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Greensboro cuts a deal: $120,000 for 25 new jobs

by Amy Kingsley

The city council granted their first economic incentive of the fiscal year on Aug. 15 in the form of a $120,000 grant to a local company that manufactures cleaning products for fast food restaurants.

In exchange Kay Chemical, a division of Ecolab, must spend almost $12 million expanding their Capitol Drive headquarters and create 25 new jobs that pay an average salary of $35,000 before benefits. The company, which was founded in High Point in the 1940s, already employs more than 340 people at its Greensboro facility and almost that many at additional sites around the world.

The motion passed seven to one. Tom Phillips, who represents District 3, cast the lone dissenting vote. Mayor Pro Tem Sandra Anderson Groat missed the meeting due to a recent medical procedure. Phillips has a record of opposing economic incentives: He also voted against a $590,000 economic incentive package for RF Micro Devices earlier this year.

“Corporations make their decisions about where they’re going based on things other than incentives,” he said. “We don’t need to be doing this.”

Kay Chemical is considering 11 different sites to build manufacturing facilities for a new product line company representatives promise will revolutionize the fast food cleaning industry. Michele Deuterman, vice president of human resources, said the new line changes how their existing products are delivered. New manufacturing equipment would be housed in an addition next to one of their existing factories.

Deuterman said the Ecolab board of directors would make a decision about where to locate the plant during one of the next couple board meetings. In the meantime, the company is applying for economic incentives from the county and state.

Assistant City Manager Ben Brown said staff members calculate economic incentives by taking 80 percent of the estimated property tax over three years. If the company fulfills its promise to create jobs with decent pay, the city refunds that amount in property taxes for the first three years.

A company must meet several criteria in order to become eligible for economic incentives, Brown said. The company must invest more than $3 million, create at least 20 jobs and pay newly hired workers an average salary that exceeds the city’s median income.

Critics of economic incentives have said the program unfairly rewards large corporations that are already financially stable. Small businesses are not eligible for the tax breaks. Brown said that national studies show that economic incentives can make the difference in where a company decides to locate or expand. Companies often use site selection consultants to narrow their options to a few desirable locations, he said. But the final decision might be based on where the company can get the best deal, Brown said. Findings in a 2003 survey of corporate leaders by the Association of Washington Business concluded that incentives play a key role in economic development.

He said he is excited that a local company is expanding instead of downsizing, and emphasized that if Kay Chemicals expands in Greensboro they will bring needed jobs to the area.

“All the time we are dealing with companies that are downsizing,” he said. “Working with a company that is expanding and creating jobs inside the community is a great opportunity.”

Aside from the short discussion about economic incentives, the mayor and city council members encountered few points of disagreement during their three-and-a-half hour meeting. They approved a $60,626 land purchase for the Battleground Rail Trail Project, a contract adjustment with Heitkamp, Inc. for water line rehabilitation and made a few changes to zoning regulations. The most heated debate of the night erupted when City Councilwoman Dianne Bellamy-Small renominated a zoning board committee member with a poor attendance record to serve another term. She withdrew the motion until the next meeting.

To comment on this story, e-mail Amy Kingsley at amy@yesweekly.com

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