THE SCEDA
ECONOMIC DEVELOPMENT HANDBOOK
S C E D A E C O N O M IC DE V E L OP M E NT HANDBOOK | 2
THE SCEDA
ECONOMIC DEVELOPMENT HANDBOOK
01 CHAPTER
S C E D A E C O N O M IC DE V E L OP M E NT HANDBOOK | 4
Why Economic Development is Important to South Carolina Economic development is the process through which wealth is increased in a community by attracting investment and jobs to the area. Many definitions of economic development exist, but ultimately economic development should be defined by each local community based on their unique needs and expectations. For most counties in South Carolina, the focus of their economic development efforts is manufacturing and distribution. In some metropolitan areas, the focus is widened to include corporate headquarters, call centers, back-office operations, IT companies, and other knowledge-based businesses. In some communities, economic development includes tourism, small business development, downtown development, and entrepreneurship. Regardless of how it is defined, economic development is important to all communities in South Carolina because of its potential to improve the lives of its citizens. Successful economic development should do the following: •
Improve the quality of life in a community by bringing wealth into the area. The theory is that new jobs bring increased payrolls, which creates more disposable income to be spent in the community. In turn, everyone’s quality of life will improve as more wealth is spread throughout the community.
•
Bring new jobs to the community. The main emphasis behind every economic development effort in the country must be job creation. As mentioned earlier, this is how wealth is increased in a community.
•
Increase the tax base of a community. As new companies locate in an area and existing companies expand, capital investment increases the tax base, which helps to pay for essential services such as schools,
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police, fire, and other local government functions. By increasing the tax base and attracting new businesses, successful economic development also spreads the tax burden, alleviating some of the burden on homeowners. •
Diversify the local economy. As anyone who has felt the effects of offshoring in the 1990s and 2000s will tell you, diversification of the local economy is critical for a community’s economic health. Having a variety of industry sectors in a community protects an area from downturns in any one business sector. A good example of this impact is the devastation caused by textile mills closing in small towns across the South. For those communities with a more diverse economy, the downturn in the textile industry did not have as devastating an effect as in those communities where the mill was the primary business in town.
•
Increase pool of community volunteers. New companies often want to be involved with local charitable and nonprofit organizations as a way to raise their profile and give back to the community. Local nonprofits benefit from the increase in volunteers available for their programs.
Regardless of the size of a community, economic development can and should play an important role in improving the lives of its citizens. Helping attract new jobs and capital investment to pay for essential services is critical to the economic well-being of a community. Its value cannot be overemphasized.
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02 CHAPTER
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The Economic Development Process Economic Development is the process undertaken to create jobs and wealth and improve the quality of life within a community. It refers to the enhancement of economic activity within a community; and whether they are aware or not, the entire community is involved. The quality of schools, roads, retail, services, tourism, housing, politics, water service, wastewater service, electric service, and industrial products will determine if your community will grow or stagnate. The most visible economic development efforts are accomplished by the local (city or county) economic development office. They usually focus on three main activities: the recruitment of new industry, the retention of existing industry, and the development of new industrial products (sites, buildings, and industrial parks). For the purposes of this handbook, we will focus on the site selection process a company may go through as it determines if it will locate in your community.
01
PRE-PLANNING: Company creates a Site Requirement List. Included are all elements needed to establish a successful and profitable operation. The list is prioritized and can include: •
Requirements for site (size and characteristics)
•
Labor (number and skill sets)
•
Utilities (electric, natural gas, water, wastewater)
•
Transportation (highway access, rail, port, airports)
•
Cost of doing business (taxes, fees)
The company may choose to perform this task internally or contract with a Site Location Consultant.
02
ESTABLISH geographic requirements—proximity to suppliers, customers, existing plants, and competitors.
All of this has occurred without contacting any economic development organization: state, regional, or community.
All of this has occurred without
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IDENTIFY areas of interest and begin compiling general
•
Cost of doing business (taxes, fees)
The company may choose to perform this task internally or contract with a Site Location Consultant.
02 03
ESTABLISH geographic requirements—proximity to suppliers, customers, existing plants, and competitors.
IDENTIFY areas of interest and begin compiling general information from the Internet including the websites of various economic development organizations.
04
COMPILE information for comparison purposes.
05
ELIMINATE areas/sites/communities that do not meet the requirements.
06 07 08 09 10 11
regional, or community.
All of this has occurred without contacting any economic development organization: state, regional, or community.
Contact economic development agencies—state, regional, or county—and issue a REQUEST FOR INFORMATION (RFI). An RFI is a questionnaire designed to gather specific information about the site and/or community. It can be brief or quite extensive.
The contacted agency (Department of Commerce, Regional Alliance, or County) ANSWERS all questions posed and returns the RFI to the company or consultant.
The company or consultant REVIEWS all submitted information and identifies the sites/communities that best fit their needs. All other sites/communities are eliminated. The remaining sites/communities, the “short list,” are contacted for more information or to schedule a visit.
INITIAL SITE VISITS ARE MADE. These visits may include a consultant, a consultant and company official, or just company officials.
THE LIST MAY BE SHORTENED to include only a few (2-4) locations. Generally, the short list of sites/communities meet the criteria of the project and provide a successful location for the company.
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The consultant and/or company may return for MULTIPLE VISITS depending on the complexity of the project.
10 09 11 10
THE LIST MAY BE SHORTENED to include only a few (2-4) locations. INITIAL SITE MADE. These visits may Generally, the VISITS short listARE of sites/communities meet the include criteria a consultant, a or just company officials. ofconsultant the projectand andcompany provide a official, successful location for the company.
The consultant company may return for MULTIPLE VISITS THE LIST MAYand/or BE SHORTENED to include only a few (2-4) locations. dependingthe on short the complexity of the project.meet the criteria Generally, list of sites/communities of the project and provide a successful location for the company.
12 11
It is important to note that the agenda of all meetings are determined by the prospect—not The COMMUNITY PROVIDES of the incentives they will the local developer. They determine who they DETAILS want to meet and talk with during these visits. make available and/or to the prospective company. The package VISITS may include The consultant company may return for MULTIPLE statutory and incentives from the state (Department depending ondiscretionary the complexity ofuitilities, the project. Visits may be requested with local industires, educators, county officials,ofor other Commerce), the local government, and/or utilities. These incentives are entities important to the process. offered in exchange for company commitments of new capital investment and jobPROVIDES creation. DETAILS of the incentives they will The COMMUNITY
12 13
make available to the prospective company. The package may include statutory and discretionary incentives from the state (Department of Commerce), localby government, and/or utilities. These incentives are DECISION ISthe MADE the company. offered in exchange for company commitments of new capital investment and job creation.
13
DECISION IS MADE by the company.
It is also important to note that confidentiality is very important during the process. Most companies want their site search to remain confidential. A level of trust is built between the company and the county if confidentiality is maintained. Unwanted publicity will negatively affect a deal, and can cause it to fall through.
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03 CHAPTER
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The Role of Elected Officials in Economic Development Elected officials at all levels of government are critical to the economic development success of South Carolina and its communities. As policy makers, elected officials set the tone and message for how the world views the state and its cities and counties. Just as important, elected officials need to support economic development by providing the necessary resources to be competitive in today’s business climate. In South Carolina, all elected officials have a role to play in supporting the process. Some have more active roles, such as the governor, state legislators, county councils, and city councils. Local school boards may also be involved. Elected officials can be supportive of economic development in a variety of ways, but the following are the most critical roles elected officials can play.
