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The Tar Heel corporate incentives hustle

by Jordan Green

Ramseur, a North Carolina Piedmont town on the Deep River near where US 49 cuts across Randolph County, has depended on textiles for its economic survival since at least 1949 when the fabric and yarn factory first opened its doors. Town historians date Ramseur’s first cotton mill back to 1850.

For many years the plant was run by Burlington Industries. When the textile giant staggered in the 1980s, a smaller and leaner company called Ramtex, owned by the Hong Kong-based Textile Alliance Limited, bought the plant and took over production. Since then, town officials have taken to heart a message understood by many North Carolina communities: if you want to keep the jobs and the tax base, find creative ways to use public funds to enhance private enterprise.

So in June 2001 when one of the company’s reserve water tanks began to leak and rust, Ramtex didn’t even have to ask the town for help.

‘“We never approached the town,’” Vice President Bob Durand said, ‘“The town kind of felt an obligation because we were also committing capital to modernize. It was a signal that we’re staying; we’re not leaving.’”

Company officials did not say in direct language that they would close the plant if the town refused to provide incentives, but Mayor Hampton Spivey said in a recent interview that the threat was implicit in a presentation made on behalf of the company that paired the town’s agreement to repair the water tank with a company commitment to invest millions of dollars in retooling the plant. In case the town commissioners didn’t get the message, the presentation noted that another unnamed North Carolina community might be more accommodating. As is often the case, the deal was brokered by a county economic development official, a matchmaker whose salary is paid by both public and private funds.

‘“Ramtex considering capacity expansion to add cutting edge technology with a new air jet spinning process,’” the June 2001 minutes read. ‘“Expansion will allow company to remain competitive in industry sector under intense pressure’… No link to job creation, but direct link to job retention’… Competitor offered incentive package for similar expansion in Triad company.’”

Faced with the prospect of Ramtex shrinking or moving, town commissioners sprung into action, voting unanimously to give the company $49,410 to make the repairs. Not a lot of money for a big city, but for a town the size of Ramseur (Pop. 1,588) the cost came to $31.11 per resident.

Spivey said the grant was made with the idea ‘“that maybe if it came down to them leaving they’d give it a second thought. There was doubt if we could even survive as a municipality if they left. We were like the coal-mine towns in West Virginia where if the mines closed then the town would die.’”

In return for the water tank repairs, Ramtex agreed to invest $14 million to upgrade its plant and keep the jobs in Ramseur. But city leaders say that hasn’t happened.

‘“I don’t think they stood up to their end of the bargain,’” said Spivey, the town’s three-term mayor. ‘“They’ve reduced their workforce. Every year they cut the amount of taxes they pay us.’”

Ramtex claims it has put money into the Ramseur plant, but for Spivey the betrayal is self evident in the plant’s gradually atrophying workforce and ever declining contributions to the town’s tax base. Since 2001, the company admits, the number of wage-earning employees at Ramtex has dropped from about 630 to 470. In August 2003 the company shed 60 to 70 jobs when the bottom fell out of the market for woven fabric.

The company’s management doesn’t express any guilt over taking the town’s money and then laying off workers.

‘“No, with reduced capacity falling on weaving and the unforeseen circumstances in the textile industry,’” Durand said, ‘“as you know, it’s been very hard in the textile industry.’”

But some Ramseur residents whose livelihoods have been tied to Ramtex don’t accept the claim that the vicissitudes of the textile industry excuse the company’s downsizing. One is 53-year-old Sheena Cheek, whose husband quit his job at Ramtex during one of its layoffs.

‘“If you drive around here, people are losing their homes,’” she said. ‘“People work all of their lives and they ought to have something to show for it.’”

With anger flashing across her face, Cheek added: ‘“I don’t like it when they take the people’s tax money and give it to a company that’s laying people off. They need to give it to the people who need it.’”

