Friday, December 9, 2022

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Time to reconsider Burlington’s economic incentives policies

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And while we’re on the subject of unnecessary government secrecy, let us give due attention to the city of Burlington’s policies regarding incentives proposals.

Last week, that city council had two incentive requests on its agenda for its semi-monthly meeting on Tuesday night.

But both were shrouded in mystery, described only by their “code names” – “Project Freeze Pop” and “Project WKR Burlington.”

Burlington residents were not told exactly what these projects were, how much they were going to be asked to fork out for the projects, nor – most basic of all – who were the companies seeking dollars from the city’s taxpayers.

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In what has to be one of the most poorly-formed “code names” for a top secret incentives project – by a reference to the Number One product of one of our home-grown companies, Alamance Foods.  The city also did identify the location of the future investment, which just happened to be the location for Alamance Foods on Cedar Crest Drive, confirming the identity of the company, even while still couching it in secrecy.

Now a caveat about this and most other companies seeking incentives.  Alamance Foods is a fine, locally-based company with a long and distinguished reputation in the community.

But are these newest incentives really necessary?

We think citizens, and council members, might want to do some basic math.

The city has already spent over $328,000 in incentives for the same company’s $16 million construction of a new, 500,000-square-foot facility which began in 2016.

Now, these same Burlington taxpayers are going to be asked for another, even larger, amount: $730,000 for what is described as a $42 million expansion.

The company at least says it envisions hiring another 140 employees – which is at least something compared to the other request on the agenda (see below), which promised no new jobs whatsoever.

The cleverness of the “code name” was equally comical for the second request; it turns out that “Project WKR Burlington” refers to the actual name of the company, WKR.

This incentives project is even more curious: not a single new job promised.  (After all, we thought that was at least the ostensible purpose for these taxpayer-funded incentives programs.)

This is for a spec building that the company hopes to rent out to some future industrial tenant.

While the word was not used during the hearing, the photo of the project makes fairly plain that this is another warehouse project (one with 100,000 square feet).

And we have nothing against warehouse projects, even if they are large enough to be called “distribution centers,” we do question why Burlington would consider paying out hundreds of thousands of tax dollars for this particular project. (The council voted, 5-0, to do so.)

There are many warehouse projects that are deciding to locate in Alamance County (along the I-85/40 corridor) but haven’t sought, or received, any incentives payments from taxpayers.

Why should this one?

Instead, taxpayers are being asked to finance $400,000 in building, grading, and permit costs associated with the company’s spec building.

We were under the impression that banks, not the public purse,  were the proper venue for “investment opportunities.”

First, we think it rather odd to give incentives to companies – any company – that already has a local operation.

We also think all local governments need to begin reevaluating whether incentives are still necessary at all, particularly in the case of the growing number of distribution centers and warehouses deciding to set up shop in the county.

The original concept of incentives was sort of like a farmer “priming the pump” so that he’ll get a better payoff than by simply starting from scratch each time he’s at the well.

But it seems to us local governments are fast reaching a point where there is no objective reason to continue paying out incentives, particularly for warehouse projects.

Alamance County is a prime location for distribution centers and warehouses because we’re located along two interstate highways, I-85/40.  We’re not sure there’s a real need to continue paying companies to set up operations here when it’s so obvious that we’re a logical location for logistics-related companies.

While we’re puzzled by the specifics about the rationale for these two projects, and the necessity of taxpayers funding them, our real objection is to the secretive nature of the way they are handled.

The “code names” are on the agenda.  A description with some detail is in the agenda packet, which can be accessed.

But what’s missing?

The name of the company.

And we think that is an oversight that the city should remedy.

There were similar problems of secrecy surrounding county incentives requests several years ago.

A procedure was developed whereby, when the governmental unit has decided on an “agreement” with the company, the company’s  name is announced, publicly, at a public meeting of the governing board.

One week later, the details about the project that haven’t already been outlined – where it will be located, how much is being proposed to be paid (and over what time period), the employment impact, and other factors – are to be announced.

The public then knows what’s being proposed, for whom, and under what conditions.  Anyone can come to the public hearing on the request and make a comment.

Unfortunately, few residents take advantage of showing up at such meetings.

But at least they have the option to do so.

That’s our basic concern on a host of issues: let the public know.

If there’s not enough interest to entice someone to come before a public body, fine, but they should have the information to do so if they so choose.

Instead, Burlington’s current procedures are more like an ambush.  Little to no information is provided ahead of time.  A concerned resident would have to show up to find out what’s being proposed, for whom, etc.

That’s not good public policy – even if no one wants to come talk about it.

We urged Burlington’s city council last week to reconsider its current ambush-style approach, to adopt a practice more like the county’s.

We believe the public deserves to know more about these issues; whether they choose to weigh in is then up to them.

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