PROVIDE THE NECESSARY RESOURCES TO SUPPORT STRONG STATE AND LOCAL ECONOMIC DEVELOPMENT ORGANIZATIONS. On the state level, the
General Assembly should provide sufficient funding for a top-notch Department of Commerce as well as other related state agencies. On the local level, county and city councils should fund both local and regional development organizations that carry out the primary mission of recruiting new jobs to the community. Typical costs for an economic development office include salaries, travel, research, recruitment expenses, office space, and marketing.
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INSTILL A PRO-BUSINESS CLIMATE IN THE STATE AND COMMUNITY. A pro-
business climate is essential to the success of any economic development effort. This competitive environment can encompass many things, including reasonable and stable taxes, supportive workforce development programs, and efficient and streamlined regulatory processes. A pro-business climate can also mean supporting product development efforts to ensure industrial parks and buildings are available when prospects visit the area. Even more important is the attitude elected officials project to companies by conveying they understand the needs and concerns of businesses.
INVEST IN INFRASTRUCTURE. Today’s site selection process is centered on speed to
market. Decisions can be made in weeks and months where in the past, projects could take more than a year. Given the compressed nature of the selection process, companies do not have time to wait for local governments to construct infrastructure for projects. Companies expect water and sewer lines to be at or very near industrial parks and sites. Without the necessary infrastructure in place, communities will be eliminated from consideration in favor of those areas that have already invested in infrastructure. Elected officials have to make the tough decision of allocating funds for infrastructure to be installed before prospects arrive.
APPROVE APPROPRIATE INCENTIVE PACKAGES. Elected officials at both the state
and local levels play the critical role of approving incentives to attract additional investment and jobs to the community. Incentives are often the tiebreaker between two competitive locations and should be utilized to improve a community’s shortcomings. Incentives should be considered an investment in the community that helps influence a company’s site selection decision and should offer a positive return in a cost/benefit analysis.
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PROTECT THE PUBLIC’S INVESTMENT. As the guardian of the taxpayers’ money,
elected officials must ensure that any incentives offered must be in the public’s best interest and protected in case a company does not fulfill its commitments. This generally includes the use of “clawbacks” that require a company to pay back all or a portion of an incentive should it not meet its contractual obligations. Protecting the public’s investment also means conducting a cost/benefit analysis on each deal to ensure the benefits a community receives outweigh the costs associated with the project. Using a cost/benefit analysis at the beginning and clawbacks at the end should give the public confidence that the community’s elected officials are indeed protecting taxpayers’ money. While this is a short list of things elected officials should do, there are a few items that they should not do. First, elected officials should refrain from micromanaging the local economic development organization. Hire competent professionals to do the job and then let them do it. The local economic developer will call on local officials when the need arises, which may not be for every project.
HIRE COMPETENT PROFESSIONALS TO DO THE JOB AND THEN LET THEM DO IT.
Second, do not breach confidentiality. While it’s natural to get excited about a prospect, companies usually require confidentiality for a variety of legitimate reasons and breaching that confidentiality can jeopardize the project. Elected officials should always act in accordance with the Freedom of Information Act guidelines, which require confidentiality during economic development negotiations. Economic development is often referred to as a team sport. In this analogy, elected officials are the coaching staff that sets the attitude of the team, guides the overall direction of the game, and gives the team the tools to win. Likewise, elected officials should set the business climate, guide overall economic development policy, and provide the resources for the economic development organization to be successful.
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04 CHAPTER
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Economic Development Participants In South Carolina, multiple organizations, both public and private, are involved in economic development. Each organization has different expertise and resources, but the ultimate purpose is to establish and cultivate an economic development environment that attracts new industry, expands existing industry, creates jobs, and raises the standard of living for the citizens of South Carolina.
Economic development professionals may be employed by:
The structure of the economic development organization can include:
• Municipalities
• Public
• Counties
• Public-private
• State agencies
• Private
• Regional economic development organizations
• Nonprofit
• Chambers of Commerce
01 LOCAL ECONOMIC DEVELOPMENT At the local level, economic developers may work for city or county governments, publicprivate economic development partnerships, Chambers of Commerce, or other private organizations. Each varies in its organizational structure, role, and resources available. For example, some local developers report directly to their county administrator or committees made up of county council members. Others maintain economic development boards appointed by city or county councils. These boards act in an advisory capacity and assist with the adaptation and implementation of local economic development programs.
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Other developers may report directly to publicprivate partnership boards chartered by a local government entity. The developer is responsible for the recruitment, retention, and expansion of industry. They are responsible for the production of promotional and informational materials regarding the community. The local developer is also tasked with ensuring the latest data about the community is readily available.
ECONOMIC DEVELOPERS MAY WORK FOR CITY OR COUNTY GOVERNMENTS, PUBLIC-PRIVATE ECONOMIC DEVELOPMENT
Community profile information can include, but is not limited to: • Available sites and buildings
• Population characteristics
• Workforce characteristics
• Education
• Workforce training
• Location
• Incentives
• Transportation
The community profiles maintained by the local developer may contain information about specific local businesses, such as a list of the leading employers in a community. Local developers maintain relationships with major employers and other community business leaders. Through these working relationships, the developer is able to communicate any regulatory changes at the local, state, or federal level which may impact businesses while also ensuring that the needs (workforce, training, suppliers, etc.) of companies are being met. The local developer is the point of contact for federal, state, and regional economic development organizations. As such, they must work closely with elected officials and economic development professionals at all levels of government, as well as economic development allies from the private sector, on issues such as product development, infrastructure, workforce readiness, and project management.
02 STATE ECONOMIC DEVELOPMENT The South Carolina Department of Commerce (SCDOC) is the state’s lead economic development agency, working to promote economic opportunity for individuals and businesses. SCDOC’s primary mission is to recruit new businesses to South Carolina as well as provide a wide range of support to existing businesses across the state. SCDOC has had a presence in Eurpoe and Asia for decades, when they provide advisory and on-theground support services including export development and international recruitment, among other activities. This is done through attendance at industry trade shows, and other marketing initiatives. SC ED A EC ON OMIC D EVELOP MEN T H A N D B OOK | 19
SCDOC assists companies in finding sites and buildings, offers grants for community development and infrastructure improvements, provides tools to enhance workforce skills, and helps businesses prosper in South Carolina. Services and expertise include: • Existing business support (permitting issues, regulations and licensing, financial resource connections, etc.) • Small business and entrepreneurial development support • Assistance with start-ups and expansions (Innovation) • Support to local economic development organizatons and leadership
• Workforce Development • Supplier development assistance and comprehensive support to existing industry • Export development through international strategy and trade • Recycling market development • Lead generation
THE SCDOC IS OFTEN THE FIRST POINT OF CONTACT WITH PROSPECTIVE INDUSTRIAL CLIENTS. THEY WORK WITH REGIONAL ECONOMIC DEVELOPMENT GROUPS AND LOCAL DEVELOPERS TO MATCH A COMMUNITY’S ASSETS (SITES, BUILDINGS, WORKFORCE AVAILABILITY AND SKILLS, ETC.) WITH A CLIENT’S SITE SELECTION CRITERIA. The SCDOC can be found online at www.sccommerce.com. Other state agencies that play an integral role in economic development include: • Office of the Governor www.governor.sc.gov
• South Carolina Department of Revenue www.sctax.org
• General Assembly www.scstatehouse.gov
• South Carolina Department of Transportation www.dot.state.sc.us
• South Carolina Technical College System www.sctechsystem.com • ReadySC www.readysc.org • South Carolina Jobs–Economic Development Authority www.scjeda.com
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• South Carolina Department of Health and Environmental Control www.scdhec.gov • South Carolina Ports Authority www.port-of-charleston.com
03 REGIONAL ECONOMIC DEVELOPMENT Eight regional alliances represent and support local economic development efforts in nearly every South Carolina county. Eight are based in South Carolina, with one based in the Charlotte area. Regional organizations provide an array of services to each member county. These services can include: • Marketing
• Product development
• Research
• Business development
• Project management As with local economic development offices, the structure, role, and level of financial resources and application of those resources varies with each of the regional alliances. Regional organizations also work with their member counties and the SCDOC with industrial recruitment and expansion through national and international marketing efforts.
