Orange County

Chapel Hill wooing two companies. How incentives might sweeten the pot

One use for economic incentives is to secure more affordable housing, Chapel Hill town officials said. That was the case with the 55-acre mixed-use Carraway Village project, now under construction on Eubanks Road. The town will help pay for required road improvements in return for the developer putting more effort into securing affordable housing or selling the land to the town for $1.
One use for economic incentives is to secure more affordable housing, Chapel Hill town officials said. That was the case with the 55-acre mixed-use Carraway Village project, now under construction on Eubanks Road. The town will help pay for required road improvements in return for the developer putting more effort into securing affordable housing or selling the land to the town for $1. tgrubb@heraldsun.com

The town is trying to bring two companies to Chapel Hill, and now there's clear guidance for how incentives can sweeten the deal.

One company is offering 75 jobs, but it's also looking at other sites in Orange County, Durham and Research Triangle Park, said Dwight Bassett, the town's economic development officer.

While the town has used economic incentives before, it's never had a clear policy about how to use them. The Town Council approved guidelines Wednesday in an 8-1 vote. It will have the final say on any grants.

Companies could be discounted for up to 50 percent of the new property tax revenues their investment creates over a set number of years.

That could include large capital investments or the development of new commercial spaces. Alternatively, new or existing companies could benefit by investing at least $2.5 million in construction and creating at least 20 new jobs. That incentive could range from $750 to $3,000 per job, based on the number of new jobs and the years spent creating and maintaining them.

Chapel Hill and Orange County previously offered that type of performance incentive to Wegmans Food Market, which will begin construction this year on U.S. 15-501. Wegmans has agreed to create 185 full-time jobs and 413 part-time jobs over five years and meet annual property and sales-tax revenue goals in return for a total of $4 million in incentives.

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The town also might incentivize a development that adds to the town’s affordable housing, as in the case of Carraway Village, a mixed-use project under construction on Eubanks Road.

The town, in that case, agreed to pay part of the required road improvements if the developer spends more time looking for money to build affordable housing, and if that’s not successful, sells the land to the town for $1.

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There also might be opportunities to combine town incentives with those offered by the state or the county, Bassett said, noting the state often requires a local match for its incentives.

The new policy will help council members think about how to help businesses move to Chapel Hill and grow here, Council member Michael Parker said. It’s not a list of rules, he added, noting incentives alone won’t bring in or retain businesses.

“You win because you’re a terrific place to live. You win because you’re a desirable place to do business. You win because you have a talent pool that employers want. You win because you create a business climate where you have entrepreneurs helping each other,” Parker said. “But sometimes, and only sometimes, you need incentives to kind of stay in the game.”

Bassett will help businesses determine if they qualify for an incentive, focusing on research and development, applied sciences, technology, and startup and entrepreneurial activities. Incentives also could be used to develop and maintain affordable housing and opportunities for lifelong education.

The goal is to put Chapel Hill on the map of cities focused on research and development, to create jobs and economic security, and sustain a high quality of life, Bassett said. The town also has a significant need for more office space, he noted.

Council member Jessica Anderson, who voted against the policy, said she wants the policy to clarify that incentives can also go to smaller companies with fewer jobs. Council member Rachel Schaevitz also worried about weeding out companies with lower-skill jobs.

"It just makes me a little nervous, like when we say we got our numbers from looking at other communities, I think that's a great place to start, but what does that mean in terms of what we really want," said Anderson. "I think part of our competitive advantage is maybe that we don’t always just try and do whatever Durham or Chatham does."

However, council member Nancy Oates argued the incentive will draw businesses that fit with Chapel Hill and the university. It also addresses the fact that Chapel Hill's tax burden falls largely on homeowners, she said. Residential taxes make up 80 percent of the town's property tax revenue.

"Right now, we don’t have affordable housing that would enable us to attract companies that pay low-wage jobs, so that's not what we're going after right now," Oates said. "The idea of the incentive was to enable us to have seat at the table and be competitive for some of these really top companies that are the type we want to see in Chapel Hill that could go anywhere."

Tammy Grubb: 919-829-8926; @TammyGrubb
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