Site Selection Factors Series: #9 State and Local Incentives
April 24, 2017
PCED Staff Note: This week’s post is part of a series on evaluating site selection factors from a local perspective titled, “Site Selection Factors”. The aim of the series is to outline the criteria used by companies to determine where they will build new facilities or expand existing ones. We will examine the top 10 factors as adapted from Area Development Magazine’s, “The Top Factor’s to Navigate the Location Maze”¹. Those factors, listed in order of priority, are as follows: Availability of Skilled Labor, Highway Accessibility, Quality of Life, Occupancy or Construction Costs, Available Buildings, Labor Costs, Corporate Tax Rate, Proximity to Major Markets, State and Local Incentives, Energy Availability and Costs. Guest bloggers will contribute each week from their area of expertise. Some topics may span multiple weeks.
State and Local Incentives-Utilizing our Toolbox
The ninth factor on the top 10 list of site location factors identified by site consultants in the Area Development’s 2016 survey is State and Local Incentives. Local municipal governments utilize incentives to attract new industry and to support our local existing industries.
Local municipal governments’ incentive packages are not one size fits all; it is more accurate to refer to our opportunities as an incentives toolbox. For the purpose of this blog I plan to highlight three major tools from our Economic Development kit: Financial, Infrastructure, and Ease of Development.
Financial
Our Financial Tools can include tax refunds, grants, (utility) rate discounts, land purchasing, and providing adequate infrastructure.
In the City of Roxboro some of our financial tools are designed to target our existing business and industries. For example, we maintain a revolving loan fund for local business and industries. Additionally, we financially support the Roxboro Development Group, who provides local façade grants to support our local business.
In 2004, voters in North Carolina authorized Tax Increment Financing or project development financing. UNC School of Government explains project development financing as “a debt financing mechanism that allows local governments to borrow money to fund certain public improvements with the purpose of attracting private investment in a designated area. The debt incurred by funding the public improvements is both secured by and repaid from the additional property tax revenue resulting from the area’s new private development.”[1]
Infrastructure
Adequate available infrastructure is also reflected in Area Development’s tenth factor or “Energy Availability and Costs.” Relevant infrastructure often developed by a local municipality can include adequate roads, water, and sewer services. Water and sewer are both resources that require an adequate supply. In North Carolina all public water systems are required to annually submit a water supply plan (available here). Site consultants can be certain of available resources when considering North Carolina water systems.
Ease of Development
Area Development’s article references “expedited permitting” as a valuable incentive to site developers. Streamlining permitting processes, having knowledgeable and helpful staff can yield valuable results in attracting additional investment. Many jurisdictions go a step further by developing sites. The North Carolina Department of Commerce maintains a Certified Site Program.[2] These sites are prescreened to ensure they are “shovel ready for immediate development.”
[1] https://www.sog.unc.edu/resources/faq-collections/tax-increment-financing-frequently-asked-questions
[2] https://www.nccommerce.com/business/certified-sites
¹ “The Top Factors to Navigate the Location Maze.” Area Development, Volume 51, Number 4, Q42016, pp. 24-36.
This post was submitted by Mr. Brooks Lockhart, City Manager for the City of Roxboro. Mr. Lockhart served as Town Manager of Biscoe, NC for eight years before being named as Roxboro's City Manager in November 2015.
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