The corporate subsidies game

Across North Carolina, the saga that transpired in Ramseur plays out dozens of times a year in meetings of local leaders desperate to create jobs and add some measure of security to their communities in a rapidly-globalizing economy.

The issue of public money for corporate recruitment splashed across North Carolina headlines last year, when Texas computer giant Dell held private meetings with state leaders to draft legislation delivering them more than $240 million state giveaways to set up a manufacturing plant in North Carolina, all the while intimating they might move to neighboring Virginia if the deal fell short of their expectations.

What’s less known is the explosive growth of special deals for corporations at the city and county level, where often cash-strapped local governments give millions and sometimes tens of millions of dollars to companies promising economic prosperity.

For this report, corporate subsidy deals were analyzed from the last five years in 10 counties across North Carolina: the state’s five largest counties ‘— Mecklenburg, Wake, Guilford, Forsyth and Durham ‘— and five others from the mountains to the coast ‘— Burke, Cabarrus, Randolph, Vance and New Hanover.

Since 2000, corporate subsidies have skyrocketed at every level in North Carolina. In the 10 counties chosen for this study, subsidies have ballooned from about $10 million in 2000 to $75 million in 2004.

Following the General Assembly’s approval of millions of dollars in state funds to Dell and the company’s announcement that it planned to build its new factory somewhere in the Triad, local governments plunged into a well-documented bidding war over the plant. The fight pitted Greensboro and Guilford County against Winston-Salem and Forsyth County. Even the city of High Point and Davidson County made offers. Ultimately Dell chose Winston-Salem after the city and Forsyth County put together an incentives package that outspent all their rivals.

At $37.2 million it stands as a high-water mark for local governments, outdone only by a city/county package in Durham that offered $43.5 million to a consortium of developers for the American Campus project. In contrast to the Dell Deal, the purpose of which was limited to creating jobs and tax revenue, the Durham project had the additional selling point of filling a vacuum in a downtown that has lost much of its commercial core over the years.

Over the past five years, the 10 counties included in this report have committed more than $185 million in public funds to corporations, provided they deliver promised jobs and investment.

Economic incentives spending by local governments over the past five years mirrors a sharp increase in state spending on grants to induce companies to relocate or expand in North Carolina. Often local governments are corralled into granting incentives by a network of economic development officials that lines up funding from state, county and municipal sources for corporations looking for a handout.

Incentives grants to private companies authorized by the state of North Carolina ‘— including the state’s two primary incentives programs, the Job Development Investment Grant and the One North Carolina Fund, along with the General Assembly’s special appropriation to Dell ‘— have ballooned in the past five years, from less than $1 million in 2001 to figures in the hundreds of millions in 2003 and 2004.

Yet despite the staggering sums of public money spent on these deals, many towns feel the same anxieties as before about their economic future. As in Ramseur, it’s often companies in old, stodgy North Carolina industries like textiles and furniture that are taking local public funds ‘— only to lay off workers or, in extreme cases, shut down entirely just a few years later.

Even with this checkered record, local officials interviewed for this story said with misgivings that pressure to give out subsidies is only increasing.

‘“I think you’ll find we have to give out incentives more and more,’” said Timothy Pegram, chairman of the Vance County Commission. ‘“If nobody gave incentives it would be fine. But with some giving it, all the others have to as well.’”

If any one North Carolina county exemplifies the temptation by local officials to hand out corporate incentives to grab onto jobs in the midst of a rapidly shifting economy, it would be Cabarrus. Corporate incentives commitments by local governments in the county over the past five years represent $191.30 per resident. That’s almost twice as much as per capita incentives spending for residents Mecklenburg, Wake and Guilford, the state’s three largest counties combined.

