Mecklenburg County Incentives
INCENTIVE PROGRAMS IN MECKLENBURG County and the State of North Carolina are designed to create a win-win partnership between the private and public sectors. The programs are intended to facilitate new investment and job creation that otherwise would most likely not happen without the incentives.
This incentives overview is meant to be a summary of the major programs available as well as a listing of some minor programs that may be available on a case-by-case basis for certain projects. Some of the programs are statutory while others are discretionary. It should be mentioned that all discretionary programs require approvals by elected officials in a public process. Charlotte Chamber staff will work with appropriate local and state officials to assist companies with applications for the various programs.
Local Investment Grants
The State of N.C. does not allow the abatement of property taxes as is the practice in some states, but it does give local government the discretion to offer a kind of rebate to new and expanding companies based on the capital investment and job creation of the project.
Each local government entity can set up a program that meets the needs of that community. Within Mecklenburg County, there are currently three municipalities that have chosen to develop an official policy regarding investment grants in addition to Mecklenburg County. Mecklenburg County’s policy is to partner with any municipality in the county that adopts a grant program. The City of Charlotte, Town of Davidson and Town of Huntersville all have investment grant policies.
City of Charlotte BIP grants
The City of Charlotte and Mecklenburg County have partnered to offer a three-year grant program at 90 percent per year for projects that meet the standard requirements of the program (20 new full-time jobs and $3 million minimum net new capital investment) or a five-year grant at 90 percent inside the Business Investment Program (BIP) zone or 50 percent if the project is located outside the BIP zone (150 new full-time jobs and $30 million investment). Projects must pay an average wage rate for all employees at the investment site equal to or greater than 100 percent of the average annual wage rate for the Charlotte-Gastonia-Rock Hill M.S.A. (currently $39,710). The average wage can be lowered by up to 20 percent for those companies that pledge to employ Work First participants and/or residents of the development zone itself in 25 percent or more of the new job positions.
Manufacturing companies creating less than 20 new jobs, but at least 10 may be considered for the program with a minimum investment of $6 million within the Investment Zone.
Required investment and employment standards will be set forth in a contractual agreement between the City, County and Grantee. These standards must be maintained throughout the term of the Grant in order for Grant payments to continue. Failure to maintain these levels during the Grant term will result in suspension of Grant payments until such time as the levels are once again met and maintained. Grant recipients that relocate outside of Charlotte during the term of the Grant — or within 3 years after receipt of the final Grant installment — will be required to repay a proportional amount of the Grant.
Companies from the following business growth clusters who are relocating or expanding to or within the program’s geography may be eligible for participation in the program.
- Finance, Insurance & Professional Services
- Corporate Headquarters
- Emerging Technologies & Industries
The program aligns itself with local Smart Growth, Transit, and Communities Within a City (CWAC) Strategic Plans. In making a recommendation for grant approval, the City will consider whether there is demonstrated competition from other cities and whether the company’s planned relocation or expansion is a realistic choice given the company’s product and market. Criteria will include a certification by company executives that the relocation or expansion is contingent upon receiving local incentives. Download the Business Investment Zone map here.
How does the Program work?
The Charlotte Chamber of Commerce, together with the City, works to identify candidate companies for the Program. If the candidate meets the criteria of a “Large Economic Impact Project” (see attachment II) then the City and County governments are involved in the process.
City staff evaluates the prospective project and develops the proposed Grant.
The Charlotte City Council and Mecklenburg County Board of County Commissioners consider approval of the proposed grant at a regularly scheduled business meeting. Typically the grant request is initially received in a closed session meeting where the merits of the project are discussed. It then would go to a public session where the official vote on the grant will take place.
Investment is broadly defined as improvements to land and/or buildings, or the purchase or lease of new equipment, or buildings constructed for the qualifying company. Where circumstances warrant, however, Grant calculations may give consideration to the value of leasehold improvements in existing buildings when it can be reasonably demonstrated that the lease will cause additional investment to replace the leased space, or that the lease results in a higher value for the building.
