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March 2007
Git 'er done
By John Paul Galles

      Well, Caldwell County got it done. They succeeded in attracting Google to locate a new server farm near Lenoir. Now that is an economic development victory. Or, is it?
    
Landing a Google server farm in Caldwell County is likely to end up costing the city of Lenoir, Caldwell County and the state of North Carolina nearly $260 million over 30 years. Google claims that they will eventually hire around 200 individuals to run and operate their new facility. Now that the deal is done, the cries of outrage are being heard from politicians all across the state. They argue that offering incentives to companies that promise to come is inherently unfair to companies that already exist and struggle to continue to operate and provide jobs. 
    
 In 2005, Dell Computers received similar incentives totaling over $300 million to locate a new facility in Forsyth County. We also heard concerns when that deal was announced.
     
It is an economic development fact of life that incentives are essential to attracting businesses that might expand or relocate to our communities. Incentives alone will not make a good deal, but they can make a good deal even more attractive after all other factors have been considered. If you want to participate in the economic development game, you must be prepared to offer incentives that sweeten or even cement the deal.
    
So many factors affect corporate decisions to relocate or expand into a community or region. Among them are location, transportation, access to capital, access to materials and resources, available buildings, workforce availability, workforce education, workforce training, schools, health care, hospitals, water, waste treatment and a multitude of quality of life indicators. Each corporation wants to find the best mix of attributes that will benefit their company in a new location. 
      Before any incentives are even discussed, every corporation has gone through a lengthy checklist to measure the opportunities of each site. When they have narrowed their search to a few sites, they begin to consider one site against another. That is when local economic incentives are offered, incentives that are likely to tip the balance in favor of one site over another. It is good business for any corporation to learn about the incentives, the environment and the cooperative spirit that can be beneficial to its operation.
    
Somewhat frustrating is the fact that most businesses considering relocating or expanding into new regions or communities will only consider their opportunities in private. Any leaks of information from any parties with information regarding a corporate location can spoil or squelch any further consideration of that site.
    
And so, negotiations are usually undertaken by public servants or elected officials who must work in secret to see that questions are answered and that incentives are in place within the law to successfully attract a new business to an area. Those officials must weigh the value of the incentives to value of the business being attracted. Are they in balance or out of balance? It would be good if the calculation were that simple; it is often not that simple. 
     
 We have all watched companies close their doors or move their operations overseas leaving thousands of workers jobless. Elected officials are left speechless when they can do nothing to save those companies from global competition. It is no wonder that they stretch so far to attract new businesses. They believe they must secure a future for their constituency and their families.
     
All we can ask is that officials are good stewards of our limited resources. If we are unhappy with them, we will have to change leadership. If we choose to limit the money for incentives, then we limit their ability to negotiate and deliver new companies to our region.

John Paul Galles is the publisher of Greater Charlotte Biz.
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