Once at the center of the North Carolina Piedmont textile industry, the county reeled when its largest employer, Pillowtex Corp., declared bankruptcy and laid off its workforce in July 2003 ‘– 3,290 employees by the count of the National Council of Textile Organizations. Of those, 1,100 were still looking for work a year later, according to the county. Adjacent to Mecklenburg County and situated on the Interstate 85 corridor, Cabarrus County has aggressively tried to reinvent itself as a motor sports, recreation and retail center, trading on the fact that Kannapolis is the hometown of the late and revered NASCAR driver Dale Earnhart.

The county’s most lucrative incentives grant went to Concord Mills in 2001. The county gave the development company a $12.6 industrial development incentive grant ‘— 81 percent of which has been paid out ‘— to build a massive retail mall with tenants like the Bass Pro Shop.

Cabarrus’ second largest incentive grant, according to figures provided by the county tax assessors office, went to fiber-optic cable maker Corning. The county granted corporate tax breaks worth $8.8 million to Corning in 2000, at a time when it was plowing capital into machinery and hiring new workers. But following a downturn in the telecommunications industry, the company would end up steadily reducing its workforce until it closed its Cabarrus County plant altogether in 2002. Even though the company no longer provides jobs, it has collected $7.5 million in industrial development incentives grants from the county by virtue of continuing to pay property taxes.

A popular perception of incentives is that they’re used by governments to spur investment by leading-edge companies that will help communities overcome dependence on old-line manufacturing companies. Yet Pillowtex received a $1 million industrial development incentives grant from the county, which it has collected in full, the year before it went out of business. Again, the county was forced to pay the incentives because the company continued to pay property taxes after the machines stopped running.

‘“Business is business,’” said Cabarrus County Commission Vice Chairman Bob Carruth. ‘“I regret that the agreement with them did not require them to stay open. Part of it was an effort to help them modernize, but at the same time they lost a contract with K-Mart that took away a major segment of their market.’”

While the county fulfilled its obligations to Pillowtex, the company does not seem to have shown the same consideration for its employees. In January 2004, the NC Department of Labor filed a ‘“proof of claim’” in U.S. Bankruptcy Court against Pillowtex to try to recover more than $14.6 million in unpaid vacation compensation and severance wages for 4,731 former employees.

But jobs are not the driving focus of Cabarrus County’s corporate incentives program, Carruth said. The commission is more interested in diversifying the tax base to offset the burden to residential taxpayers by bringing in more industrial investment.

Following the disappointing results of the Corning and Pillowtex deals, the county has focused on smaller grants to motor sports-related companies like Sabco Racing, National Racing, Chip Ganassi Racing Teams and Hendrick Motor Sports, along with grants worth more than $600,000 to Phillip Morris. The cigarette maker also earned access to up to $1 million in state incentives from the One North Carolina Fund.

Carruth conceded that the county’s corporate incentives program has done little to help the people thrown out of work by the closing of Pillowtex.

‘“The jobs replacing those jobs, most are at the lower end, minimum wage, in the retail and service industries with few benefits,’” he said. ‘“A very high percentage of [the employees who lost their jobs] did not have high school diplomas. A high percentage of them were older than forty. A tremendous percentage were Hispanic or African American.’”

The Corning and Pillowtex experiences, as well as the record of layoffs at Ramtex in Ramseur indicate that paying incentives doesn’t have much impact on job retention because the ebb and flow of goods and services on the open market operates according to its own rules.

‘“I think the sentiment is there that we should write in some agreement that requires the companies to provide a certain number of jobs,’” Carruth said. ‘“But how do you deal with the natural fluctuation of employment if a company loses or gains a contract?’”

On a macro level, tracking plant openings and closures suggests that rather than create new jobs, the practice of giving out corporate incentives merely shifts jobs from one community to another.

The Mecklenburg County Commission approved $1.3 million worth of incentives grants in 2003 to General Dynamics Armaments and Technical Products division. The plant relocated to Charlotte after laying off 320 employees and shuttering a plant in DeLand, Fla., according to an Orlando Sentinel story. General Dynamics later reaped an incentives grant valued at $598,920 from the city of Charlotte. The company could also receive up to $5.9 million from the state’s Job Development Investment Grant program. In exchange for shifting hundreds of jobs from Florida to North Carolina, the company scraped together a total of $7.8 million in incentives from state and local governments.

