The Clinton, N.C. (the "City") City Council (the "Council"), has determined that the general welfare of the residents of the City is directly benefitted by fiduciarily sound economic development policies which promote the growth and diversity of the tax base and result in the creation of more high quality, well paying jobs. Pursuant to its ruling in Maready v. The City of Winston Salem, et. al, the North Carolina Supreme Court has made clear that the expenditure of public funds to promote economic development is deemed to be for these legitimate public purposes.
The current competitive environment among states which regularly compete with North Carolina and localities which regularly compete with the City in economic development projects, dictates that the City must adopt an Economic Development Incentive Policy ("EDIP"), which is conservative and fiduciarily sound, in order to remain competitive in recruiting new business and industry, and retaining expansions of existing businesses and industries currently located in the City.
The City has a degree of economic distress, which calls for economic development policies to address these persistent shortcomings. Due to the lack of quality jobs in the City, there is at present an out migration of workers. Additionally, for workers in jobs in the City, wage levels overall lag behind the State averages.
For these reasons, the Council hereby establishes EDIP guidelines to encourage new businesses/industries to locate and existing businesses/industries to expand within the City. These guidelines are guidelines only. Each new or expansion economic development project will be considered on a case-by-case basis. The Council takes this action in adopting these guidelines pursuant to authority granted by N. C. Gen. Stat. §158-7.1, as interpreted by the North Carolina Supreme Court in Maready.
ARTICLE II
POLICY PRINCIPLES
These EDIP guidelines are based upon, and any EDIP arrangement with a new or existing company must be in compliance with, fiduciarily sound public policy principles, which at a minimum include:
Any EDIP incentive grant must provide the City a high return on investment, taking into account property tax revenues of the economic development project over a ten-year period from the date of the start-up of the project. NC Gen. Stat. §158-7.1(d2).
Any EDIP incentive grant must be preceded by an agreement with the company involved, binding it to minimum levels of capital investment and quality job creation, and providing for penalties and/or reductions in amounts of forward funded incentive grants in the event that if the company fails to meet these minimum required levels. NC Gen. Stat. §158-7.1(d2)(2).
Investments of City funds by way of EDIP incentive grants shall be in items, which leave value in the City in the event of a curtailment or closure of the operations within the facility, such as site acquisition, site preparation, internal infrastructure, job training, etc.
The bedrock of the City's economy is agribusiness, businesses and industries already located in the City. Consequently, the terms and application of the EDIP policy are to result in existing businesses/industries receiving consideration for incentive grants that are on terms equal to or better than those available to a company considering locating its first facility in the City. Specifically, EDIP incentive grants may be provided when in the opinion of the Board it is necessary to retain jobs currently existing in the City.
Provision of any EDIP incentive grant for a new industry must be a competitive necessity, in order to successfully locate a new business/ industrial facility. This provision will not apply when such incentive grants provided for an expansion of an existing facility in the City.
ARTICLE III
EDIP PROGRAM PARAMETERS
Each project will be considered on a project-by-project basis, using these guidelines established by the Council. These guidelines shall be subject to periodic review and may be modified, amended or terminated, due to changed economic conditions or competitive considerations. In the event of any modification, amendment or termination, EDIP incentive grants to which the City previously committed will not be affected.
In determining whether to make EDIP incentive grants to a project, and if so, the amount of such grants the Council will consider, among other relevant factors, the following matters:
The total capital investment in the project including site acquisition, site improvement, building cost and equipment.
The number, type and quality of jobs created or retained.
Wage levels for jobs created or retained by the project.
Other site-specific issues through which the recruitment of a particular industry would have some particular ancillary benefit for the City, such as opening up areas for further development.
Other factors deemed relevant by the Council in its discretion.
ARTICLE IV
MINIMUM PROJECT QUALIFICATIONS
In order to qualify for consideration for an EDIP incentive grant from the City, the project must meet certain minimum threshold requirements. Meeting these threshold requirements does not indicate that the project will necessarily receive an EDIP incentive grant and if so, the amount of such grant(s) inasmuch as the Council reserves sole discretion in this regard on a project-by-project basis.