All projects will be evaluated by the City and County with an impact analysis model to determine if the project’s impact on City and County services will be positive or negative in light of a grant. Elected officials will take this information into account when determining whether to support a grant for a particular project. Generally speaking, the higher the wages paid and the capital investment, the more favorable a project will be within the outcome of the impact model.
City of Charlotte sample calculation:
$5 million investment; 30 jobs
$5 million / 100 x 1.2973 (City/County millage rate) = $64,865
(property taxes) x 90 percent = $58,378.50 (year 1 grant amount)
Town of Davidson Grant Program
The Town of Davidson has targeted key locations within the town for development opportunities and has adopted an incentive grant policy to encourage development in those areas. Those areas include the Village Center Support District from the Planning Ordinance and the NE and SE quadrants of the I-77/Griffith Street interchange (Exit 30).
Companies locating within the Development Zone must make a minimum investment of $1.5 million and create at least 20 jobs that pay an average of 100 percent of Charlotte’s median wage during the first year of operation.
Investment Grants for Development Zone Projects will be based on the following formula:
Year 1: 85 percent of property tax
Year 2: 80 percent of property tax
Year 3: 75 percent of property tax
Year 4: 70 percent of property tax
Year 5: 65 percent of property tax
A provision is also provided for Large Impact Economic Development Projects. Large economic impact projects would have a minimum investment of $10 million and create at least 100 jobs that pay an average of 125 percent of Mecklenburg’s median wage at the time the grant contract is signed. The project must be located inside the Town of Davidson and the location must be consistent with adopted land use policies and plans. Other criteria used to evaluate a large impact project include: number and quality of jobs, number of new jobs to be filled locally, amount of investment, quality of company, net tax benefit to Town of Davidson, secondary economic impact, competition from other cities, need for assistance, and location within the Development Zone.
Investment Grants for Large Impact Economic Development Projects will be based on the following formula:
Year 1: 95 percent of property tax
Year 2: 90 percent of property tax
Year 3: 85 percent of property tax
Year 4: 80 percent of property tax
Year 5: 75 percent of property tax
Year 6: 70 percent of property tax
Year 7: 65 percent of property tax
Year 8: 60 percent of property tax
Projects must be revenue positive to the town over the term of the grant. Companies interested in applying for a grant will work with the Charlotte Chamber, Lake Norman EDC and town officials to evaluate the project and draft a grant agreement. The town board of commissioners will be presented the grant agreement for approval.
Investment and employment levels must be maintained throughout the term of the Grant in order for the grant payments to continue. If Company fails to maintain these levels during the term of the Grant, the grant payments will be suspended until these levels are again attained. If the company leaves Davidson during the term of the Grant or within 5 years after last Grant year, then the company must pay back a proportional amount of the Grant.
It is recognized that the program must maintain flexibility within these policy guidelines to address unforeseen issues.Investment is broadly defined as improvements to land, buildings or the purchase or lease of new equipment or buildings constructed for the qualifying company. However, where circumstances warrant, Investment Grant calculations may consider the value of leasehold interests in existing buildings when it can be reasonably demonstrated that the lease will cause additional investment to replace the leased space, or that the lease results in a higher value for the building.
Town of Davidson sample calculation:
$5 million investment; 30 jobs
$5 million / 100 x 1.2037 (Town/County millage rate) = $60,365 (property taxes)
x 90 percent = $54,328.50 (year 1 grant amount)
Town of Huntersville Grant Program
The Commissioners of the Town of Huntersville believe that granting Economic Development Incentive (EDI) grants will encourage the location and expansion of manufacturing and commercial enterprises in or near the Town of Huntersville, and will increase the population, taxable property, industrial and business prospects for the Town. In determining whether or not an EDI Grant will be made, and if so the amount thereof, the following criteria, and such other criteria as the Town may deem appropriate in each individual case, will be used in making the determination:
- The type of facility.
