News: CJ Exclusives

No Incentives from Competing States

Questions remain about Harris Microwave’s $4 million incentives grant from NC

When Harris Microwave Communications Division President Guy Campbell announced Thursday that his company will relocate its headquarters from Northern California to Durham, he said North Carolina’s offer of incentives won out over Florida and Texas in a “competitive” process.

But while North Carolina offered a package of up to $4 million in withholding-tax rebates to Harris, it turns out that Florida and Texas decided to forfeit instead of play the incentives game.

“We have no record of any inquiry (about incentives) from a company with that name,” said Kathy Walt, a spokeswoman for Texas Gov. Rick Perry, who handles all inquiries about state economic development programs.

“After going through our tracking system, it appears this isn’t even a project [we] worked,” said Kim Prunty, communications director for Enterprise Florida, the state’s economic development agency. “We handle all applications for state incentives, so there must have not been a package put together.”

Harris Microwave is the latest beneficiary of tax breaks given through North Carolina’s Job Development Investment Program. The state Economic Investment Committee awarded the grant June 3. Long before then, however, the company had identified its location in Durham as its corporate headquarters. Under the statute that created the program, incentives may be granted only to businesses that otherwise would not relocate to the state.

Shortly after Gov. Mike Easley’s announcement about the JDIG award, a switchboard operator at Harris’s parent company headquarters in Melbourne, Fla., told Carolina Journal that the Microwave Communication Division headquarters was located in Durham (with a Morrisville mailing address). She said the record of that headquarters location had existed “for quite a while.”

In addition, the Microwave Communications Division’s website listed its headquarters as “North Carolina, USA.”

Campbell told CJ on Thursday that if the $4 million incentives package had not been offered by the state, Harris Microwave would not have moved its headquarters to North Carolina. He said he could not recall what the incentive offers from Florida and Texas were.

Campbell said earlier in the day that “it was competitive. We were looking in North Carolina, Texas, and Florida, and North Carolina did win. Our decision to come to North Carolina was based to a great extent on this grant,” according to Triangle Business Journal.

Both Campbell and Easley said the move would add 80 jobs in Durham this year, and 258 jobs over the next five years. The company would be entitled to 69 percent of the personal state withholding taxes derived from the creation of new jobs.

Campbell said he has maintained a home in Cary for some time, although he wasn’t specific about how long it has served as his sole residence, other than to say it was “less than a year.” Asked whether his residence led to his decision to locate the headquarters in Durham, Campbell said, “Not at all. I would have gone to Florida or Texas. San Antonio is a nice place.” The Microwave Division maintains a facility in San Antonio.

But an official in San Antonio’s Economic Development department had no idea that Harris Microwave was relocating its headquarters.

“We didn’t know about it,” said Trey Jacobson, the city agency’s assistant director. “We never offered them an incentive proposal.”

Jacobson said that in the mid-1990s Harris Microwave was granted incentives for an investment in its manufacturing facility. However, the company “ended up not creating a lot of jobs,” according to Jacobson, so Harris and the city mutually terminated their agreement.

Rep. John Rhodes, a Mecklenburg County Republican who serves on the Commerce Committee, wondered where the competition was.

“It appears that Florida and Texas didn’t offer anything,” he said. “It appears that we are competing against ourselves as a state. It’s like a one-person poker game where we’re raising the ante against ourselves, which is not a responsible policy.”

Neither Campbell, nor any other press relations officials of Harris Corp., responded to telephone and e-mail messages seeking comment for this article. Communications officials Linda Weiner and Reid Hartzoge in the state Department of Commerce also did not return phone and e-mail messages inquiring about the JDIG award to Harris Microwave.

In October 2002 Easley announced that Harris Microwave would establish a research and development center at the Durham location, in the Keystone Business Park. He said at the time that 100 new jobs would be created in addition to between 35 and 40 employees that would relocate from California. Currently 59 employees work at the facility, according to a report on Thursday’s Business Journal website.

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected]