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July-August 2002

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"Change,” they say, “is life’s only constant.”

That reality, and the mix of emotions that accompanies it, is one that WID faces everyday. And it is upon us now as we offer our thanks to Rick Biberstein for the remarkable leadership he has given us as our chairman over the past two years.

Under his steady, calming hand, WID has seen some of the brightest moments in its history. They include welcoming LEK and its U.S. headquarters to downtown Wilmington and helping foster multi-million dollar expansion projects at Corning and Del Laboratories. Rick’s influence was particularly effective in the realm of government relations, where he helped ink long-term agreements with our county and municipal partners. He also opened a much-needed dialogue between our organization and the Wilmington Airport Authority. Rick led the way in a number of exciting infrastructure initiatives, including wastewater for Pender County and the fiber optic backbone and natural gas that will be arriving there soon as part of the Albemarle-Pamlico Economic Development Commission (APEC), on whose board Rick serves. Rick’s guidance was also crucial in the clean up of Stag Industrial Park, which after being damaged by Hurricane Floyd, risked losing its three corporate tenants. He brought professionalism to our personnel management through the creation of a new employee-benefits program and other measures.

There was, of course, much more. But there is also more that awaits as Rick, who has served on the WID board for the past eight years, will continue to chair our committee on

infrastructure and industrial parks. His support and good counsel will also be welcome at our organization, and I am pleased to count him as both friend, mentor and role model.

At the same time, we welcome our new chairman, Scott Sullivan. No stranger to WID, Scott has been a member of our board since July 1994, serving capably for the past two years as vice chairman. Scott’s impressive credentials include work as vice-president of Cameron Management and service as chairman of the board of Cape Fear Academy. WID will no doubt enjoy the benefits of Scott’s experience in leading those two great institutions. In addition, he is a devoted husband and father of two.

I look forward to Scott’s strong leadership in the coming two years, and again extend my most profound thanks to Rick Biberstein. I invite you to do the same – in person: the torch will officially be passed at our annual meeting on August 15th at UNC-Wilmington’s Warwick Center Ballroom.

Sincerely,

R. Scott Satterfield

Gaze upon the mammoth 1.4 million square foot Lowe’s distribution site in rural Northampton County, North Carolina, and you’ll likely ask a number of questions. Not least of which is about the economic impact the sprawling $64 million facility will have when it ramps up its workforce of 600. The state-of-the-art center just off I-95 will move an estimated 28,000 different items through its bay doors annually. It is one of only nine such centers the North Wilkesboro-based company operates nationwide.

And what’s it doing in Northampton County?

“The county had the right people, Interstate access and proximity to our stores,” explains Steve Maggard, manager of the recently dedicated site, “and we got the right incentives from the state and county.” The latter included land, infrastructure development and workforce assistance offered by the county, in addition to enhanced state tax credits under the William S. Lee Act. “You’ve got to have all of them in place,” Mr. Maggard explains.

In surveys of site selection pros about the importance of incentives in the big picture, most say it’s way down the list. But when it ultimately boils down to two or three competing sites that each possess all the basic requirements, incentives are what corporations look to in order to breakup the logjam.

And increasingly the presence of local economic development incentives are needed just to place a community in consideration. “In today’s site selection process, the use of local incentives is viewed as a prerequisite,” according to Dale Carroll, president of the North Carolina Economic Developers Association (NCEDA). Mr. Carroll, who is also chief executive officer of Asheville-based Advantage West Regional Development Commission, says that more and more county and municipal officials are equating local incentives with the ongoing investments a community must make in itself. “We’ve been very involved in assisting local communities in exploring and developing incentive policies.”

But there is anything but consensus on the issue. The noisy statewide debate over the use of taxpayer funds to support private industry climaxed in the 1996 Supreme Court case of Maready v. City of Winston-Salem. Arguing the case was then-Attorney-General Mike Easley, who reasoned that if a local government was within its rights instituting policies that were detrimental to its economy, it was surely not inappropriate for it to take actions to spur economic activity, including the use of financial incentives. The court agreed that such policies were indeed constitutional.

No group is as vociferous in its opposition to incentives as the Raleigh-based John Locke Foundation. Its primary rationale: financial assistance to lure new industry puts firms already in a community at a competitive disadvantage – the economic policy equivalent of a slap in the face. “When government at any level gets into the practice of picking winners, it unavoidably is also picking losers,” said John Hood, the organization’s president, at a recent presentation before the North Carolina Economic Development Board. Instead, communities should reduce tax burdens, improve school performance and maintain adequate transportation systems. Further, he suggested that communities should cease operating promotional and marketing programs aimed at industry.

Most city officials appreciate the value of financial incentives, so long as such measures are applied under the appropriate circumstances. “Cash incentives paid by cities, counties and state governments with public funds is a modern economic necessity,” says Ellis Hankins, executive director of the N.C. League of Municipalities. He views such support as tantamount to an investment when the results are job creation, increases in per capita incomes, greater diversification of the local economy and the expansion of the local tax base. But he cautions that incentives should be offered “within limits and with carefully crafted provisions and measurable criteria in writing.”

