Local developers want some economic incentives, too

by Jordan Green

Guidelines for an economic incentives plan for the benefit of land developers will be considered by city council on Tuesday. During a hearing on June 26 some council members raised questions about whether the funds will have the desired effect of inducing developers to safeguard land for the kind of industrial operations with high tax yields that the city needs to reverse an economic slump. The new guidelines state that infrastructure assistance is the city’s preferred handout to developers clearing land for future corporate parks. The money could be used to install water and sewer lines, install storm sewers and build new streets. City staff reduced the minimum site acreage to meet the program’s criteria from 300 to 150 acres. Among other eligibility requirements, the site must fall within the limits of the city or the developer must agree to be annexed within five years, and the developer must make a minimum private investment of $15 million. Voters narrowly approved a $10 million economic development bond to fund the program in November after the council voted 8-1 five months earlier to include it on the ballot. The lone dissenting vote was cast by District 5 Councilman Tom Philips, who continues to be an outspoken opponent of incentives. Other members have strongly favored the practice, with solid majorities voting to give financial help to manufacturers like HondaJet and to premium residential and retail projects such as developer Roy Carroll’s Center Pointe. Phillips suggested on June 26 that the program is likely to benefit developers who don’t need the city’s help. “I didn’t see any language about the return of dollars should the project happen quickly,” he said. “If they invest their money and get an immediate return, then they don’t need our money.” City staff indicated that there are no plans to include such a provision. In researching other cities’ policies they were unable to find any viable models. They also argued that requiring developers to return funds if they realized an immediate profit would provide a perverse incentive for them to delay projects. Mayor Keith Holliday indicated that one purpose of the incentive was to help developers get through an eight- or nine-month period between the beginning of site preparation and the time when they could close a deal with a corporate tenant. “In Greensboro the private sector doesn’t want to put its money at risk,” Phillips groused. “It wants to put the public’s money at risk.” Discussion among council members and city staff suggested that the rationale for the program remains somewhat unclear. Phillips noted that nothing in the current guidelines would prevent a developer receiving city funds from breaking up a site after water, sewer and streets were installed. “What was really driving that bond referendum is we don’t have large sites available for a project like Dell,” he said. “We don’t have any restrictions on the developer taking the site and splitting it up…. I thought what we wanted to do was give them the incentive to sit on a large site.” The city of Greensboro entered a bidding war with Winston-Salem in 2004 to try to secure a Dell factory. The Texas computer maker ended up choosing Winston-Salem. In response to Phillips’ concerns, city staff member Dan Curry suggested that small industrial sites could be important economic catalysts – and that promising new projects will remain on hold until the council signs off on the guidelines. “We’re about to lose a deal with a hundred-plus million in private investment on a fifteen-acre site,” Curry said. “These are high-tech jobs.” District 4 Councilman Mike Barber, a pro-business representative who has voted to approve incentives in the past, acknowledged that development companies that do not need incentives might take advantage of the program. “That’s the global game that we’re playing,” he said. “It’s somewhat of an entitlement mentality that’s moved over to the business world.” Barber’s candid assessment does not match the city’s official line. The city’s Urban Development Investment Guidelines clearly states that economic incentives do not amount to an entitlement program because “the provision of financial assistance, in any form, is solely at the discretion of City Council. Council may waive or modify any aspect of these Guidelines and determine levels of assistance to be provided, as it deems appropriate.” At-large Councilmember Sandra Anderson Groat expressed ambivalence about the program. “I think it’s important that we have very clear criteria,” she said. “Ten million dollars is going to be used to buy less than ten developers. We’re using taxpayers’ money to do this. I want business, I really do, but I want to do it right.”

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