In 2004 the New Hanover County Commission approved a $500,000 grant to General Electric in return for moving its nuclear energy division from San Jose, Calif. to the Wilmington area. Unlike typical incentives grants that pay out incrementally over five to 10 years based on the company’s performance, New Hanover County agreed to pay GE the first half as soon as it secured a certificate of occupancy, and the second half once it demonstrated it had hired 100 full-time employees. In May the county approved a $2.1 million grant to GE to reward new capital investment. GE also received a state Job Development Investment Grant worth $5.9 million. The company’s combined incentives grants have totaled $8.5 million.

If the General Dyamics and GE deals exemplified cases of North Carolina paying companies to destroy jobs in other states, it’s also true that smaller deals have involved local governments in North Carolina offering companies incentives grants at the expense of jobs in neighboring communities.

In 2002, for instance, the Winston-Salem Board of Aldermen approved an incentives grant of $500,000 to Sara Lee Corp. to expand its headquarters there, according to a story in the High Point Enterprise. At the same time the company was closing down its High Point plant less than 20 miles away.

The Cabarrus County Commission approved an incentives grant earlier this year valued at $67,100 to chicken producer Perdue Farms, matched by a $255,600 grant from the city of Concord. The company closed plants in Robersonville, NC and Emporia Va. in 2004, according to news reports.

While elected officials in Winston-Salem could comfort themselves that they were authorizing incentives grants for administrative jobs while the company was eliminating production jobs, officials in Burke County had to admit they were paying the company to create the same jobs it was destroying in the next county over.

The Burke County Commission together with the Morganton City Council authorized an incentives package valued at $172,520 to Henredon Furniture in May. The payout will be calculated by job creation and capital investment at the furniture company’s Morganton plant.

Henredon planned to close its Spruce Pine plant in neighboring McDowell County in April, wrote the company vice president for human resources to the Burke County Manager Ron Lewis and his counterpart at the city of Morganton, Sally Sandy, adding that the incentives grants would help the company restructure.

‘“While we are sorry to hear about the closing in Spruce Pine, we are proud to see your company continuing to compete in today’s market with US labor,’” Lewis and Sandy replied. ‘“We value Henredon as a good corporate friend and wish to aid you in your efforts by offering economic incentives based on both jobs creation and investment in our community.’”

Low return on the investment

While many counties play the game, poor parts of the state often play at a disadvantage to their more affluent neighbors. When Vance County entered the incentives game in 2001, it did so in return for lower-paying jobs and comparably less tax revenue than many of its wealthier counterparts in the state’s urban areas.

The county, with a population of less than 50,000 people, gave Wal-Mart $1.4 million worth of free land to build a distribution center in the county seat of Henderson, adding free utilities and waiving permit fees to sweeten the deal. The county’s unemployment rate pushed up into the double digits the year the county approved the Wal-Mart incentives package and has remained there through this past February despite the 396 new employees hired since the distribution center’s opening.

Vance County lies along the Virginia state line only 40 miles up Interstate 85 from Durham yet it has remained outside the reach of the Triangle’s technology and research-driven economic growth. With 16 percent of families living below poverty, Vance County lands in the state’s poorest quartile. In Henderson the share of families living in poverty is 23.4 percent, while per capita income is $15,130, well below the state average.

‘“We’re mighty glad to have Wal-Mart here,’” said Pegram, who has served on the county commission off and on since the late 1950s. ‘“It’s increased our tax base and created some jobs.’”

