With rumors flying about local governments’ closed sessions on economic development (a New Belgium brewery?), government incentives for private business are once again in the news. Whether they’re spat on as “corporate welfare” or lauded as “job creation,” they remain controversial as ever.
At their respective Sept. 13 meetings, both the Buncombe County Board of Commissioners and Asheville City Council went into closed sessions to discuss an unspecified economic development proposal. Combined with rumors, swirling for weeks, that the New Belgium brewing company is looking at Asheville for a new brewery.
So far, it’s just rumor. New Belgium won’t confirm which six locations it’s considering for its East Coast expansion, and local officials are staying similarly mum.
The most recent economic incentives package was the high-profile deal with Canadian auto-parts manufacturer Linamar, which saw the state, Asheville and Buncombe all dish out incentives to get the company into the old Volvo plant. In that case, Asheville’s incentives took the form of just over $2 million in tax breaks over the next two years.
Ironically, the previous occupant of the plant, Volvo, was set to receive incentives from Asheville and Buncombe too, before laying off employees and shutting its doors.
While direct cash as part of an economic deal isn’t unheard of (the Grove Arcade is a famous example), economic incentives rarely take the form of direct funds from city/county coffers to the businesses involved. Instead, after a given governmental body signs off on the incentives, staff assess the company’s expansion to make sure it meets the criteria. If the company does, it gets a reimbursement from its property taxes.
In the Volvo case, notably, this had an impact. While it looked somewhat embarrassing for the company to fold its Asheville operations just a few years after county commissioners posed smiling at a groundbreaking, Volvo never received any of its last round of incentives, because it didn’t meet the criteria in the incentive deal.
Many cities and counties crafted economic development incentive policies in the late ‘90s after a series of court battles and decisions cleared the way for their use. Asheville and Buncombe were no exception. And a look back at the history of the initial deals shows no less controversy then.
For their defenders, incentives are a way to target job growth in needed sectors and, if done correctly, provide big economic payoffs for relatively little pain (after the incentives expire, the company pays property taxes at a normal rate). Even among many progressives generally averse to government helping big business, they represent an occasionally necessary evil.
However, they have plenty of opponents, especially those who point out that they often go to larger companies. Asheville City Council member Cecil Bothwell was ardently against the Linamar deal, and even devoted the invocation at the Aug. 9 Council meeting to decrying corporations. Council candidates Chris Pelly and TJ Thomasson have also decried the practice.
Of course, not all incentives are created equal. Asheville’s not exactly teeming with mom-and-pop auto parts manufacturers, so the Linamar deal was a relatively easy sell, especially as it was occupying a disused space. A New Belgium brewery, as a potential competitor to Asheville’s already-famed beer industry (which hasn’t received such tax breaks), might be a whole different matter, and a much more contentious battle.