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04 ECONOMIC DEVELOPMENT ALLIES South Carolina is fortunate to have an extensive private-sector network of professionals involved in economic development. These allies represent an integral part of the economic development effort in South Carolina. They lend their expertise by working with prospects, offering technical assistance, and assisting with product development, project funding, and financing. These allies include, but are not limited to: • Banks and financial institutions • Site selection consultants • Utility companies • Technical colleges • Universities • Railroads • K-12 school systems • Councils of governments
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• Real estate brokerage and development firms • Environmental firms • Construction companies • Chambers of Commerce • Architects and engineering firms • Law firms • Telecommunications firms
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05 CHAPTER
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Incentives “Incentives are not strategy, they are tactics.” –Carlos Ghosn, Chairman of Nissan Motor Co. Ltd. The discussion surrounding incentives seems to lead the headlines of almost every economic development investment announcement, especially in the South. These states, including South Carolina, have long considered monetary rewards for corporate investment a necessity for success. The following chart is the result of a survey conducted by Area Development magazine. The publication asked, “What assets are most valued by both corporate decision makers and economic development project consultants for locating companies?” The responses that follow may be surprising.
COMBINED RATINGS* of 2016 FACTOR
COMBINED RATINGS* of 2016 FACTORS
SITE SELECTION FACTORS
SITE SELECTION FACTORS
COR POR AT E SUR VEY 2016
Ranking
2016
2015
CONSULTANTS SUR VEY 2016
Ranking
2016
2015
1.
Highway Accessability
94.4
88.0 (2)**
1.
Availability of Skilled Labor
100.0
2.
Availability of Skilled Labor
89.8
92.9 (1)
2.
98.7
93.5 (6)
3.
Labor Costs
89.6
80.8 (6)
Highway Accessibility
3.
95.8
96.1 (2)
4.
Occupancy or Construction Costs
86.0
85.4 (4)
Labor Costs
3T.
96.1 (2T)
State and Local Incentives
84.0
75.8 (9)
Proximity to Major Markets
95.8
5. 6.
78.8 (7)
State and Local Incentives
95.8
94.9 (4)
Corporate Tax Rate
82.3
3T.
7.
Tax Exemptions
79.7
74.7 (11)
3T.
Available Land
95.8
91.0 (7)
8.
Energy Availability and Costs
78.5
75.3 (10)
3T.
Tax Exemptions
95.8
91.0 (7T)
9.
Proximity to Major Markets
78.1
76.3 (8)
8.
Energy Availability and Costs
93.0
85.8 (13)
10.
Quality of Life
76.4
87.6 (3)
8T.
Proximity to Suppliers
93.0
84.2 (14)
11.
Available Buildings
75.5
83.7 (5)
10.
Training Programs/Technical Schools
91.7
86.9 (12)
12.
Available Land
75.3
73.9 (13)
11.
Available Buildings
88.9
94.8 (5)
13.
Expedited or “Fast-Track” Permitting
71.7
74.2 (12)
12.
Accessibility to Major Airports
88.8
88.4 (9)
14.
Environmental Regulations
70.8
69.8 (14)
13.
Expedited or “Fast-Track” Permitting
87.3
88.4 (9T)
14T. Low Union Profile
70.8
66.3 (18)
14.
Occupancy or Construction Costs
86.0
84.0 (15)
16.
Right-to-Work State
70.1
15.
Inbound/Outbound Shipping Costs
84.6
88.4 (9T)
Inbound/Outbound Shipping Costs
69.1
16.
Low Union Profile
82.0
83.1 (16)
17.
Environmental Regulations
80.3
82.9 (17)
67.7 (16)
18.
Corporate Tax Rate
78.9
74.1 (20)
64.3 (20)
19.
Right-to-Work State
76.4
76.7 (18)
52.6 (24)
20.
Water Availability
72.2
75.3 (19)
58.6 (21)
21.
Availability of Advanced ICT Services
69.5
57.2 (25)
47.8 (26)
22.
Availability of Unskilled Labor
69.0
65.0 (21)
Raw Materials Availability
64.8
64.9 (22)
63.3
64.5 (23)
17. 18.
Training Programs/Technical Colleges
18T. Availability of Long-term Financing 20. 21. 22. 23.
Proximity to Suppliers Rawl Materials Available Accessibility to Major Airports Availability of Unskilled Labor
66.7 66.7 66.0 53.7 52.4 51.9
67.7 (16T) 64.6 (19) 68.7 (15)
100.0 (1)**
24.
Water Availability
51.9
54.6 (22)
23.
25.
Availability of Advanced ICT Services
40.9
53.6 (23)
24.
Quality-of-life
26.
Proximity to Innovation/Commercialization R&D Centers
39.2
48.4 (25)
25.
Proximity to Innovation/ 62.0 61.9 (24) SC ED A EC ON OMIC D EVELOP MEN T H A N D B OOK | Commercialization/R&D Centers Railroad Service
45.1
52.0 (26)
27.
Railroad Service
33.7
32.4 (27)
26.
28.
Water Availability
18.1
24.0 (28)
27.
Availability of Long-Term Financing
40.8
39.0 (28)
28.
Waterway or Oceanport Accessibility
29.6
42.9 (27)
25
10. 11. 12. 13. 14.
76.4
Quality of Life Available Buildings
75.5 75.3
Available Land Expedited or “Fast-Track” Permitting Environmental Regulations
71.7 70.8
87.6 (3)
10.
Training Programs/Technical Schools
91.7
86.9 (12)
83.7 (5)
11.
Available Buildings
88.9
94.8 (5)
73.9 (13)
12.
Accessibility to Major Airports
88.8
88.4 (9)
74.2 (12)
13.
Expedited or “Fast-Track” Permitting
87.3
88.4 (9T)
69.8 (14)
14.
Occupancy or Construction Costs
86.0
84.0 (15)
COMBINED RATINGS* of 2016 70.8 FACTOR 66.3 (18)
88.4 (9T) COMBINED RATINGS* of 2016 FACTOR
14T. Low Union Profile
15.
Inbound/Outbound Shipping Costs
16.
67.7 (16T)
16.
Low Union Profile
64.6 (19)
17.
Environmental Regulations
80.3
82.9 (17)
66.7
68.7 (15)
18.
Corporate Tax Rate
78.9
74.1 (20)
2016 66.7
2015 67.7 (16)
Ranking 19. Right-to-Work State
2016 76.4
2015 76.7 (18)
88.0 (20) (2)** 64.3
20. 1.
Water Availability Highway Accessability
72.2 94.4
75.3 88.0 (19) (2)**
92.9 (24) (1) 52.6
21. 2.
