If you want to know why North Carolina lawmakers are scrambling to beef up the state’s business incentives programs, drive a few miles south down Interstate 77.
From the state line to Rock Hill, Charlotte’s neighbors to the south are experiencing a boom, fueled in large part by projects South Carolina either lured from Charlotte or beat out North Carolina to win. The common thread: big incentives packages that North Carolina couldn’t match.
The point was driven home Thursday, when South Carolina Gov. Nikki Haley and other economic development officials broke ground on LPL Financial’s new headquarters in Fort Mill. The company is moving about 1,000 workers from Charlotte to the 450,000-square-foot new campus in Kingsley Park and plans to eventually employ 3,000 workers there.
“Our vision for the future development of Fort Mill is not simply to be a bedroom community for Charlotte,” said Fort Mill Mayor Danny Funderburk. He said the upstate will compete for jobs from Charlotte just as if they were jobs from anywhere else.
“Whether these jobs were in Mobile, Ala., or Omaha, Neb., you’re still going after jobs; you’re still going after economic development,” Funderburk said.
In a 2007 profile, the New York Times called Fort Mill “A Sleepy Mill Town Coming To Life.” Now, the effects of the surging upstate counties are visible along the spine of I-77:
▪ In addition to LPL’s relocation, health care consulting company Lash Group is moving from Charlotte to the same development, where it plans a 250,000-square-foot headquarters that will employ up to 2,400. North Carolina tried and failed to convince both companies to stay, outgunned by bigger incentives offers. South Carolina offered the companies $2 million each, plus unspecified future tax credits.
North Carolina Commerce Department documents obtained by the Observer found Lash Group estimated South Carolina’s incentives would be worth $45 million, compared with just $11 million from North Carolina.
▪ A little farther south on I-77, Giti Tire is building a $560 million plant in Chester County that will employ 1,700 workers. The South Carolina incentives package included $36.2 million for land acquisition, $2 million for sewer and water infrastructure, unspecified payroll tax rebates, and a “fee in lieu of property taxes” agreement with the county. North Carolina put together an “aggressive” package of incentives totaling $57.4 million, but the company concluded it would pay far more in corporate taxes if it located in North Carolina.
And the influx of new jobs and workers is fueling more growth.
▪ Kingsley Village, a 626-acre mixed-use project, is being built next to the LPL and Lash Group headquarters at S.C. 160 and Interstate 77. Plans are for the development to eventually bring more than 1,000 residences and up to 1.5 million square feet of commercial space, including hotels, restaurants and shops.
▪ Riverwalk, a 1,000-acre development off I-77 in Rock Hill just south of the Catawba River, is building hundreds of thousands of square feet of industrial, office and retail space, with more than 1,400 houses and apartments.
▪ Charlotte-based Crescent Communities is building Masons Bend, its first residential community since the recession, at I-77 and Sutton Road. The 550-acre development will include houses, apartments and retail.
At the LPL groundbreaking, Haley played down talk of rivalry between the states.
“The Carolinas are blended,” she said. “We are sister states, and growing together.”
To be sure, North Carolina and Charlotte have had their share of recent successes. The city’s population is growing, apartment construction is at an all-time high, and new office towers are under construction uptown and in SouthPark. Last year, Charlotte lured Sealed Air Corp., maker of Bubble Wrap, to Charlotte, along with almost 1,300 jobs. Sealed Air, a Fortune 500 company, is set to receive about $43 million worth of incentives.
But North Carolina legislators appear to be heeding Gov. Pat McCrory’s call for bigger incentives. The N.C. House will begin discussing a bill next week to replenish and expand the state’s depleted incentives funds.
“We’re the only state in the Southeast that doesn’t really have a (jobs incentive) program right now,” Commerce Secretary John Skvarla told state senators Tuesday.
The proposal includes doubling the state’s Job Development Investment Grants program to $45 million, $20 million for an infrastructure grant program that helps companies build new industrial sites and a narrow tax break for large manufacturers locating in poor areas. And the state’s tobacco settlement-funded Golden LEAF Foundation has earmarked $50 million to lure an auto plant.
Haley said Thursday that she’s not worried such efforts hurting South Carolina, which she said will lure companies with its overall business climate.
“That’s not any sort of challenge for us,” she said. “What we do is offer a good, strong business environment.”
Looking at South Carolina, local leaders in Charlotte have mostly taken a “rising tide lifts all boats” approach. There’s been a strong strain of regionalism in some local planning initiatives, such as the March 18 Global Competitiveness Summit, which is expected to draw leaders from both sides of the border to talk about the region.
“There’s going to be some movements within the region,” said Charlotte Mayor Pro Tem Michael Barnes, who chairs the council’s economic development committee. He said it’s important for the state and city to focus on building strong school systems and infrastructure to lure companies, not just to focus on incentives.
Opponents of incentives say they amount to corporate welfare and that government has no business picking and choosing companies to help.
Still, Barnes said incentives, while not always popular, play an important role.
“It’s a fact of life,” Barnes said. “I don’t think anybody really likes the incentives game, but we recognize we have to play it.”
Ely writes about growth and development at charlotteobserver.com/business. Follow him on Twitter at @ESPortillo. Send him news tips and feedback at email@example.com or 704-358-5041.