- The effect on the environment
- The size of the project based upon investment in site development, plant facilities and infrastructure.
- The number of and type of jobs created.
- The relationship between jobs development and total investment.
- Potential for future expansion and increased employment.
- Site specific issues that impact upon local infrastructure responsibilities.
- Site-specific initiatives that may be pursued to stimulate other development in areas that the Town may deem of significant benefit to the community.
The Grants may be made in kind, or in cash. If the Grant is made in cash, it may be made in a lump sum or in annual installments, depending on the Town’s budgetary condition. If the Grant is made in annual installments, the industry shall meet the following requirements:
- The industry must be in continuous operation for a period of at least one calendar year prior to the Town’s making the annual installments.
- The industry must employ a certain number of employees who are paid wages equivalent to or above the average wages paid in Mecklenburg County as reported by the Employment Security Commission.
- All ad valorem taxes and other public obligations must be current.
Annual installment payments of Grant may not be transferred or otherwise conveyed to another party without the specific consent of the Town. The terms of the EDI Grant will be embodied in a formal agreement between the industry and the Town. If the industry is not located within the Town limits of Huntersville, this agreement may provide that the property location shall be annexed into the Town.
The applicant shall apply directly to the Town of Huntersville. The Town Manager will bring the request to the Town Board of Commissioners with a recommendation of the type and level of incentive. The Town Board of Commissioners will set a public hearing on the issue according to Chapter 158 of the N.C. General Statutes. The Town Board of Commissioners will hold the hearing and act on the request. The Town Attorney shall prepare a contract between the Town and client for such incentives.
The Town shall obtain a petition of annexation if necessary before any payments are processed. The client will send a request for payment to the Town and it will process the request and reimburse the client as specified in the contract. The client shall consent to an audit of its employment records during and one year after the period covered by the incentive contract to insure that it meets bother the wage and employment goals in the contract. In order to receive a distribution of an incentive grant, the client must be current on all taxes, fees and payments. Incentive grants will be made on an annual basis except otherwise stipulated and approved in the contract by the Town Board of Commissioners.
The grant amount will be a percentage of the net new real and business personal property taxes generated by the project. The maximum amount awarded will be 75 percent. The period of time will normally be for five years.
Town of Huntersville sample calculation:
$5 million investment; 30 jobs
$5 million / 100 x 1.1287(Town/County millage rate) = $56,435 (property taxes)
x 75 percent = $50,791.50 (year 1 grant amount)
Discounts for electricity and natural gas are available from utility companies that service Mecklenburg County. The utility companies also offer some additional services/incentives for their customers.
Duke Energy offers two special rate schedules, Economic Development Rider EC (NC) and Economic Development Rider ER (NC).
The Rider EC offers power users meeting specific criteria, a billing credit for a period of four years and can reduce a company’s power costs over their first four years of operation. In the first year, a credit of 20 percent will be applied to the bill under the applicable rate schedule. Rate declines continue in the second through the fourth year at rates of 15 percent, 10 percent and 5 percent, respectively.
To qualify for the Rider, the customer must sign a ten year contract with Duke and add 1000 kW of new load on the Duke system accompanied by either,
75 new full time employees on the Duke system per 1,000 kW of load, or
$400,000 in capital investment per 1,000 kW of new load, and a net increase in full time employees on the Duke system
The customer must make application for and receive approval of the Rider and must affirm that availability of the Rider was a factor in siting the load on the Duke System.
The Rider ER targets qualifying customers that locate in an existing building that is already served by Duke Energy. The customer receives a billing credit of 50 percent for their first year of operation beginning, at the customers discretion, up to 12 months after the initial delivery of service. The monthly billing credit effectively offers a new customer in an existing Duke served building, with adequate Duke electrical service in place, the opportunity for ‘half price energy’ during their first year of operation.