Availability ICT Services Availability of of Advanced Skilled Labor
69.5 89.8
57.2 92.9 (25) (1)
80.8 (21) (6) 58.6
22. 3.
Availability Labor Costsof Unskilled Labor
69.0 89.6
65.0 80.8 (21) (6)
85.4 (26) (4) 47.8
23. 4.
Raw Materials Availability Costs Occupancy or Construction
64.8 86.0
64.9 85.4 (22) (4)
75.8 (22) (9) 54.6
24. 5.
Quality-of-life State and Local Incentives
63.3 84.0
64.5 75.8 (23) (9)
Proximity Innovation/ Corporateto Tax Rate Commercialization/R&D Centers Tax Exemptions Railroad Service Energy Availability and Costs Availability of Long-Term Financing Proximity to Major Markets Waterway or Oceanport Accessibility
62.0 82.3
61.9 78.8 (24) (7)
79.7 45.1 78.5 40.8 78.1 29.6
74.7 52.0 75.3 39.0 76.3 42.9
76.4
87.6 (3)
17. 18.
C OR POR AT E SUR VEY 20 70.11 6
Right-to-Work State
Inbound/Outbound Shipping Costs
Training Programs/Technical Colleges
Ranking 18T. Availability of Long-term Financing 1. 20. 2. 21. 3. 22. 4. 23. 5. 24.
69.1
SITE SELECTION FACTORS
Highway Accessability Proximity to Suppliers Availability of Skilled Labor Rawl Materials Available Labor Costs to Major Airports Accessibility Occupancy of or Unskilled Construction Costs Availability Labor State and Local Incentives Water Availability
94.4 66.0 89.8 53.7 89.6 52.4 86.0 51.9 84.0 51.9
6. 25.
Corporate Tax Rate Availability of Advanced ICT Services
82.3 40.9
78.8 (23) (7) 53.6
25. 6.
7. 26.
Tax Exemptions Proximity to Innovation/Commercialization R&D Centers Energy Availability and Costs
79.7 39.2
74.7 (25) (11) 48.4
8.
78.5
75.3 (10)
27. 9.
Railroad Service Proximity to Major Markets
7. 26. 8. 27. 9. 28.
33.7 78.1
32.4 (27) 76.3 (8)
28. 10.
Water Availability Quality of Life
18.1 76.4
24.0 (28) 87.6 (3)
11.
Available Buildings
75.5
83.7 (5)
*All figures are percentages and are the total of “very important” and “important” 12. Available Land 75.3 73.9ratings (13) of the Area Development Corporate Survey and are rounded to the nearest tenth of a 13. Expedited or “Fast-Track” Permitting 71.7 74.2 (12) percent. **(2015 ranking)
10.
84.6
CORPORATE SUR VEY 82.0 2016 SITE SELECTION FACTORS
Quality of Life
83.1 (16)
(11) (26) (10) (28) (8) (27)
11. Available Buildings 75.5 83.7ratings (5) *All figures are percentages and are the total of “very important” and “important” of the Area Development Corporate Survey and are rounded to the nearest tenth of a 12. Available Land 75.3 73.9 (13) percent. **(2015 ranking) 13.
Expedited or “Fast-Track” Permitting
71.7
74.2 (12)
70.8
69.8 (14)
14.
Environmental Regulations
70.8
69.8 (14)
14T. Low Union Profile
70.8
66.3 (18)
14T. Low Union Profile
70.8
66.3 (18)
16.
Right-to-Work State
70.1
67.7 (16T)
16.
Right-to-Work State
70.1
67.7 (16T)
17.
Inbound/Outbound Shipping Costs
69.1
64.6 (19)
17.
Inbound/Outbound Shipping Costs
69.1
64.6 (19)
18.
Training Programs/Technical Colleges
66.7
68.7 (15)
18.
Training Programs/Technical Colleges
66.7
68.7 (15)
18T. Availability of Long-term Financing
66.7
67.7 (16)
18T. Availability of Long-term Financing
66.7
67.7 (16)
20.
Proximity to Suppliers
66.0
64.3 (20)
20.
Proximity to Suppliers
66.0
64.3 (20)
21.
Rawl Materials Available
53.7
52.6 (24)
21.
Rawl Materials Available
53.7
52.6 (24)
22.
Accessibility to Major Airports
52.4
58.6 (21)
22.
Accessibility to Major Airports
52.4
58.6 (21)
23.
Availability of Unskilled Labor
51.9
47.8 (26)
23.
Availability of Unskilled Labor
51.9
47.8 (26)
24.
Water Availability
51.9
54.6 (22)
24.
Water Availability
51.9
54.6 (22)
25.
Availability of Advanced ICT Services
40.9
53.6 (23)
25.
Availability of Advanced ICT Services
40.9
53.6 (23)
26.
Proximity to Innovation/Commercialization R&D Centers
39.2
48.4 (25)
26.
Proximity to Innovation/Commercialization R&D Centers
39.2
48.4 (25)
14.
Environmental Regulations
It would appear that, despite common perceptions, a community will not be able to incent 27. Railroad Service 33.7 32.4 (27) 27. Railroad Service 33.7 32.4 (27) a company to make an ill-advised investment decision if other assets such as18.1 skilled24.0 labor, 28. Water Availability 18.1 24.0 (28) 28. Water Availability (28) infrastructure, and a good transportation network are not present. What, then, does this tell are percentages and are the total of “very important” and “important” ratings *All figures are percentages and are the total of “very important” and “important” ratings us *All atthefigures the local Corporate levelSurvey about incentives asSurvey important totenth help of Area Development and are the roundedapplication to the nearest tenth of a and useof of the Area Development Corporate and are rounded tools to the nearest of a percent. **(2015 ranking) percent. **(2015 ranking) achieve desired outcomes?
INCENTIVES NEED TO MAKE FISCAL SENSE FOR BOTH THE COMMUNITY AND THE COMPANY. Each community needs to make sure any incentive provided is both
valuable to the prospective company and provides a long-term benefit to the community. Every new or expanding company can bring significant benefits, but also additional community costs. Cost/benefit analysis programs can help communities assess priorities and target goals to ensure a good deal for the community. It is important for elected officials and economic development organizations to align their objectives and then plan scenarios for the use of any local incentive. For example, if a specific industry cluster or job type (aviation/aeronautics, automotive, plastics) is an identified target, incentives can be tailored to help achieve success in that area, which will ultimately benefit the entire community.
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INCENTIVES SHOULD BE TAILORED TO MEET THE SPECIFIC NEEDS OF THE COMPANY AND USED WHEN NECESSARY TO CLOSE THE DEAL. Unrealistic
expectations are often set by touting potentially valuable incentive programs without first asking what is most valuable to the prospective company. While property tax reductions are certainly welcome by most companies, they may not be a deciding factor in the investment decision. Due diligence is required to assess what a local community needs to do to win a project. By “leading with their chin” on incentives, a community can lose sight of what it takes to differentiate itself from the competition. However, by taking time to listen, a community can often determine the relative value of a particular incentive and then apply that knowledge to set itself apart from the competition.
INCENTIVES SHOULD BE MONITORED AND REVIEWED, NOT ONLY TO MAKE SURE CONTRACTUAL OBLIGATIONS ARE MET, BUT ALSO TO MEASURE THEIR EFFECTIVENESS. Each community should establish an annual program to
review incentive contracts to ensure obligations are being met by both parties, but also to provide feedback on their value. Since some incentive agreements can be highly complex, benchmarking each project allows a community to determine the effectiveness of a particular program and make adjustments if needed. If there is a particular investment or job creation benchmark that is not being met by the company, tracking allows the community to address any outstanding issues.