With only $514,858 in property taxes collected from Wal-Mart so far, according to figures provided by county attorney Robert Hight, the county is on track to recover its investment in about four years. Meanwhile, Vance County ranks near the bottom of the state for spending on public schools. Vance County’s expenditure of $1,159 per student gave it a ranking of 77th out of 100 counties for ‘“effort’” in funding education in the Public School Forum’s 2003 North Carolina Local School Finance Study.

Thomas Built: A

multi-jurisdiction deal

Guilford and Randolph counties share the distinction of being roped into one of the largest multi-jurisdictional incentives deals in the state’s history. Thomas Built Buses is based in High Point, Guilford County’s second largest city. About a fifth of its employees live in Randolph County, mostly in the city of Archdale.

In August 2000 Bonnie Renfro, the same county economic development official who would pitch an incentives deal on behalf of Ramtex to the town of Ramseur in 2001, came to the Randolph County Commission with some promising news: Thomas Built Buses was considering several sites in Randolph County to build a new plant.

Then in June 2002 she had more news information about the company. Thomas Built had decided to stay in High Point, she said, but only if ‘“all parties’” granted the company incentives. The economic development broker suggested that commissioners hold a joint public hearing with the city of Archdale. On June 17, High Point Economic Development Corp. President Loren Hill presented Thomas Built Buses’ demands to the High Point City Council, and three days later Renfro did the same at the joint meeting of the Randolph County Commission and the city of Archdale.

The language of the two presentations was nearly identical, suggesting a division of responsibilities handed down from the state or regional level, and it evoked the jobs-stealing bogeyman of South Carolina.

‘“The State of North Carolina, which was competing with the State of South Carolina for the project, has proposed an investment package of $14,180,500,’” the two proposals read. ‘“The value of South Carolina’s package is said to have been $34 million.’”

North Carolina had already committed to $1.7 million worth of tax credits, $339,200 for employee training, $2 million in direct grants and $4.4 million for road improvements. The state called for Randolph County, Guilford County and the city of Archdale to contribute a total of $1.2 million, and for the city of High Point to provide a grant valued at $4.1 million and $336,500 in electrical infrastructure. All four local governments rushed through approval of their allotted shares of the incentive package to keep High Point’s largest manufacturing employer from leaving town.

In return Thomas Built agreed to stay and create 178 new jobs at a new plant straddling the Guilford and Randolph county line.

Combining incentives from the state of North Carolina, Guilford County, Randolph County and the cities of High Point and Archdale, the package made Thomas Built eligible for $79,215 for every new job it created. With the average salary for the new jobs falling at $38,625, the state and local governments in effect agreed to cover the company’s payroll for the first two years.

In their defense state and local officials point out that most economic incentives grants, with the exception of those that provide free land and infrastructure, don’t start paying out until after the company has already delivered the promised jobs or capital investment. So-called ‘claw back’ provisions ‘— which allow communities to take legal action to recover incentive grants when companies shut down or eliminate jobs ‘— are rarely written into local agreements. Most now stipulate that local governments make incremental payments that prorate the award based on the number of jobs created and the company’s capital investment made rather than giving out millions of dollars up front.

‘“I think a lot of people misunderstand and think we hand out checks to companies on the spot,’” said NC Department of Commerce spokeswoman Deborah Barnes in an e-mail message. ‘“Companies enter into legal contracts that require them to produce the pledged number of jobs and investment in return for the awards.’”

Ben Brown, Greensboro’s assistant city manager for economic development, echoed that principle.

‘“We pay out incrementally on an annual basis,’” he said. ‘“We don’t give away a daggone thing. It’s all about due diligence. We negotiate and discuss that with them up front.’”

The anatomy of a deal

It’s no secret that in North Carolina the business community sets the agenda for economic development. And the NC Department of Commerce website pitches it that way to companies considering relocation or expansion.

‘“In North Carolina you will find a robust business climate driven by a partnership between private industry and government,’” it states. ‘“With one of the largest economic development networks in the nation, North Carolina is truly dedicated to giving businesses all the assistance and resources needed to meet their unique business requirements.’”

