Eligibility for state business incentives questioned

Dec. 24, 2012 @ 02:00 PM

A quarrel about whether redevelopment in the South Square area should qualify for business-incentive deals resurfaced this month after city administrators sought City Council approval for a routine filing with the state.
The filing seeks renewed N.C. Department of Commerce certification that South Square and two other parts of Durham qualify as “urban progress zones,” to make some projects in them eligible for state tax credits.
But City Councilwoman Diane Catotti said she was “not really comfortable” with the filing because she continues to doubt the rationale for offering incentives in southwest Durham’s primary commercial corridor.
“We need to be targeting our incentives where we need them most,” Catotti told City Manager Tom Bonfield and Office of Economic and Workforce Developer Kevin Dick. “I don’t think that’s our highest priority.”
But Dick said administrators in including South Square in the requests were simply following state guidelines for what qualifies as a progress zone.
Moreover, “even if it’s a business that would come into an area we don’t want to incentivize, it still would be a business that would provide jobs,” he said.
The clash reprised a disagreement between Catotti and Dick that’s smouldered for the past couple of years.
Dick has argued that the South Square area needs help to recover from the twin blows that rocked it in the past decade: The 2001 opening in south Durham of The Streets at Southpoint, and the contraction in global automobile manufacturing that caused several car dealerships in the corridor to go out of business.
Catotti views the area as one where private investment should and is likely to spark development on its own, especially if local governments follow through on plans for a Durham-to-Chapel Hill light-rail line that’s to pass through the corridor.
She also prefers contentrating local incentive offers downtown, in east Durham and a couple of other small, neighborhood-level redevelopment areas.
But it’s not clear that Catotti’s view has majority support on the council. Her colleagues in September voted 4-2 to support a $1 million city incentive offer to a mixed-use project off Shannon Road and University Drive.
Catotti and Councilman Steve Schewel dissented from that vote.
In the urban-progess-zone discussion, Catotti said the council needs a broader, policy-level “conversation about our incentive policy” to identify the areas it supports incentives and those where it doesn’t.
And she wasn’t deterred even though there’s no local money at stake in the designation of urban progress zones – it’s for a state program only, one that offers qualifying businesses a break on their income taxes.
“Good policy should direct the activity where we as local officials think it best serves our community,” she said.
Catotti didn’t voice objections to either of the two urban progress zones. One covers a broad swath of downtown and east Durham. The other targets an area between Hillsborough and Erwin roads near Duke University.
The three zones have been on the state’s books since 2011. They qualify under state law because they have unusually high levels of poverty.