INCENTIVES NEED TO BE CONSISTENTLY AND LOGICALLY APPLIED. Incentive
programs in South Carolina are designed primarily to benefit manufacturing, distribution, and large office projects. While each prospect is unique, it is important for a community to uniformly apply incentive programs based on their own established criteria to ensure as much consistency as possible.
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Since many existing industries, especially smaller businesses, do not meet minimum requirements, there can be resentment if incentives vary and are randomly applied. While variation within a standard is often necessary to effectively negotiate, a reasonable standard should be followed.
A COMMUNITY NEEDS TO KNOW WHEN NOT TO USE INCENTIVES. It is relatively easy to prove that most new and expanding industry development projects bring with them substantial benefits (new jobs and salaries, additional taxes from new buildings and machinery, increased local sales tax revenue, etc.). However, there is an incentive “line in the sand� that once crossed, will ultimately cost the community more in providing required local services to the company than those benefits provide.
While no company actively seeks to erode a community’s quality of life, an inequitable incentive deal may result in exactly that. For example, tax reductions and abatements provided to industries result in lower overall collections needed to operate schools, build and maintain roads, and provide for police and fire protection. The tax burden to maintain these systems then falls on other businesses or homeowners. A thoroughly performed cost/benefit analysis can help the community know where to set return-on-investment minimums for each prospective company. Elected and appointed government officials play a valuable role in attracting new jobs and investment to a local community. As gatekeepers for many of these incentive programs, local economic developers rely on this group as important partners in any successful new or existing company investment. By working together, they can achieve the goal of making their community a better place to live and work.
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06 CHAPTER
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Economic Development Marketing Effective marketing is the key for any economic development organization to generate interest in their community. Whatever the approach, marketing efforts should include a targeted plan with outcomes and measurable, attainable goals. Marketing should focus on internal and external audiences. Most importantly, it should highlight a community’s assets. A balanced mix of email marketing, social media, advertising, media relations, and face-toface meetings should be part of the strategy. Since most companies and consultants begin their search online, a community’s economic development website should be its primary marketing tool. The sophistication of the website will vary depending on the community’s resources, but at the very least it should be relevant, navigable, and up-to-date. Partnerships with economic development allies locally, regionally, statewide, and nationally can enhance a marketing plan’s reach. If no existing staff is in place to develop and execute a plan, engaging a reputable marketing firm is highly recommended. For the purposes of this handbook, a three-part approach to developing a marketing plan will be outlined. This approach includes: • New industry recruitment • Existing industry retention • Internal communications within a community
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Starting with an overall objective and then drilling down to each of these specific areas with tactical steps can lead to a successful strategy. Many of the tactical steps can be achieved internally at minimal or no cost, while others will require some investment. Remember, the overall goal is to market the attributes, value, and qualities of a community externally to prospective business sectors and internally to both the existing industry and the community at large. It is also imperative that all key stakeholders are included in the development of a plan. After all, most economic development organizations must rely on the expertise and energy of a number of resources to be successful. The following is a high-level example of a strategic marketing plan that can be customized or expanded to fit the specific needs of most organizations. The plan should always be embedded in a living document that shows the status of each tactical step. Although this example does not indicate responsible parties for each item, assignments should be made.
X YZ ECONOMIC DEVELOPMENT ORGANIZ ATION MARKETING PLAN Objective: To create a structured process for generating new industry leads, strengthening relationships with existing industry, and improving internal communications.
Goals: • Increase requests for information by 10%
• Generate one qualified lead from existing industry
• Generate two qualified leads from new industry
• Secure four or more community speaking engagements
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Tactical Steps
Expected Outcomes
Status
PROSPECTING Update sites and buildings database
Increase sites and buildings portfolio
11 sites marketed: 10 industrial, 1 commercial; 2 certified industrial sites, 4 identified for certification
Update market collateral
Support USPS mail campaign
Completed
Internet marketing (update website, Twitter, Facebook, LinkedIn, blog; video on Youtube; email campaign)
Improve appearance, increase value-added information, improve tracking engine, improve website navigation, improve organization and layout of information, highlight community attributes
Completed and active
Launch eNewsletter
Add value to relationships with existing industry, public officials, regional alliance, DOC, utilities, media, tourism, site consultants, etc.
Launched and active
Identify target industries (states/countries with highest concentration of target industries)
Industry: manufacturing (automotive, medical devices); Industry: distribution
Completed
Create contact database (utilize Hoovers, existing industry, community; purchase targeted industry mailing lists)
Industry/sector-specific contact lists
Databases set up with ongoing updates, purchased site consultant database Q4 2014 for Q1 2015 eBlast
Launch email marketing campaign (compelling message that adds value, highlights attributes, call to action, link to website)
Generate leads
Completed, eBlast to launch February 2015
Launch USPS mail campaign (compelling letter, packet of brochures, flyers, etc.)
Generate leads
Driven by results of email campaign
Follow up calls to email campaign and USPS mailing
Qualify suspects and prospects
Driven by results of email and USPS campaign
Track web hits and Internet marketing reports
Qualify suspects and prospects
Daily and weekly
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Tactical Steps
Expected Outcomes
Status
INTERNAL COMMUNICATIONS
Create Mayor’s Forum
Drive collaboration, share best practices, educate, receive input, provide continuous economic development education
Established, meeting quarterly
Speaking engagements
Educate citizens about mission and goals of development organization, drive county-wide support, encourage collaboration, generate industry leads
Rotary, annual chamber banquet, local chamber board, Rotary Scholars Day, WIB
Attend local civic meetings
Build relationships, communicate and encourage economic development support, generate industry leads
Rotary, local chamber, Civitans, county council, WIB forums, Lions Club
Communicate with county council (written, face-to-face, eNewsletter)
Share activities, provide continuous economic development education, educate about mission/goals of organization, drive countywide support, encourage collaboration, strengthen relationships, offer advice
In process and ongoing
Write newspaper column (economic development update, industry success stories)
Educate citizens about mission and goals of development organization, drive county-wide support, encourage collaboration, provide continuous economic development education, generate industry leads
In process
Launch annual economic development update/report
Educate citizens about mission and goals of development organization, drive county-wide support, encourage collaboration, provide continuous economic development education, generate industry leads
On schedule to be released Q1 2015
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Tactical Steps
Expected Outcomes
Status
EXISTING INDUSTRY Face-to-face meetings with industry decision-makers/ local contacts (one-on-one, industry appreciation/recognitions, plant manager’s forum)
Maintain/strengthen relationships, generate leads, demonstrate support
In process, ongoing
Rally with local leaders/ decision-makers and strategic partners to address needs and concerns of existing industry
Retention
Ongoing, individualized, and just-in-time activities
Utilize existing groups/ organizations to add value and support
Retention
Ongoing
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07 CHAPTER
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Product Development “Product” in the economic development world means industrial buildings, industrial sites, and industrial parks. In large communities, office parks and buildings are also considered product. However, just because a parcel of land is for sale does not mean it is ready for an industry and should be called an industrial site. The parcel must have infrastructure in place (with available capacities), must be available for sale at a specific price, and must be appropriately zoned to be considered by an industrial prospect. A community must have existing industrial sites, industrial buildings, and industrial parks to be competitive. Timeframes for site location decisions have become more compressed than in the past, and the real estate must be ready. Companies are not willing to wait for a community to develop industrial product. Your competition is already prepared. In general, it is best when a county controls the property either through direct ownership, option to purchase, or a formal marketing agreement with the landowner. However, not all counties can afford to purchase or build industrial product. In these cases, arrangements among economic partners can sometimes be formed to accomplish the goal. In more developed areas of the State, the private sector may be interested in providing the resources necessary to develop quality product. These partnerships are the foundation of community growth.
