You asked: Legal to offer incentives outside Enterprise Zones

Published 10:37 am Sunday, February 10, 2013

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You asked: Is it legal to offer tax breaks for developments not in an Enterprise Zone?

COURTLAND—It is legal to offer tax breaks to companies that want to build on property not located in an Enterprise Zone, said Southampton County Administrator Mike Johnson.

The question was given to The Tidewater News after the Board of Supervisors during its Jan. 27 meeting voted 5-1 to grant a tax break to a company building an asphalt and concrete plant in Ivor.

Newsoms District Supervisor Glenn Updike voted against the $150,000 discount on taxes over five years to AMAC Leasing, which is not in an Enterprise Zone.

Enterprise Zones are designated areas where local and state government can offer incentives, including tax breaks, to create jobs and investment.

A joint Enterprise Zone in Franklin and Southampton County in 2011 was expanded to include 6.37 square miles in southern Isle of Wight, which includes Franklin’s International Paper mill. The zone also includes Franklin’s Pretlow Industrial Park, downtown Franklin and the Armory Drive area, as well as Southampton’s Business Park and the Turner Tract Industrial Park.

The county is required to offer a local match when the state kicks in an incentive to a company locating in an Enterprise Zone, Johnson said. Counties can offer rebates on taxes, discounts on the sale of public property, or financing through the Industrial Development Authority of Southampton County.

Without offering the incentive to AMAC, Amanda Jarratt, president and chief executive officer for Franklin Southampton Economic Development Inc., doubts the company would’ve chosen Southampton County for its plant and 26 jobs.

“When we received the original request for information, incentives were a key piece to be considered,” Jarratt said Friday. “Incentives are a key part to any economic development decision.”

AMAC also considered James City, York, Isle of Wight and Sussex counties and Suffolk, she said.

“I don’t know if we would’ve made it to the site visit if we hadn’t put together (incentives),” Jarratt added.

County officials in October rezoned 20 acres from agriculture to industrial for the plant. Construction could begin during the first or second quarter of 2013 with operations beginning in the third quarter.

AMAC chose the property because it borders Route 460 and a Norfolk Southern rail-line. The company hopes to have stone shipped in by rail and plans to have a 1,700-foot spur built.

This proposed agreement with the county offers AMAC a 50 percent rebate on the machinery and tools taxes and a sliding scale rebate on the electric utility taxes, both for the first 5 years. The agreement also includes rebating all permit fees.

While the company expects to save a total of $150,000, the project is expected to generate $500,000 in tax revenue over the same time period.

After the initial 5 years, the project is expected to generate an average of $40,000 to $50,000 annually in tax revenues, assuming there is no additional investment.