The Beaufort County Economic Development Commission's ignorance of the strong cyclical nature of our economy has set taxpayers on an inadequately researched and ill-timed industrial park strategy.
Beaufort County, NC Unemployment Rate
The Economic Development Commission's activities can be sorted into two separate periods, the period between 2001 and 2005 and the period between 2005 and the present. By examining both periods taxpayers can form an opinion as to whether the EDC has efficiently managed their resources, i.e., have jobs been created or attracted to Beaufort County with as little expense to taxpayers as possible.
Initially, employers seem to have been aided by grants that were in lieu of property taxes. If an outside company would bring new jobs into the county then its property taxes would be rebated as a form of grant. The EDC reports that when Camfill Farr relocated to Beaufort County in 2002 they leased, and later purchased, a building that had come under the Committee of 100's ownership and were assisted with relocation and banking arrangements. Until PAS took over the old Lowe's Building around 2003, EDC records show that the Skills Center, a Committee of 100 facility coordinated with the Beaufort Community College, was the principal receiver of funding. By 2004 and 2005 Hackney and Coeur appear in the EDC lists as recipients of incentive grants that were tied to the creation new jobs. The grants vary and the records are awkward, but the cost per job created seems to be not more than several thousand dollars.
Grants and projects undertaken by the Economic Development Commission began to accelerate in scope and cost during 2005. Brooks Boat Works received some small grants and $557,618 grant for water/sewer line at the industrial park requiring the creation of 30 new jobs. In 2006 Quick Start I was both built and sold for $1.35 million. Additional water/sewer work accompanied a Flanders grant.
It was in 2007 that the price of jobs created and projects undertaken began to spiral upward. The Chocowinity property was purchased and improved for $2.3 million. Then the proceeds from the sale of Quick Start I went into Quick Start II, which was augmented with nearly $1 million in cash and loans from Beaufort County. The industrial park strategy has created 34 jobs in six years and cost $6.5 million. If the cost of the EDC's salaries is included then the price balloons to nearly $8.5 million or $250,000 invested per job. In 2007 Carver Machine Works received a $1 million Golden Leaf grant for plant and equipment and another $1.6 million was awarded in sewer/water grants for River Road. This was attached to the creation of 50 jobs and included $850,000 in city/county performance guarantees. Less than 15 jobs had been created when the economy stalled. The cost per job on the Golden Leaf grant alone is $70,000.
When the local economy begins to overheat, as it did in 2006 and 2007, the county's unemployment rate contracts into the 5% range. After a period of time, this level of economic activity will falter and the economy will enter a recession. Opportunities will dry up, projects will become overly risky, businesses will begin to fail and local unemployment will rise to near 12% before the cycle again repeats itself. This is a fact of life in Beaufort County.
However, by 2006 the low cost incentives, which were used in 2002 and 2003 at the depth of the recession, were replaced by the high priced projects of an EDC inattentive to the strong cyclic nature of our local economy, and determined to proceed on an inadequately researched and ill-timed industrial park strategy.
Now Beaufort County is caught in the middle of a glut of spec buildings scattered across the surrounding counties. With millions of dollars tied up in idle assets, we are cash poor during a recession. This is exactly the time when free cash and a clear balance sheet could be put to its best use in helping a community to weather the storm. But our reserves are depleted by the EDC's inattention to risk and its failure to consider an exit strategy. To make matters worse there has not been a single EDC grant origination from mid 2007 through late 2011. When we need help the most the Economic Development Commission is useless. Worse than useless, they have recently tied us to matching grants that actually fund workforce reductions.
If economic development has a place at all, it is best used in recessions and in a diversified approach. Let it include, not just large firms, but the Waterfront, Main Street and the neighborhoods as well.
Whatever the plan it needs to be properly accounted for, free of favoritism and open to public view. The current Economic Development Commission is none of these.
Regards,
Warren Smith
