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Published: Jan 16, 2007 12:00 AM
Modified: Jan 16, 2007 05:40 AM

Google breaks may top $100M

Tax incentives aim to land Lenoir hub

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How the deal could add up for Google

Google could get more than $100 million in tax breaks and other incentives if it agrees to build in Lenoir. Here are how the incentives break down:

NORTH CAROLINA

Sales tax exemption. The General Assembly last year approved a measure eliminating sales taxes on electricity and certain purchases for data centers like the one Google is contemplating.

The exemption could mean that the state would forgo $89 million in tax revenue over 30 years, based on estimates provided by the Commerce Department to the legislature's Fiscal Research Division. The state has not identified any business prospects other than Google that could benefit from the change.

Investment grant. A Commerce committee last month approved a Job Development Investment Grant potentially worth $4.7 million. The company would have to create 168 jobs and invest at least $480 million before 2011 to get the full benefit.

Tax credits. Google can apply for tax credits that, assuming it creates 210 jobs, could exceed $2.6 million.

LENOIR AND CALDWELL COUNTY

Officials in the city and county have agreed to waive 100 percent of Google's business property taxes and 80 percent of real-estate taxes for 30 years. They have not provided an estimate on the cost of that provision.

(The General Assembly Fiscal Research Division, With Figures From the N.C. Department of Commerce)

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A housing boom is making way for a new class of residents. High-end homes and gated communities are planned or under construction to attract retirees.

Everywhere, though, the furniture influence remains -- a sign downtown welcomes visitors to "the furniture city" -- and its legacy is hard to escape.

In Caldwell County, 66 percent of adults are high school graduates, according to census data, compared with 78 percent in the state overall.

The unemployment rate is 8.4 percent. That's down slightly from a peak of 13.1 percent in July 2005 but far above the 1.8 percent recorded in July 1999. In December, furniture maker Broyhill said that it would put 390 more out of work.

One hundred people a day seek assistance from the N.C. Employment Security Commission's office in Lenoir. But few new businesses fill the void. Vantage Foods, which processes fresh meats sold at grocers, will open a Lenoir plant by summer and create about 180 jobs. A Super Wal-Mart is planned in nearby Granite Falls.

At Abigail's Gifts, Hicks hopes that Google will bring prosperity.

"The economic impact that this is going to have, I can't even fathom it," she said, raising and shaking her arms with excitement. "It is absolutely one of the best things that could happen."

A Lenoir resident, she moved her store from Banner Elk about 18 months ago to cut down on commuting costs. Business has been growing, but Hicks said she isn't taking a paycheck.

Google could change that, she thinks.

With the company, she sees a more educated work force. Workers will make an average $48,000 a year, almost twice the county average. They'll demand nicer homes, restaurants and things, she figures.

Their money will course through the local economy and to businesses like hers.

"You've got to start somewhere," Hicks said. "We're going to take every little accomplishment, because they all build."

Jumping at the future

The state's economic leaders are pushing communities like Lenoir to embrace companies that are likely to shape the future.

Google is the world's most-used guide to the Internet, tracking and revealing all manner of information, from chicken recipes to the whereabouts of high-school exes. It has become a business and cultural force.

With more than $11.86 billion in cash and a market value exceeding that of Boeing and Caterpillar combined, Google is a lucrative target for any business recruiter.

If Google can be lured to Lenoir, leaders believe other high-tech companies, suppliers and businesses could follow.

The logic is similar to that used in 2004 when the state recruited a Dell factory to Winston-Salem. North Carolina, city and county governments offered the computer manufacturer $280 million in enticements to get the operation.

That deal was taken to court.

"It's mind-boggling that these kind of giveaways are taking place," said Bob Orr, a former N.C. Supreme Court justice who unsuccessfully sued to stop the Dell incentives. "There are a number of struggling businesses or people who would like to open a business who don't get this kind of break."

In Lenoir, there has been much consternation about the way governments have dealt with Google and handled taxpayer money.

The entire process has been secret, as is often the case in such projects. Aliases Tapaha Dynamics and Madras Integration were used to hide Google's identity.

While broad terms of local incentives have been made public, the specifics are still unknown.

"There's a certain amount of resentment anytime your elected officials tell you, 'I'm sorry, I can't tell you how we're going to' " spend tax dollars, said George Bernhardt Jr., the sixth generation to run Bernhardt Seagle Hardware Store, which opened in 1829.


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Staff writer Jonathan B. Cox can be reached at 836-4948 or jcox@newsobserver.com.
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