The minimum project qualifications are as follows:
The minimum levels of capital investment are $1,000,000 for a project on behalf of a company, which is a new project in the City, and $500,000 for a project, which is an expansion of an existing facility in the City.
At least 15 new jobs for a new corporate facility or 10 new jobs for the expansion of an existing corporate facility must be created in the City over a period of 3 years.
The wage levels of the jobs created must represent a competitive improvement for citizens of the City, as determined by the Council.
The project must involve a facility to be used for manufacturing, customer service center, data processing center, central administrative offices, value added agricultural processing, distribution, corporate or divisional headquarters, or research and development.
For a project to be considered by the Council for an EDIP incentive grant, it must meet the above minimum project qualifications. Additional qualifications may be required by the Council in its discretion on a project-by-project basis.
ARTICLE V
EXCLUSIONARY FACTORS
Even though a project might meet all of the above minimum project qualifications, it will not be considered by the Council for EDIP incentive grants if any of the following factors apply:
The expansion project would, for any reason, result in a net reduction of the property tax valuation of all facilities in the City owned by the company, or its parent, subsidiary or affiliated companies.
An EDIP incentive grant will not be made or installments continued if that company, or a parent, subsidiary or affiliated company, is not current in all property tax payments to the City.
No prior commitment to an EDIP incentive grant shall be binding if the company originally receiving the grants assigns it to another company, unless the Council has consented to such assignment in writing.
The financial condition of the company receiving the incentive grants must not be such that the ability of the company to meet its obligations is in doubt.
ARTICLE VI
USE OF GRANT FUNDS
EDIP incentive grants under these guidelines may be made at the time of the announcement that the project is locating in the City, or in installments to be paid in the future, with the timing of such payments in the sole discretion of the Council. Such incentive grants may be used for one or more of the following purposes, depending upon the terms approved by the Council:
Site acquisition.
Site preparation.
Internal site infrastructure.
Other improvements to the site.
Job training costs not otherwise reimbursed by investments from the Community College system or tax credits pursuant to the state statute.
Other purposes, which leave value in the community as determined by the Council on a project-by-project basis.
ARTICLE VII
PROCEDURE FOR CONSIDERATION
The following procedure will be utilized in considering a project for EDIP incentive grants:
The company will negotiate the terms of such grants with the Executive Director of the Sampson County Economic Development Commission, the City Manager, and any other official designated by the City Manager. Such discussions are negotiations only, inasmuch as the Council has the sole discretion and authority to finally agree to such investments.
The company will submit financial records, under procedures to protect confidentiality, to a designee of the City for a review of the financial ability of the company to meet the performance requirements specified.
At a time agreeable to the company, given its confidentiality concerns, a public notice and public hearing regarding the proposed investment will be given/held in accordance with the requirements of N.C.Gen.Stat. §158-7.1.
The Council will make a decision as to whether to approve the terms of the incentive grant agreement.
An EDIP incentive grant agreement will be executed which contractually binds the City to make the investments and the company to meet the capital investment, job creation and wage level requirements, to which they mutually agreed.
The company will provide annual verification of its compliance with the requirements to which it has agreed such verification process to be as mutually agreed to between the City and the Company.
ARTICLE VIII
CONCLUSION
All EDIP incentive grants will be considered an a project-by-project basis, and by adopting these guidelines, the Council is not obligated to make any grants. In considering whether to provide EDIP incentive grants for a project and if so how much, the Council will take into account grants made by other local, regional, or economic development entities. These guidelines are not retroactive to any project that has been announced prior to the adoption of these guidelines, except for projects that have been announced and have reached an agreement in principal with the Council, or the Executive Director of the Sampson County Economic Development Commission and the City Manager as to EDIP incentive grants for that particular project.
These guidelines are effective as of February 2004.
Adopted by Clinton City Council on February 3, 2004.
Town Clerk, City of Clinton
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April 14, 2010