To qualify for the Rider, the customer must sign a contract with Duke and add 500 kW of new load on the Duke system accompanied by either,
35 new full time employees on the Duke system per 500 kW of load, or
$200,000 in capital investment per 500 kW of new load, and a net increase in full time employees on the Duke system.
Rider ER is available to nonresidential establishments, provided the establishment is not classified as Retail Trade or Public Administration, for load associated with a new customer in an existing establishment served by Duke, provided the establishment has been unoccupied and/or has remained dormant for a minimum period of 6 months. The Customer must make an application for consideration of Rider ER and must affirm that the availability of this Rider was a factor in their decision to locate the new load on the Duke System. The 500 KW must be at one delivery point at one voltage and must not result in additional investment in distribution facilities, other than minor alterations in the service which can be accomplished feasibly and economically.
ElectriCities communities also offer economic development incentive rates that will lower the cost of electric service during the first four and one half years of operation. This rate is available to qualifying new or expanding industry that receive electric service from their Municipal Public Power System communities. In Mecklenburg County, the communities participating include the towns of Cornelius, Huntersville and Pineville.
EnergyUnited provides electrical power service to assigned areas in Northern Mecklenburg County. EU offers free energy audits and equipment evaluations, financing packages, site selection assistance and a willingness to be a flexible partner. EU has over $6 million available in loans and grants for local projects. EU also offers an Economic Development Incentive Rate for five years to qualifying companies.
Piedmont Natural Gas Company
Piedmont Natural Gas Company also offers a special rate program. This program offers a three-year discount beginning with a 45 percent reduction in year one; 25 percent in year two and 15 percent in year three. In year four, the customer would pay the normal rate as stated on the applicable rate schedule.
Industrial Revenue Bonds
Industrial Revenue Bonds (IRB’s) are an excellent source of capital for medium to large size manufacturing projects ranging from $1 million to $10 million in size. They can be used to finance capital expenditures for fixed assets such as land, building and equipment; architectural and engineering fees; interest on construction financing; issuance costs. IRB’s cannot be used to finance rolling stock, airplanes, inventories, working capital or relocation expenses.
Federal tax law limits the issuance to a maximum of $10 million per project with a $40 million cap total for a corporate entity and its affiliates. The law also requires that total capital investment at the project location not exceed $10 million in the three years before and after issuance.
IRB’s historically have run around 65 percent-75 percent of the prime rate. These rates include the fees added in. Rates are negotiable between the buyer and seller of the bonds. Ultimately the rate is determined by the financial strength of the borrower.
Developers may also apply for IRB financing for build-to-suit lease and build-to-suit sales of facilities for manufacturers. The manufacturer must be named in the inducement proceedings and the manufacturer must meet the requirements outlined above.
Taxable Industrial Development Bonds
Manufacturers that don’t qualify for tax exempt bonds may want to consider Taxable Industrial Development Bonds (TIDB’s). TIDB’s can provide project funding at savings in the range of 35-75 basis points. Income on the debt of these bonds is exempt from state tax, and financial institutions in North Carolina provide permanent placement of the debt. These bonds provide significant savings if a letter of credit is not required to accomplish placement. Taxable bond issues may be in excess of $10 million since they are not subject to the federal volume cap. TIDB’s are processed and approved in the same manner as IRB’s.
Tax Increment Financing
TIF’s are a relatively new financing tool in North Carolina. TIF’s allow local governments to issue bonds to provide site infrastructure for new projects utilizing the future tax proceeds of the project and any subsequent surrounding tax base enhancements to pay the debt service on the bonds. Examples of things that can be paid for through TIF’s include the extension of water and sewer lines, construction of roads, sidewalks and parking decks, storm water control improvements, construction of a spec building, etc. The bonds may be issued for a period of up to thirty years. A state oversight panel must approve all TIF projects.
