Businesses seeking tax breaks to set up shop in Raleigh could soon be following a formal process.
Raleigh City Council members Tuesday debated the criteria for an economic incentives policy, which the city doesn’t yet have. While Durham and Charlotte offer companies clear guidelines – number of jobs created, dollars invested – Raleigh provides tax breaks infrequently and on a case-by-case basis.
That can make matters unpredictable for companies considering Raleigh. “It would be helpful, as staff gets calls, for us to have a structured policy,” Mayor Nancy McFarlane said.
The mayor said Raleigh shouldn’t be providing handouts without any strings attached. “Everybody is more comfortable with the performance-based type of incentive, where it’s really up to the company to do what they said,” she said.
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Councilman Thomas Crowder argued that the city should be cautious about granting tax breaks, because the money involved could be spent on other projects.
“I think the biggest incentive we can have is to maintain a great quality of life – a well-educated workforce, parks and greenways,” he said. “Are we expending funds that we should be putting into our quality of life?”
City officials plan to look closely at what Raleigh’s competitors are offering companies. “We are competing against other cities, and it seems like a big opportunity for us,” Councilman Russ Stephenson said. “There are other cities that have much more robust economic development departments.”
While Cary takes the same case-by-case approach that Raleigh has used, Durham has multiple incentive programs tailored to a company’s size and location. Tax breaks are available to companies investing as little as $300,000, with credits of up to $10 million for the largest development projects.
In Charlotte, companies bringing at least 20 jobs and $3 million can avoid 90 percent of property taxes on the increased value of their site.
Wake County commissioners discussed tweaks to county policy during their meeting Monday. The county often partners with municipalities on incentive packages.
Even without a formal policy, Raleigh currently has 34 companies already working with the city’s economic development department. “The majority of the projects that are looking are proposing 100 jobs or more,” economic developer James Sauls said.
“Raleigh’s doing a great job of economic development compared to many in the state and many nationally,” said Jim Greene, a new assistant city manager overseeing the efforts.
Greene, Sauls and other city staffers will develop a draft incentives policy in the coming weeks, which will go before the council for approval. Greene said any new program will still require the full City Council to vote on each incentives grant.
“I think it is time for the city of Raleigh to step on board” with an incentives program, Councilman Eugene Weeks said. “I think we can do it without giving away the city of Raleigh.”