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With Apple on hook, legislative leaders roll out incentive reforms

May 17th, 2018

— Top legislative leaders on Thursday rolled out proposed changes to an economic development incentives program meant to lure big fish to the state.

The state’s “transformative projects” incentives, created in 2017, are a richer tier of incentives originally intended to help attract a major automaker. To qualify, a project is currently required to bring at least $4 billion in capital investment and 5,000 jobs.

The changes unveiled Thursday reduce those thresholds to $1 billion in capital investment and 3,000 jobs. Jobs filled by immigrants holding H-1B visas wouldn’t count toward that threshold under the proposal.

Sources have said the floor in Apple’s plans to open a research and development facility in North Carolina, as well as other expansion plans here, is 3,000 jobs, but up to 10,000 jobs are expected over time. They put the investment between $1.5 billion and $2 billion.

Sources have told WRAL News that negotiations with the tech giant led to the tweaks and that the company is likely to build a major research and development hub in Research Triangle Park. But Senate President Pro Tem Phil Berger and House Speaker Tim Moore denied that the changes are aimed at any specific target.

“These changes that will be in the budget to our job recruitment and economic development programs are not for any specific company,” Berger told reporters. “These thresholds are based on research conducted by the General Assembly’s economic team regarding the level at which a major corporate relocation will have an immediate positive impact on state revenues.”

Berger and Moore did say the changes are “expected to help secure a major jobs announcement in North Carolina in the coming months” and that the changes are based on feedback from previous recruitment efforts as well as “recent conversations between lawmakers and prospective companies across many sectors of the economy looking to move to North Carolina.”

Asked about Apple, Berger declined to comment but chided reporters for “speculative stories.”

“I would point out that, if anonymous sources were accurate, North Carolina today would have four automobile manufacturing facilities,” he noted dryly. “I would suggest that there were stray cats that got out of bags before.”

Among other things, the proposal includes the elimination of a per-job incentives cap meant to attract higher-paying jobs. The average salary for the jobs Apple is expected to announce has been pegged at around $130,000 a year.

The proposed changes were described to Republican lawmakers Wednesday afternoon in a joint House-Senate caucus held behind closed doors. The full legislature will have to approve the changes for them to take effect, and they will go before Gov. Roy Cooper as well.

Berger and Moore said the proposal has been discussed with the executive branch and that there seems to be agreement. House Majority Leader John Bell said the pitch was well-received in caucus and should pass.

“I think so,” Bell said. “But I’ve got to go through and look a little more in-depth.”

There’s likely to be some pushback, though, from lawmakers and groups who are against incentives on principle. Americans For Prosperity criticized parts of the proposal Thursday morning, with state deputy director Anna Beavon Gravely noting that the program is continually used to sweeten offers to companies already interested in coming to urban parts of the state.

“We don’t need to entice people to come here,” she said. “People want to come here.”

For more nearly a decade, if not longer, the state’s wealthier, larger counties have far and away benefited the most from state economic development incentives, a WRAL News analysis showed last year.

The changes announced Thursday would flow money from new employers, though, to a fund specifically earmarked to boost job development in rural parts of the state through an account meant to fund infrastructure improvements, including broadband.

The legislation would also lengthen the maximum terms for the transformative projects program as well as the state’s Job Development Investment Grant program to as much as 40 years total.

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