Economic-incentive programs drive company expansions and relocations.

• Author: Jordan, Jon R.
• Position: LAW JOURNAL 2012

Despite the economic woes of the last several years, many companies have successfully relocated or expanded their operations in North Carolina with the assistance of financial incentives. With the economy showing some signs of growth, there may never be a better time to expand operations or relocate a business in North Carolina, which was ranked No. 3 in Site Selection magazine's most recent ranking of the "Top Business Climates," When the magazine released its ranking for new and expansion projects in 2011, North Carolina ranked No. 4 nationally and No. 1 in the South Atlantic region. Many of these projects were made possible by economic-incentive packages offered by stateand local-government agencies. For a company looking to relocate or expand, these packages can provide hundreds of thousands or even millions of dollars in tax credits and cash grants for facility upgrades, equipment purchases and other capital expenditures.

Economic incentives are typically available at three levels in North Carolina. State incentives are primarily awarded or administered through the Department of Commerce, governor's office and Department of Revenue Local incentives are offered by towns, cities and counties. Additional incentives are offered through public and private programs operated by other entities.

The three major state-level programs are the Job Development Investment Grant (JDIG) program, One North Carolina Fund grants and Article 3J Tax Credits. Eligibility for these programs is generally limited to projects involving one of the following types of businesses: aircraft maintenance and repair, air courier services hub, company headquarters that create at least 75 jobs, customer-service call centers, electronic shopping and mail-order houses, information technology and services, manufacturing, motor-sports, research and development, warehousing and wholesale trade.

Given the economic climate over the last several years and new opportunities for growth, one eligibility question that frequently arises is whether a company that has suffered a recent reduction in workforce is eligible for economic incentives. Although the analysis is fact-specific, the short answer is generally "yes," particularly if workforce has increased to pre-reduction-in-force levels or has at least been stable during the previous 12 months.

The JDIG and the One North Carolina Fund are discretionary grant programs tied to job creation and capital investment. The JDIG program...