North Carolina gubernatorial candidate Pat McCrory (R) and some legislative Republicans in Raleigh are talking up the idea of reforming the state’s economic development practices. The landing of an Apple data center for the western town of Maiden is a great case study for highlighting the problem with the state’s current modus operandi:
In its pitch for approval and tax breaks, Apple said it may employ 50 people at the center and expects to generate 250 more jobs in areas such as maintenance and security, according to a state website and records compiled by the city and surrounding Catawba County. North Carolina projected the creation of an additional 3,000 jobs related to construction of the center.
Maiden and Catawba County may receive $9.3 million in taxes and other revenue over 10 years, according to the documents. That includes $5.1 million for Maiden, which has an annual budget of $13.1 million, and $4.2 million for Catawba, which has an annual $202.2 million budget.
Locals aim for added payoff from “Project Dolphin,” as officials have dubbed the center: that Apple will lure other companies. Google Inc., owner of the world’s largest search engine, already has a facility in a neighboring county.
Microsoft, Google Centers
“Names like Google and Apple indicate you’re in the 21st century and open for business, so we hope to propel this to something greater,” said Kitty Barnes, chairman of the Catawba County Board of Commissioners.
U.S. technology companies increasingly are setting up shop in small-town America. Microsoft Corp., Facebook Inc. and Twitter Inc. all are placing data centers in sparsely populated regions, drawn by tax incentives, inexpensive labor, cheap electricity and abundant space.
Microsoft, based in Redmond, Washington, weighs more than 35 different issues when selecting a site, said Kevin Timmons, general manager of the company’s data center operations. The company plans to build a $500 million data facility in Virginia, Governor Bob McDonnell’s office said in August.
“Topping the list were factors such as its close proximity to our customers, fiber-optic networks, a large pool of skilled labor and an affordable energy source,” Timmons said.
Apple Tax Breaks
Data centers have helped bring 3,100 jobs and more than $3.6 billion in capital investments to Virginia since 2006, said Rob McClintock, director of research at the Virginia Economic Development Partnership.
“Everybody understands these projects by themselves aren’t a panacea, but it’s the window of what the future can be,” McClintock said.
To land its Apple facility, North Carolina’s legislature approved $46 million in tax breaks for the company. Local governments also trimmed Apple’s real property taxes by half and slashed personal property taxes by 85 percent, records show.
Some local officials say companies, not communities, benefit most as big providers locate operations in rural areas.
“I have a problem with government giving large multinational corporations millions of dollars in handouts,” said T.J. Rohr, a city councilman in Lenoir, North Carolina, site of a $600 million Google data center lured by incentives.
While Google has been a “good corporate neighbor,” funding Wi-Fi downtown and donating computers to local schools, tax breaks are “a lazy way to recruit business,” said Rohr, who is a member of the Libertarian party.
OK . Let’s tally this up: Boss Bev and the legislature gave Apple $46 million in tax breaks in return for the possible creation of 50 jobs. Local government slashed Apple’s real property taxes by HALF and their personal property taxes by 85 PERCENT. So, the state gets to brag about having almighty APPLE as a member of its business community, but the deal leaves us starting off in the hole. Guess who gets to shoulder the burden of that fiscal shortfall? Those of us who have been here all along — committed to the prosperity of The Tarheel State.
If we can afford to offer tax breaks that huge, why do it for large corporations who will leave us at a drop of a hat when a better incentive package gets dangled in front of them? Why not do it for businesses and residents who have been here and have been committed to North Carolina?
Bloomberg documented the story of one North Carolina couple who made out BIG in the Apple recruitment:
Apple Inc. needed land owned by Donnie and Kathy Fulbright for a $1 billion data center in rural North Carolina. The couple showed no interest in moving out of their home of 34 years in the town of Maiden.
The Fulbrights say they spurned one offer, then a second. Finally, they agreed to sell for $1.7 million, county records show, opting to leave the single-story house on the less than one acre of land they purchased for $6,000.
“They told us to put a price on it and we did,” said Kathy Fulbright, 62, seated on a brown leather sofa in the living room of the home she and her husband built with the proceeds. The 49-acre property boasts a 4,200-square-foot house with a Jacuzzi in the master bathroom, as well as a manmade pond stocked with bass and catfish.
Way to go, Fulbrights!