Heuts: Tier change ‘bittersweet’Published 8:11pm Thursday, November 29, 2012
As of 2013, Beaufort County will no longer be considered among the poorest counties in the state.
The N.C. Department of Commerce this week notified Beaufort County officials the county would no longer be ranked among North Carolina’s 40 most-distressed counties, according to County Manager Randell Woodruff.
That change means Beaufort County’s economy has improved, but it also means the county and many government agencies within the county will lose advantages such as economic-development incentives the Department of Commerce designates for the state’s poorest regions.
“I think it’s bittersweet,” said Bob Heuts, Beaufort County’s economic-development director, on Thursday.
Using a statutory formula outlined in the 2006 Tax Credits for Growing Businesses — more commonly known as Article 3J tax credits — the Department of Commerce annually assembles required statistics for each of North Carolina’s 100 counties, applies the formula and assigns a tier designation ranking from 1 to 3.
The rankings are based on an assessment of each county’s unemployment rate, median household income, population growth and assessed property value per capita. In addition, any county with a population of less than 12,000 or a county with a population of fewer than 50,000 residents with 19 percent or more of those people living below the federal poverty level automatically are designated as among the most-distressed counties.
Tier 1 counties are the most economically distressed, and Tier 3 counties are the least. Eligible businesses that locate in lower-tiered counties are eligible for some grant programs and larger tax credits than those that locate in higher-ranked areas.
The law calls for the 40 most-distressed counties to become Tier 1 counties, the next 40 counties to be designated as Tier 2 counties and the 20 most-prosperous counties to become Tier 3 counties.
Beaufort County has been ranked among the 40 poorest counties since at least 2007.
In past years, local economic-development officials have considered the loss of tax credits and other incentives that they worked with Marc Basnight, then leader of the state Senate, to change the formula used by the Department of Commerce to enable Beaufort County to continue to meet Tier 1 criteria.
The Department of Commerce is expected to announce the tier rankings for all of North Carolina’s counties later this week.
In an email received Thursday morning, Woodruff said he had been notified by Dale Carroll, assistant secretary of commerce, that, effective Jan. 1, 2013, Beaufort County would move from the ranks of Tier 1 counties to Tier 2 counties.
In that email, Woodruff said he was “very surprised with the level of poverty here” that Beaufort County will no longer be considered among the state’s poorest counties.
The change in tier ranking is because, in part, the poverty level in Beaufort County dropped from 19.5 percent to 17.2 percent and the increase in the value of property located in Beaufort County.
While the improved economic climate is good news, the loss of tax credits and grant opportunities that go along with Tier 1 status is bad news for economic development interests in the county, said some county officials.
Tier designations determine the available amount of tax credits for job creation and business property investment in a list of eligible industries. They include manufacturing, motorsports, aircraft maintenance and repair, air courier services, warehousing, customer service call centers, research and development, electronic shopping and mail order houses, wholesale trade and information technology, according to the Department of Commerce.
Potential benefits to companies under each tier designation in 2012 include:
• Tier 1 — $12,500 tax credit per new job with a requirement to create at least five jobs, and a 7-percent tax credit for eligible business property expenditures.
• Tier 2 — $5,000 tax credit per new job with a requirement to create at least 10 jobs, and a 5-percent tax credit for eligible business property expenditures of more than $1 million.
• Tier 3 — $750 tax credit per new job with a requirement to create at least 15 jobs, and a 3.5-percent tax credit for eligible business property expenditures of more than $2 million.
Heuts said while the loss of tax credits to businesses locating in Beaufort County is a concern, he is more concerned about the affect on the change in status on grants from organizations such as the Golden LEAF Foundation, which uses tier status among its considerations in awarding grants.
Lee County, where Heuts served as head of economic development before coming to Beaufort County, was frequently ranked among Tier 2 counties.
“I’ve been in a Tier 2 county for years, and we tried to get anything we could get,” he said. “That’s our job. And I will do the same thing here.”