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Incentives Grant Frustrates Competitor

RALEIGH — The owners of Pate Dawson Company, a Goldsboro food distributor that has been doing business in North Carolina for 120 years, is wondering how the state can justify giving the company’s main competitor, Texas-based Sysco Inc., $10 million to build a distribution center in Johnston County. “I’ve been hearing rumors for a long time that Sysco has been thinking of building a new distribution center either in the eastern part of the state or Virginia, but only last August did I learn they may be trying to get money from the state,” said Pate Dawson’s president. He questions claims of net job creation from the incentives.

News

When Good News Is Bad News

CHARLOTTE — When is good news the cause of bad news for local government and civic leaders? When it comes to the state’s yearly William S. Lee Act tier designations, in which a stronger local economy can reduce incentives for business investing in and state aid to a county. Under the act, businesses can quality for tax credits by creating jobs, engaging in research and development, purchasing new machinery and equipment, or making certain other types of investments. For Lee Act purposes, the state places counties into one of five categories, labeled tier 1 (worst) to tier 5 (best), based upon how well they are doing economically.

Michael Lowrey

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New Lowe’s Facility Gets Tax Funds

RALEIGH — Gov. Mike Easley last week gave Lowe's Companies a $100,000 grant because the home-improvement retail company decided to locate a data processing facility in Winston-Salem. Lowe's reported $30.8 billion in sales in fiscal 2003. It will invest $71 million in the data center. The One N.C. grant represents 0.14 percent of Lowe's investment, raising questions about whether the company seriously considered placing the project anywhere else. Lowe's has data centers in Wilkes County and Mooresville, where its headquarters resides. The company said the new data center is expected to employ 20 to 25 people.

Paul Chesser
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Top Lawyers to Discuss Incentives

RALEIGH — The newly formed NC Institute for Constitutional Law will sponsor a program Dec. 9 in Raleigh that analyzes recent court decisions on economic development. The program will feature Northeastern University law professor Peter Enrich, who was the lead plaintiff’s lawyer in Cuno v DaimlerChrysler, in which a three-judge federal appeals panel ruled that an investment tax credit that Ohio granted the automaker, in exchange for agreeing to build a plant in Toledo, violated the U.S. Constitution’s interstate commerce clause. Other panelists include Bert Gall of the Institute for Justice, Bill Maready, and Ernie Pearson of Sanford Holshouser.

Richard Wagner
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Dell Deal Oversold in Tennessee

RALEIGH — A special legislative session convenes today to vote on incentives to entice Dell Computer to build a plant in the Triad. But a similar incentives deal struck five years ago in Tennessee was sold to the public by exaggerating the benefits and underestimating the costs of incentives for a Dell plant. The difference between the initial, pro-incentives study and a later review was that the first one didn’t include indirect costs such as educating the children of Dell employees who are newcomers and providing those families with city services.” Because of tax rebates, these costs were covered not by Dell but by other companies and taxpayers in the area.

Paul Chesser
News

Federal Court Throws Out Incentives

RALEIGH — A federal appeals court ruled Thursday that economic development incentives given by the State of Ohio to automobile manufacturer DaimlerChrysler violated the interstate Commerce Clause of the US Constitution. A three-judge panel of the U.S. Sixth District Court of Appeals determined that Ohio’s investment tax credit “is to encourage further investment in-state at the expense of development in other states, and the result is to hinder free trade among the states.” Robert Orr, a former state Supreme Court justice who leads the new North Carolina Institute for Constitutional Law, called the decision “very important” and “ a step in the right direction.”

Paul Chesser