The Department of Commerce often sets the most generous incentives deals in motion by calling on regional and local economic development organizations when an out-of-state company expresses interest in moving to North Carolina. The regional economic development partnerships have the job of selling the company on the region, while the local economic development partnerships are tasked with selling elected officials on handing out incentives to the companies.

‘“A lot of times the Department of Commerce will come to the regional partnerships and they won’t even say the name of the company,’” said John Shoffner, Greensboro’s economic development program manager. ‘“The regional partnership will say we’ve got these two sites and we’ve got this type of labor force. The regional partnerships turn to the local economic development partnerships to get that information.’”

Piedmont Triad Partnership President Donald Kirkman explained: ‘“We’re trying to set the hook so the company will consider the Triad. The next time the company is seeking data, we will provide it, whether it’s data about the labor market or schools. The Department of Commerce’s regional offices coordinate the client’s visit with the local economic development corporation.’”

The Piedmont Triad Partnership receives some money from local governments, but expects to raise $3 million from the private sector over the next six years, Kirkman said, adding: ‘“The lion’s share of the investors are banks, utility companies, hospitals and medical-related firms.’”

Sometimes divisions of local government and sometimes private organizations, the local economic development corporations are likewise often financed by both the private and public funds. The High Point Economic Development Corp., for instance, receives $360,000 per year from the city of High Point, $75,000 from Guilford County and $45,000 from a group of local CEOs known as High Point Partners, said President Loren Hill.

Hill confirmed what corporate incentives agreements and public meetings minutes often imply or openly state: the deals are put together by local economic development directors, company executives and elected official in closed-session meetings, and then later approved in a formal vote after a public hearing.

Not once has a deal brokered by Hill been rejected.

‘“I’ve been doing this for four and a half years and that has never happened,’” he said. ‘“The city council has always voted to authorize the awarding of incentives.’”

An incentives package approved by the Randolph County Commission in April 2002 for processed food company Unilever offers an example of how the final step of the process is also stacked in favor of business interests. Renfro, the Randolph County Economic Development Corp. president, pitched the project to the commission, proposing that Unilever be paid $125,000 in exchange for keeping a plant in Asheboro.

Only three people availed themselves of the public comment section of the meeting, according to minutes. Plant manager Jack Marcus spoke, as did Jim Culberson, a retired banker, both in support. A third advocate for the incentives deal was the economic development corporation’s chairman, Charles Allen. He was also president of Allen Instruments, a company that serviced Unilever’s machines. The minutes paraphrase him as saying that ‘“government today is facing unparalleled challenges and that we must be creative and innovative to meet the needs of existing industries.’”

Some of the largest corporate incentives deals approved by local governments in North Carolina have gone to development companies to revitalize downtown. The success of these deals is more difficult to evaluate because they’re geared towards not just creating jobs and tax revenue but enhancing the vitality and quality of city centers.

The American Campus project in Durham, with an investment of $43.5 million in public funds to rehabilitate the old complex of tobacco warehouses into office, retail, restaurant and public space, easily stands as the state’s most ambitious. With the city’s iconic ‘Lucky Strike’ tower hovering high above the complex and the brand-strong Durham Bulls ballpark next door, the city’s assistant director of economic development wrote that the project was ‘“a beacon of hope to other potential developers that Durham stands ready and willing to enter into bold partnerships with the private sector.’”

In Raleigh, the largest corporate incentives package, valued at $23.2 million, was handed out to a developer to build a new convention center which will eventually be managed by the world’s leading hotelier, Marriott International. A May 2004 incentives agreement between the city and two local developers expresses alarm that Raleigh has steadily lost convention business to Charlotte, Greensboro and other similarly sized cities.

The city of Charlotte and Mecklenburg County have reserved their largest incentives grants for shopping centers and entertainment and restaurant hubs, including a $12.3 million grant to a local developer to build a shopping center that would be anchored by a Home Depot store.

Elected officials in Greensboro and Guilford County have unleashed a steady stream of incentive packages over the past five years, though none as large as those granted in Durham, Forsyth, Wake or Mecklenburg counties. In contrast to Durham, Raleigh and Charlotte, Greensboro has resisted granting million-dollar incentives to local developers. Concerted community efforts have helped its downtown rebound without them.

Rather, Greensboro along with neighboring High Point and Guilford County have targeted corporate incentives towards the goal of job creation. With Guilford County’s unemployment rate for June figuring at 5.5 percent, compared to 2.8 percent in 2000, local officials make no apologies for spending taxpayer money to attract companies like Volvo Truck, CitiCard and Comair.

In fact, many local official view corporate incentives as a social welfare component.

‘“From a county perspective, when kids come from home not having been fed, having been beaten, when the health department has people coming out the wazoo, when the sheriff gets a lot more calls because people are out of work, when social services is strained ‘— there is a reduction in the cost of the county doing business if people are at work,’” said Rob Bencini, director of the Guilford County Community and Economic Development Office. ‘“If a company is going to bring a hundred and fifty jobs here, that takes pressure off the county.

‘“That’s why we insist on an average wage or more ‘— thirty thousand dollars a year,’” he added. ‘“We don’t need ’em getting seven dollars an hour and they’re still on our rolls.’”

While officials like Bencini favor granting incentives based on strong wage-level criteria, others express a growing distaste for the entire practice.

‘“Let me tell you what I think of economic incentives,’” Ramseur Mayor Hampton Spivey said. ‘“Because other people do it, we have to do it. Economic incentives ought to be banned nationally. Then wouldn’t it be open to the best neighborhood, the best municipality?’”

Carruth, the county commissioner from Cabarrus County, considers that idea well intended but potentially disastrous.

‘“People ask: ‘Why not have a federal law that prohibits incentives,”” he said. ‘“Well, you have a plant relocate to Indonesia. There’s no property taxes for 10 years. ‘If you ever have a problem with an employee, call this number and they will not be back.’

‘“I wish we never had to give out an incentive,’” he added. ‘“More important is our infrastructure. Here’s our high-speed internet connection. We’ve got I-85 going right through our county. We’ve got to do a good job selling a business on Cabarrus County.’”

In Greensboro, public opinion turned decisively in June against corporate incentives to companies that create low-wage jobs with meager benefits.

A month earlier, city council members met with local developer Don Linder and voted 7-2 in closed session to approve a $300,000 grant to allow him to buy out easements from neighboring property owners near the site of a proposed Wal-Mart. When telephone calls and e-mails expressing opposition to the grant flooded city council members’ answering machines and inboxes, Mayor Keith Holliday asked Linder to withdraw his request for assistance. As it turned out, the developer sold the property to Wal-Mart anyway and a demolition crew was hired in short order to prepare the site for new construction.

For many local officials, the assumption that without economic incentives, companies would go elsewhere ‘— which is, after all, the rationale for the practice ‘— remains the operative bottom line. But how can anybody but the company executives and their representative know for sure that the company would have gone somewhere else without the inducement of local taxpayers’ money?

‘“You’re operating in a vacuum because nobody discloses what they’re offering until they make the commitment,’” said Shoffner, the Greensboro economic development program manager. ‘“Nobody wants to show their hand. Rarely will they tell you what the other city is offering. They’ll try to create the spark in your mind that the other city is offering more.

‘“Sometimes we’ll do public records requests or search for news articles to see what other cities are doing,’” he added, ‘“but usually by the time the deal is done, we’re on to the next one.’”

This story was produced for the Institute for Southern Studies/Southern Exposure. The Institute can be reached at PO Box 531, Durham, NC 27702 or southernstudies.org.

Financial support for this project was provided by the Z. Smith Reynolds Foundation in Winston-Salem.

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