01 INDUSTRIAL BUILDINGS Most economic development projects/prospects begin by saying they want an existing building. It saves them time and money and reduces their risk of project-delaying problems. Some of the building requirements outlined by prospects may include: • Size/square feet
• Column spacing
• Acreage
• Floor Thickness
• Ceiling height
• Truck doors
• Construction type
• Zoning
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Each project and industry has its own requirements. For example, distribution projects require a large number of dock doors. Certain processes require cranes, so column strength and spacing may be important. Heavy stamping machinery requires thicker floors. Building requirements vary.
02 SPEC BUILDING A Speculative (Spec) Building is partially completed building that is constructed to attract a prospect, but leaves many portions incomplete to allow for the buyer/industry to adapt to their specific needs. At a minimum, it has walls and a roof. Some feature a concrete floor while others may have office windows, landscaping, and paved parking. The completion level varies. The advantage of a Spec Building is that it provides a shorter construction time than a new construction facility, and allows the company to get up and running—and making money—faster. A Spec Building also generates prospect traffic (inquiries and visits). It is an advantage to have a Spec Building in your county.
03 INDUSTRIAL SITE An Industrial Site is a parcel of land appropriate for a single industrial facility. It must be available for sale at a determined price. It must be zoned for industrial use and have the necessary infrastructure in place. The surrounding land use is generally compatible with industrial operations. An Industrial Site can become certified if it is evaluated and determined to be ready for development through the State’s Certification Program. The Certification process includes documenting and evaluating many aspects of a property to ensure they meet a minimum set of criteria required by most manufacturing prospects. This process evaluates the ownership availability, the utility feasibility, transportation accesses, zoning and surrounding land use, as well as, due diligence items such as environmental, wetlands, archaeological, endangered species and soil testing. This process can be expensive, but it increases the marketability of the property by reducing risk to perspective prospects.
04 INDUSTRIAL PARK An Industrial Park is a parcel of land developed for multiple users. It is usually master planned, features interior roads, and has various sizes of lots available. Industrial Parks have all infrastructure in place and are usually controlled through Covenants and Restrictions.
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08 CHAPTER
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Workforce Development Education, workforce development, and economic development form a three-legged stool that supports thriving communities. Prospective companies looking to locate in South Carolina, and current businesses looking to expand, require a qualified and skilled workforce to succeed. The unrivaled recruiting, training, and workforce development tools offered in the Palmetto State, as well as the organizations that choose to relocate or expand here, provide citizens with the opportunity to grow and prosper by remaining competitive. South Carolina’s Workforce Advantage • Fast-growing labor force, low corporate tax rates and competitive wages consistently outpace national growth levels • Lowest unionization rate in the U.S. for private sector • Third-lowest rate of manufacturing unionization (1.9%)
• One of the lowest work-stoppage rates in the U.S., with minimal time lost due to strikes • Advantageous labor climate ranked third in the nation for low labor costs • World-class workforce development programs, ranked fifth in the nation by Area Development magazine
South Carolina’s workforce development system is made up of a number of employment and training programs, services, and resources. Workforce development efforts are administered by various state agencies, local workforce development boards, technical colleges, and other workforce-related entities. In an effort to elevate South Carolina’s education and training efforts, legisation has been creating The Coordinating Council for Workforce Development and the Education and Economic Development Coordinating Council to bring together education, workforce and economic development. The goal is to create a competitive workforce advantage for South Carolina that will improve the prosperity of businesses and the lives of its citizens.
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01 SOUTH CAROLINA DEPARTMENT OF COMMERCE A team of 12 dedicated Regional Workforce Advisors located across the state, these individuals work to broker services and resorces between individuals, education and businesses. Serving as a support system for the current and emerging workforce, these individuals advocate industry needs inside the education system, ensuring that state’s secondary and post-secondary schools are developing the skills required by both current and future employers.
02 SOUTH CAROLINA TECHNICAL COLLEGE SYSTEM Comprised of 16 colleges located strategically across the state and two internationallyrenowned statewide programs: readySC™ and Apprenticeship Carolina™, the South Carolina Technical College System is dedicated to furthering economic and workforce development in South Carolina. readySC™ is a key component of South Carolina’s economic development engine program. Focusing on the recruitment and initial training needs of new and expanding organizations in South Carolina, readySC™ provides recruiting, assessment, training development, management, and implementation services at no cost to qualifying companies. Apprenticeship Carolina™ promotes supervised on-th-job training that is provided by an employer at the workplace and is customized to meet job-specific needs.
03 SOUTH CAROLINA DEPARTMENT OF EMPLOYMENT AND WORKFORCE The South Carolina Department of Employment and Workforce (DEW) is responsible for paying unemployment insurance benefits, collecting unemployment taxes, helping people find jobs, matching businesses with qualified candidates, and collecting and disseminating state and federal employment statistics. DEW also partners with the SC Works centers, State Workforce Investment Board, and the 12 local workforce investment areas to provide services to meet the needs of the state’s businesses, job seekers, and those looking to further their careers.
WORKFORCE AND ECONOMIC DEVELOPMENT The Division of Workforce and Economic Development (WED) is responsible for the administration of federal programs which provide funding and services to help businesses meet their need for skilled workers and individuals secure training to prepare for work. In partnership with SC Works, WED provides all job seekers with career counseling, job referrals, testing and training services, and resume-writing assistance. Free tools to assist
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employers include training opportunities, posting job openings, recruiting and screening candidates, and reviewing job market trendsopportunities, posting job openings, recruiting and screening candidates, and reviewing job market trends.
04 DATA AND STATISTICS The Business Intelligence Department (BI) collects, analyzes, and disseminates employment statistics, job forecasts, wages, demographics, and other labor market information for the state to help public and private organizations, researchers, and others better understand today’s complex workforce. The data helps employers and job seekers make career, education and economic development decisions. Better understanding employment trends help promote stable employment and economic growth.
05 SC WORKS/WORKFORCE INVESTMENT BOARDS The federal Workforce Innovation and Opportunity Act (WIOA) is designed to help job seekers access employment, education, training and support services to succeed in the labor market, and to match employers with the skilled workers they need to compete in the global economy. WIOA programs are delivered through the state’s comprehensive workforce system and through the 12 Workforce Development Areas. WIOA programs help businesses meet their need for skilled workers and provide individuals with access to training that helps them prepare for work.
06 SOUTH CAROLINA WORK READY COMMUNITIES South Carolina Work Ready Communities (SCWRC) leverages the ACT WorkKeys National Career Readiness Certificate (NCRC™). A work- readiness credential, NCRC™ helps to measure foundational skill levels—and builds a common framework that link, align and match workforce development efforts.