Labor Related Assistance
The North Carolina Employment Security Commission office in Charlotte will search for and screen applicants for new and expanding companies in Mecklenburg County. The company only has to provide the agency with a list of job openings and the requirements for each position. The ESC then matches those criteria with its database of available workers and will also post the positions on its Internet web site. ESC will then set up interviews with the company’s staff or can refer the individuals directly to a training program administered by the NC Dept. of Community Colleges at Central Piedmont Community College in Charlotte.
The Charlotte office of the NCESC has opened a satellite office in southwest Charlotte and will soon be opening a new satellite office in southeast Charlotte to better serve its corporate customers as well as the residents in those areas. The office in downtown Charlotte will also continue to serve the market.
In 1958, the state of North Carolina was the first state to develop a system of customized worker training coordinated through the state’s community college network. Today, North Carolina’s program is still considered the top worker training program in the United States.
In Mecklenburg County, Central Piedmont Community College works with new and expanding companies to develop a customized training program that meets the needs of the company.
This program is backed by the financial support of the State of North Carolina. While the value of the training will vary from project to project depending on the skills taught, an average cost per worker for training is around $1,000.
Funding applies to educational materials, standardized equipment, cultural and technical training and supervisory development. Per diem and travel expenses are also included for supervisors who must obtain technical training at another company facility. Training classes can be developed for as few as 12 workers.
In an average year, the state serves over 200 companies and more than 24,000 trainees. CPCC often has 6-12 projects in the works at any given time. Statewide figures show 99 percent of companies rated as either excellent or very good, the “extent to which the NEIT Program met the company’s expectations.” In addition, 96 percent rate as excellent or very good, the “overall effectiveness of the NEIT program in preparing the company’s employees for productivity.” Types of training assistance often include pre-employment assistance, post-hire employee orientation, safety training, technical skills, vendor-related specialized skills, leadership and team development, and quality training.
Incumbent Worker Training Program
The program provides funding to established North Carolina businesses to provide educational and skills training for current workers. It is designed to benefit the businesses by enhancing the skills of employees, thereby increasing employee productivity and the potential for company growth. An Incumbent Worker is an employed individual who is served with statewide Workforce Investment Act funds. A business may apply for more than one grant as long as the total for all grants in a program year does not exceed $37,500. Applications and program guidelines are available at www.nccommerce.com/workforce. Completed applications are to be returned to the local workforce development board for review and awards.
State of North Carolina Programs
Jobs Development Investment Grant Program (JDIG)
The Job Development Investment Grant Program is an incentive program that rebates a portion of the “new employees” personal income tax withholdings (7.5 percent minimum up to 56 percent maximum of the taxes withheld for companies in Mecklenburg County) back to the company for a period of up to twelve years. The company must sign a contract with the State of North Carolina and live up to its obligations.
This program is also limited to 25 projects per year statewide. The maximum total amount of all grants in a single calendar year may not exceed $15 million statewide. Projects that create a minimum of 20 new full-time positions may apply for a grant. There is a $5,000 application fee. In urban areas such as Charlotte, the projects should be larger in scale with 200 jobs being a typical threshold desired by the state.
The Economic Investment Committee makes the final decision as to how much of the money is given to the company and that could range from little to the maximum depending on the criteria used to reach a Return on Investment to the state.
The committee will consist of the Secretary of Revenue, the State Budget Director, the Secretary of Commerce, one appointee by the Speaker of the House and one appointee by the President Pro Tempore of the Senate. The committee may act only upon a decision of three of its five members.
A JDIG would be offered and applied to only those projects at substantial risk of locating elsewhere and for which the existence of the incentive is the deciding factor in locating the project in NC. An approval for a JDIG must be secured prior to the company’s final decision or announcement of a location in North Carolina.
