Raleigh weighs pros and cons of development incentives

ccampbell@newsobserver.comApril 7, 2014 


Workers move pieces into place as they build the Citrix building in downtown Raleigh in August 2013. Citrix’s 2-story divisional headquarters is designed to help the company recruit the nearly 340 workers it expects to add in Raleigh over the next five years. Economic development incentives helped lure the company.

CHRIS SEWARD — cseward@newsobserver.com Buy Photo

— City leaders are in the early stages of crafting an economic development incentives policy to govern how new businesses can seek tax breaks.

The Raleigh City Council got a presentation on the possible options last week from the city’s economic development director, James Sauls. “Currently there are other communities here around Raleigh and Triangle that have adopted those policies,” he said. “They tend to create a business-friendly environment. They are definitely critical in closing deals at the final stages.”

For now, Raleigh has no formal policy, but it has offered tax breaks to major new employers like Citrix and Red Hat with approval from the city council.

Some council members worry that an incentives policy could prompt more businesses to seek tax breaks. “To put a policy, that means everybody’s going to apply,” Councilman John Odom said. “I’m very nervous about incentives. We seem to be doing it because everybody else is doing it.”

Sauls said the majority of companies considering Raleigh are already asking about incentives. Of 16 companies currently looking at the city, he said, 13 wanted to see the incentive policy.

Sauls suggested developing a scoring system for potential development that reflects “local priorities,” perhaps targeting industries that Raleigh wants to focus on: technology, life science and consumer goods, among others.

Incentives would be paired with those offered by Wake County, and they’d likely target companies creating jobs above the county’s median salary, which is about $51,000. The amount of the incentive is typically determined by the level of taxable investment – with the goal of “never giving more than we receive,” Sauls said.

City Manager Ruffin Hall set setting a formal policy will give city staff the framework they need to work with companies. Right now, “we don’t know where the boundaries are to start a conversation,” he said. “Without a starting point, we spend a lot of time talking about a lot of what-ifs.”

The city council will begin crafting a policy in its budget and economic development committee, which consists of Mayor Nancy McFarlane and three council members. But Councilwoman Mary-Ann Baldwin said the full council should be involved in discussing such an important topic.

“I’m not sure that not having all our voices heard is a good idea,” Baldwin said.

McFarlane said she encourages other council members to join the committee meeting, but Baldwin said she has a schedule conflict. “I’ll find a way to make my voice heard,” she said. “How about that?”

Campbell: 919-829-4802; Twitter: @RaleighReporter

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