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09 CHAPTER
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Business Retention and Expansion Business Retention and Expansion (BRE) is one of the key components of an economic development program. Existing industries are an important part of a local community’s economy for several reasons: • Existing industries account for job growth, with nearly 70% of all new jobs being created by a company that is already located within a community • Business stability is created through existing industries as they work to build a network of local suppliers within a region • Existing industries and their employees help stabilize the tax base of a community by contributing revenues that pay for services • Existing industries are the best salespeople in a community and are very helpful with recruitment The most effective economic development dollars are spent working with existing industries. A strong BRE program shows local businesses that the community cares about them and their success. BRE programs can also help to identify at-risk companies and provide support. Some characteristics are shared by successful BRE programs. The first is that the BRE program provides support to local industries to ensure their continued viability. This can take the form of connecting companies with a variety of useful programs to strengthen their operations. Worker training programs are just one example. This support often occurs with the help of an economic development ally, such as a utility, the South Carolina Department of Commerce Division of Existing Industry or the Manufacturing Extension Partnership.
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Secondly, a successful BRE program is a collaborative effort between the local government and the business community. There must be an understanding that the BRE program exists to help the local government improve the business environment of the community. Finally, a BRE program must be results-oriented. Interaction with the existing industry community needs to result in programs that will provide assistance. The primary focus of a BRE program is to: • Help businesses become more competitive in the long run • Remove local obstacles that could tempt existing firms to contemplate relocation To have a successful BRE program, local developers need to understand its business community and their needs. To gain insight on the needs of the business community, local developers must examine an inventory of the business community, industry trends, interviews, and surveys. This knowledge will allow local developers to craft programs and policies to ensure a healthy business community. An inventory of the existing business community allows local leaders to understand the makeup of the local economy. They can see if any clusters or concentrations of one particular industry exist. Once the inventory is complete, a trend analysis can be conducted to determine which industries are growing and which ones are at risk.
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Surveys and interviews are tools local economic development officials can use to get direct feedback from industries on the business environment. They can be useful to help determine the business community’s feelings on local government services and policies. They can also identify gaps that a community needs to fill, such as lack of skilled labor in a particular field, or lack of proper fire protection. Business surveys should be conducted on a regular schedule and the results presented to local elected officials.
BUSINESS RETENTION PROGRAMS A community can offer several types of BRE programs to assist local industries: Expansion assistance: This can include providing incentives to encourage expansion in the local community, but also may include working with allies to provide more specific assistance such as worker training programs offered by local technical colleges. Business seminars: These programs allow local industries to network among businesses with common interests. Many communities have an industrial council or manufacturer’s council to serve as a conduit for networking. Appreciation initiatives: South Carolina honors existing industries each year with Industry Appreciation Week. Local communities should also honor their existing industries. Many communities hold luncheons, golf tournaments, or other types of events to show appreciation to local industries.
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GLOS SARY
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Economic Development Terms Used by the South Carolina Economic Developers’ Association Ad Valorem: type of tax based on value of the property (real estate, machinery, equipment). Ally: a person or organization that may benefit from an economic development announcement in your community and can be counted on to assist in that process. Angel Investor: an investor who provides equity investment to start-up businesses. Assessed Value: the monetary worth of a property for taxation purposes. Market Value is used to determine Assessed Value. Real Property (land and building) assessed value is based on sales price or construction cost. Personal property (machinery and equipment) value is based on purchase price less depreciation. Assessment Ratio: percentage applied to Fair Market Value of property to determine Assessed Value. Millage rate is then applied to Assessed Value to determine property taxes. In South Carolina, manufacturers are assessed at 10.5%, Commercial property is assessed at 6%, and Residential property is assessed at 4%.
Basic Industry: industries that sell their product and/or services outside the local community. Basic industry brings new dollars into the community. Benchmarking: information gathered from similar groups for comparison purposes to evaluate competitiveness. Bond: a certificate of debt issued by a government or corporation guaranteeing repayment, at a future date, of the original investment plus interest. Brownfield: industrial or commercial sites that are abandoned or underutilized and have real or perceived environmental contamination. Building Pad: site graded to a point where a building footprint is at an elevation ready for building construction. Business Attraction: recruitment efforts by an economic development organization to persuade companies to locate a new facility in their area.
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Business Climate: environment of an area that impacts the ability of an organization to do business; includes tax rates, attitudes of government toward business, ease of permitting.
Clawbacks: a method by which government can recoup funds from companies that do not meet the investment and/or job creation minimums as outlined in incentive agreements.
Business Retention: efforts designed to keep local companies happy in their present location with hopes of creating expansion opportunities.
Clusters: a collection of firms in the same or similar industry within an area or region of a state. Can provide advantage of synergies that include education, training, workforce, and suppliers. May provide an area with a competitive advantage in that industry.
Capital Investment: value of land, building, machinery, and equipment being placed on a county’s tax roles. CAVE People: Citizens Against Virtually Everything. Community Development Block Grant Program (CDBG): a federally funded Housing and Urban Development program that provides grants to support a variety of projects from revitalizing neighborhoods to improving community infrastructure, which can support the creation of jobs. Funds are primarily targeted to low-to-moderate income areas. Community Development Corporation (CDC): organizations, usually non-profit, that provide programs and services to promote and support community development, including economic development, education, community organizing, and real estate development. Certified Site: an industrial site that meets a stringent set of criteria to minimize potential roadblocks and ensure fast-track construction. Criteria can include ownership, zoning, Phase I, geotechnical, right-of-way issues, appropriate roadways, and utilities. S C E D A E C O N O M IC DE V E L OP M E NT HANDBOOK | 50
Community Development: activities designed to make a product/community more desirable for new buyers, citizens, and existing companies. Consultant: an individual or company that provides professional or expert advice. Consultants are often used by companies to determine the best location for a new or expanded facility. Coordinating Council: a South Carolina state board charged with providing funding to economic development projects, consisting of the heads or board chairs of 11 state agencies. Corporate Income Tax: tax paid on a business’ income. South Carolina Corporate Income Tax rate is 5%. Cost-Benefit Analysis: an analysis used to compare the economic benefits of a new company or expansion versus the cost to service the company including incentives offered.
County Designation: annual designation of a county’s economic strength as determined by SC Department of Revenue and based upon economic indicators including Unemployment Rate and Per Capita Income level. Counties are designated as Tier I (Most Developed), Tier II, Tier III, and Tier IV (Least Developed). Customized Training: workforce education designed to the specifications of a company. Usually provided through the local technical college or readySC. Department of Commerce: a State of South Carolina cabinet agency whose mission is to create jobs, recruit new industries, retain and expand existing industries, and enhance the competitiveness of South Carolina companies, counties, and communities. Discretionary Incentives: those incentives (Fee in Lieu of Property Tax, Job Development Credit, Set Aside Funds, Rural Infrastructure Fund, Port Volume Increase Credit, Tourism Infrastructure Development Grant) that are not automatically awarded and application of funds must be approved by the governing body. Economic Development: activities designed to create jobs and wealth, and improve the quality of life within communities. Employment at Will: signifies that an employer may immediately terminate an employee, and an employee may resign immediately, with no resulting liability on either side. South Carolina is an Employment at Will state.