The benefits would be made available only after negotiations with an eligible company result in a contract ensuring that the overall benefits of the project exceed its costs — including the costs of this incentive. Important considerations taken into account when deciding whether to offer this incentive to a company may include — economic impact, strategic importance, environmental responsibility, quality of jobs, viability of the company in its industry, whether it help build a targeted cluster in North Carolina, substantially mitigate unemployment in a distressed area, etc. Eligible companies must also provide healthcare insurance for their employees, meet the state’s wage test standard and have a satisfactory record under OSHA with no serious violations in the past three years.
One NC Fund
The One North Carolina Fund may provide financial assistance to those businesses or industries deemed by the Governor to be vital to a healthy and growing State economy and are making significant efforts to expand in North Carolina. The $20 million fund is a competitive fund and the location or expansion must be in competition with another location outside of North Carolina. A local incentive match is also required. A limited amount of funding is available annually. Projects that are not large enough to receive consideration for a JDIG may receive consideration for a One NC Fund grant. Grants generally range between $500 and $1,000 per new job created.
Article 3J Tax Credits
Article 3J Tax Credits offer several types of tax credits to eligible taxpayers that undertake qualifying initiatives. These credits may be used to offset up to 50 percent of the taxpayer’s state income and/or franchise tax liability, and unused credits may be carried forward for up to five years. To qualify for these credits, the company must have an average wage of $794 per week. Article 3J offers credits for:
Creating jobs — Companies who meet a minimum threshold of new fulltime jobs created during the taxable year may claim a credit. Eligible taxpayers that meet a minimum threshold of new full-time jobs created during the taxable year may claim a credit for each new job created. The credit is taken in equal installments over four years following the year the jobs are created. There is a threshold of fifteen jobs minimum and the credit is $750 per job.
Investing in business property — Companies can claim a credit based on a percentage of the cost of capitalized tangible personal property that is placed in service during the taxable year, in excess of an applicable threshold. This credit is taken in equal installments over four years, beginning the year after the property is first placed in service. There is a threshold of $2 million and the credit is 3.5 percent of the investment over the minimum threshold.
Urban Progress Zones (UPZ)
Municipalities with a population of at least 10,000 have the ability to define qualifying areas of poverty as Urban Progress Zones. Projects located within these zones received enhanced Article 3J Credits. Download the Urban Progress Zone map here. Those enhancements are as follows:
Creating jobs — Companies who meet a minimum threshold of new fulltime jobs created during the taxable year may claim a credit. The credit is taken in equal installments over four years following the year the jobs are created. There is a threshold of five jobs minimum (not fifteen) and the credit is $17,50 per job (not $750 per job). If the company hires a resident of the zone, or a long-term unemployed worker, the credit is enhanced by an additional $2,000 for that employee.
Investing in business property — Companies can claim a credit based on a percentage of the cost of capitalized tangible personal property that is placed in service during the taxable year. This credit is taken in equal installments over four years, beginning the year after the property is first placed in service. There is no threshold for investment in the UPZ (as opposed to a threshold of $2 million outside the UPZ), and the credit is 7 percent of the investment (as opposed to 3.5 percent of the investment over the minimum threshold).
There are several other programs available that may be applicable on a case-by-case basis. More details on the following programs can be provided:
- Brownfield Assessment Program
- Brownfield Cleanup Revolving Loan Fund
- Brownfield Property Tax Incentive
- Business Equity Loan Program
- Façade Improvement Grant Program
- Infrastructure Grant Program
- Security Grant Program
- Business Energy Improvement Program
- Access Road Assistance
- Rail Spur Access Assistance
- New Market Tax Credits
If you have any questions, please contact one of our economic developers:
Jeff Edge, CEcD, Sr. VP Economic Development 704-378-1307 email@example.com
Sven Gerzer, VP Economic & European Development 704-378-1310 firstname.lastname@example.org
Kati Hynes, VP Economic Development704-378-1371 email@example.com
Eileen Cai, VP Economic & Asian Development 704-378-1316 firstname.lastname@example.org