“We could take that ten million dollars and stretch it into millions in investment,” Mayor Keith Holliday said.
The Starmount Company, a local developer interested in developing 300 acres in Reedy Fork as a corporate park, is already exploring the possibility of using the voter-approved funds. City employees estimated it would cost $2.4 million to make the site construction-ready, said Ron Wilson, senior vice-president for Starmount.
“What the city has been so concerned about is the lack of two hundred thousand-square foot facilities,” Wilson said. “Companies will only look at a site that is pad ready. They say when consultants see a cattle ranch, they can’t imagine a corporate park.”
Developers who make infrastructure improvements for corporate or industrial parks, which often costs between $2 million and $2.5 million, do not know when or if an interested company will choose their property, Wilson said. Often developers feel pressured to turn that land into residential development, he added.
Because corporations often work anonymously through intermediaries, Wilson said he is not sure how many big users have passed Greensboro over because of the lack of construction-ready sites.
“There’s no proof that these people are here,” he said. “But as a practical matter, we know that FedEx is coming. And we know that in other communities where there are FedEx hubs, a number of businesses have moved in.”
Only properties within the city or areas that will be annexed within the next five years are eligible for bond money. Proposed corporate parks must conform to Greensboro’s Urban Development Investment Guidelines, which require them to be located downtown or in reinvestment corridors. Corridors include Randleman Road, O. Henry Boulevard, East and West Market streets and the area near the airport.
Developers must invest a minimum of $15 million to be eligible for bond money. This requirement, coupled with the demand that projects be at least 300 acres, has led to some criticism that the bond money, like traditional economic incentives, is geared towards large companies at the expense of smaller startups. Diane Davis, a political activist and downtown booster, said the program amounted to a giveaway to large developers. She questioned how the city would enforce guidelines that made developers sit on large plots of land, waiting for something to happen.
“Passing rules that are not cut-and-dried in the city’s favor does not seem real smart to me,” she said.
Staff members from the city manager’s office said the requirement that applicants have an established track record makes the investment a safer one for the city.
“We want established companies just to reduce the risk of it for taxpayers,” said John Shoffner, economic development program manager. “It doesn’t necessarily favor big developers or small ones.”
Governments usually attach guidelines to incentive programs that require companies who receive them to pay a certain wage, usually at above the community’s average. Developers who receive the infrastructure incentives can sell or lease their land to any company, regardless of the kinds of wage or benefits they offer.
The economic development office is still working on the guidelines for spending the bond money, and the city council must approve the final draft. Wilson said the program could be beneficial both to developers who might otherwise be wary of hanging onto to 300-acre sites, and to the city of Greensboro.
“It’s highly speculative,” he said. “But the payoff to the community can be huge.”
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