Entrepreneur: an individual who takes a business idea and creates a new business. Equity Financing: investments made in a business resulting in the investor receiving partial ownership. Export: the distribution of goods to markets outside the United States. Fee in Lieu of Taxes (FILOT): an incentive program used to lower the property tax rate of a company making new investment. Allows a county to lower the 10.5% Assessment Ratio to as low as 6% and in some extraordinary cases 4%. Gap Financing: a loan required to bridge the gap between traditional financing and total needed for project completion. General Obligation (GO) Bonds: form of borrowing by a state or local government that is secured by their pledge to use resources, including tax revenues, to repay bond holders. Greenfield Sites: parcels of land that previously have not been developed and designated or secured for industrial purposes. Impact Fees: fees required to cover the costs associated with providing utility service to a business. Incentives: benefits offered to a company based on their investment and job creation within a community. Can include tax reductions, training, infrastructure improvements, and land grants. SC ED A EC ON OMIC D EVELOP MEN T H A N D B OOK | 51
Incubator: an entity that encourages and supports young companies in their early stages; usually involves providing affordable space, technical, management, and clerical support. Industrial Development Bonds: bonds that provide low-interest financing for real property improvements or the purchase or construction of buildings, facilities, or equipment. The bond is issued by a governmental entity but proceeds are directed to a private entity. Infrastructure: refers to the physical system needed to operate a business. Can include transportation (roads, air, port), rail, electric, water, wastewater, gas, or fiber optic. Job Development Credit (JDC): a discretionary, performance-based incentive that rebates a portion of the employees’ withholding taxes to a company for approved expenditures. Amount of potential JDC is based upon county designation and employee pay rate. Job Tax Credit: a statutory incentive offered to companies, both existing and new, that create new jobs in the state. Credit is applied to the company’s state corporate income tax and Value is based on County Designation and ranges from $1,500 per job to $5,500 per job. Local Economic Development: activities performed by county level staff to recruit new industry and retain existing industries. Most counties in South Carolina have a County Level Economic Developer and Economic Development Board or Commission. S C E D A E C O N O M IC DE V E L OP M E NT HANDBOOK | 52
Microloans: a very small, short-term, unsecured loan given to people/businesses without the typical credit or collateral necessary to obtain a conventional loan. Millage Rate: tax rate paid on property in South Carolina that includes county, school, city/town, and special purpose district components. Multi County Park: a legal arrangement in which two counties agree to share property taxes that allows a county to treat the revenue stream as Fees rather than ad valorem taxes. Multiplier: an estimate of a project’s impact on the local economy through payroll and the purchase of goods and services. NIMBY: Not in My Back Yard. Term used to describe local opposition to development projects. Option: A contract to purchase property at an agreed upon price for a designated amount of time. Per Capita Income: income per person; calculated by estimating all sources of income in the appropriate area (city, town, county, state) and dividing it by the total population. Product: Available, quality industrial buildings, green-field sites or industrial parks that are available for purchase or lease by businesses considering a relocation or expansion.
Property Tax Rate: property (real and personal) tax calculated by multiplying the Assessed Value of Property by the Assessment Ratio and then multiplying that by the Millage Rate. Prospect: an organization/business with an interest and the capacity to make an investment that can produce jobs and increase tax base. Regional Alliance: an organization that represents its members, usually counties and municipalities, in economic development activities that may include marketing and project management. Reinforced Floor: Concrete floor that includes steel or other reinforcement such as wire reinforcing, steel fiber, or rebar. Request for Information (RFI): For economic development information gathering process whose purpose is to collect written information about the capabilities of a community, county or state in terms of their ability to meet the needs of a company looking to locate or expand. Requested information often includes water and sewer capacities, electrical loads, natural gas capacities, education statistics, demographic information and other pertinent local and statewide information. Request for Proposals (RFP): A formal gathering process made to local, regional and/or state economic development entities used to gather information from multiple locations to generate a pool of prospective location sites. The RFP review process is used to short-list possible communities or counties that meet the desired qualifications
of a relocating or expanding business. Return on Investment (ROI): A measurement used to rate the gains from of investment made in an economic project, business, incentive package in comparison to the costs generated by providing a service or other financial investment. Revenue Bonds: bonds backed by the anticipated revenue stream generated by a specific project. Revolving Load Fund (RLF): a pool of money from which loans are made and upon repayment (with interest) new loans are made. Right to Work: a designation signifying a worker is not required to join a union as a condition of employment. South Carolina is a Right to Work state. Rural Infrastructure Authority (RIA): a newly formed state agency whose purpose is to select and assist in financing qualified rural infrastructure projects. The RIA offers competitive grants and other financial assistance to support qualified rural infrastructure projects in areas that are most in need. Rural Infrastructure Fund: a funding source managed by the SC Coordinating Council for Economic Development to assist counties primarily designated as “Tier III” or “Tier IV” by providing financial assistance for infrastructure and other activities that enhance economic growth and development.
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Set Aside Fund: a funding source managed by the SC Coordinating Council for Economic Development to assist local governments with road, water/sewer infrastructure, or site improvements related to business location or expansion. Site Location Assistance: services provided to companies looking to locate a new facility. Can include providing information, calculating incentives, and organizing visits to the community. South Carolina Department of Employment and Workforce (DEW): Cabinet agency responsible for paying unemployment insurance benefits, collecting unemployment taxes, helping people find jobs, matching businesses with qualified candidates, and collecting and disseminating state/federal employment statistics. South Carolina Economic Developers’ Association (SCEDA): a non-profit, privately funded state organization whose mission is to enhance the professional development of its membership and to advocate for economic development legislation to benefit the citizens of South Carolina. Special Source Revenue Credit (SSRC): a credit applied to a company’s FILOT payment that reduces their county property tax liability. SSRCs are discretionary and awarded by the county. Start-up: a new company in the first stage of their business development.
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Start-up Capital: funds that help a new business get started usually provided by private investors. Sustainable Development: development that does not destroy or eventually deplete an area’s resources. SWOT Analysis: assessment that includes examination of an entity’s Strengths, Weaknesses, Opportunities, and Threats. Tax Abatement: a reduction in taxes. Companies making new capital investment in South Carolina do not have to pay/can abate the county operating and county debt portion of property taxes for a 5-year period. Minimum investment required for manufacturers is $50,000 and minimum for distribution or corporate headquarters facilities is $50,000 and the creation of 75 new jobs. Abatement is not available to companies utilizing the FILOT incentive. Tax Credit: a reduction in tax liability. South Carolina provides Tax Credits to the Corporate Income Tax liability for new job creation (Job Tax Credit). Tax-Exempt Bond: bond obligation that does not require recipients of interest payment to pay taxes on the interest revenue. Tax Incentive: any program designed to reduce the tax liability of a new company making an investment and creating jobs in an area. South Carolina tax incentives include Job Tax Credits, Job Development Fees, Port Incentives, Fee in Lieu of Taxes
(FILOT), and Tax Abatement. Tax Increment Financing (TIF): financing tool funded by tax revenues produced by designated development projects and used to repay bonds issued to finance that development.
Workforce Investment Board (WIB): a local/regional group of business owners, state government officials, educators, and private citizens who determine the local use of Workforce Investment Act funds.
Tax-Exempt Bond: bond obligation that does not require recipients of interest payment to pay taxes on the interest revenue. Triple Net Lease: A lease agreement between a building owner and a tenant assigning payment of property taxes, building insurance and other maintenance or repairs to the tenant during the term of the lease. The lease amount charged is generally lower due to tenant responsibilities. Unemployment Rate: percentage of civilians who were not employed but were available and actively seeking employment. Venture Capital: financial capital provided to early-stage, high-potential, high-risk, growth startup companies in exchange for owners equity in the company. Workforce: all workers who are available for work. Workforce Investment Act (WIA): a federal program designed to provide local communities with funds to provide training and educational opportunities to its area workforce.
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