Despite basic agreement about incentives on both legal and policy grounds, there is no uniformity across communities on the structure and composition of financial inducements. Wake County, for example, offers no direct incentives, as such. In contrast, Forsyth County applies a formula that calculates the annual tax return from the investment and the sales tax increase from the new jobs. It then provides up-front financial assistance based on a 3-5 year payback, money companies can use for site and facility improvements, land credits, site testing, employee training and lease reductions. To qualify, a company must be making a minimum investment of $3 million and creating at least 25 jobs, and each case is approved by vote of the county’s Board of Commissioners.

Both New Hanover and Pender counties, as well as the City of Wilmington, have industrial investment policies in place. In each instance, grants to companies are based on a number of criteria, and government officials determine on a case-by-case basis whether and how long to award a grant.

“Each individual county makes up its own mind on what it wants to do,” explains Paul Meyer, assistant general counsel of the North Carolina Association of County Commissioners, which does not take an official stand on the wisdom of maintaining a local incentive plan. “There are a number of counties that think it is a great idea and some that think it is not.”

R.V. Biberstein, Jr.
Carl Byrd, Sr.
Meg Davenport
Rob Gerlach
Robert Greer
Paul Grimsley
Frank Hamilton, III
Dr. James Hundley
Phil Marion
Louise McColl
Dr. Eric McKeithan
Dr. Eugene McMurray
Mayor Harper Peterson
Gene Renzaglia
James Smith
Dwight Strickland
Robert Stuart
Gayle Van Velsor

Small Business Administration’s 504 Loan Program
Wilmington Industrial Development, Certified Development Company for SBA
Serving New Hanover, Pender and Brunswick Counties

Focus on Hotel Financing

In the past year, WID has proudly assisted two borrowers in acquiring SBA 504 loan financing for their hotel projects. Microtel Inn & Suites opened in May off Hwy 17 in Shallotte. Amerihost Inn & Suites, is set to open in the next few weeks on Carolina Beach Road in Wilmington.

Both of these large projects were new businesses with special use facilities. New businesses are required to inject a minimum of 15% equity. Constructing special use facilities, these borrowers also had to inject an additional 5% in equity.

SBA’s maximum loan participation in a project is 40% or $1,000,000-whichever is greater. There is an exception for projects meeting community development or public policy goals which allows for a maximum of $1,300,000. Some exceptions include veteran-owned, women-owned, business district revitalization, and rural development. Both of these newest hotels are women-owned, and one was able to take advantage of the $1,300,000 maximum due to the size of their project.

Previously, WID has assisted with financing for the Wingate Inn on Market Street in Wilmington, and the Golden Sands Motel on South Lake Park Boulevard in Carolina Beach. These four hotel projects represent a total investment of $15,866,000 into our area and have created over 100 jobs.

Golden Sands Motel
1211 S. Lake Park Blvd
Carolina Beach, NC 28428
910-458-8334
www.coastalcarolinas.com/goldensands/

Wingate Inn
5126 Market Street
Wilmington, NC 28412
910-395-7011
www.wingateinns.com

Microtel Inn & Suites
4646 East Coast Lane
Shallotte, NC 28459
910-755-6444
www.microtel.com

Amerihost Inn & Suites
5600 Carolina Beach Road
Wilmington, NC 28412
910-796-0770
www.amerihostinn.com

Are you looking to finance a real estate project? Please call to inquire about how SBA’s 504 Loan Program can assist with your financing. The SBA 504 Loan Program can be used for almost every type of business. Existing businesses are eligible for a lower equity injection of 10%. SBA 504 loans have fixed interest rates with terms of 20 years for real estate and 10 years for machinery and equipment.

Please call Susie Parker at 910-763-8414 to obtain more information on how the SBA’s 504 Loan Program can assist with your project.

Hilco Transport, Inc.
Mr. Larry Clark
100 Export Drive
Wilmington, NC 28405
1-910-762-9687 Phone
1-910-762-0747 Fax

McGill Environmental Systems
Mr. Rob Taylor
1100 Herring Rd. Rose Hill, NC 28444
PO Box 64
Harrells, NC 28444
1-910-532-2539 Phone
1-910-532-2542 Fax
www.mcgillcompost.com

Jeff Gordon Chevrolet/
Toyota of Wilmington
Mr. Steve Jacobs
228 S. College Rd.
Wilmington, NC 28403
910-791-2424 Phone
1-910-798-2789 Fax
www.toyotaofwilmington.com
www.jeffgordonchevy.com

Inclusion of news in WID Newsletter.

Database listing of industrial properties for referrals.

Posting of commercial property on WID website.

Posting of commercial property on regional economic and NC Department of Commerce (providing property meets specified criteria).

Inclusion of your company’s marketing literature, when appropriate, in client/prospect proposals.

Building/Site Selection Assistance-if you are planning to expand or relocate, we can help you find the ideal building and/or site.

Financial Assistance-based on your company’s capital needs, WID can locate attractive financing options.

SBA 504 Loan

Industrial Revenue Bond Inducement Assistance

Community Development Block Grants