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County awards SPX $3.1M grant to fund expansion

SPX Corp. will be receiving a $3.1 million grant from Mecklenburg County for five years as the company expands.

The Mecklenburg County Board of Commissioners approved the grant 8-1 Tuesday, with Republican Bill James voting against it.

SPX, which manufactures infrastructure, tools and equipment primarily for the energy, food and beverage and automotive industries, is one of eight companies that have won a Business Investment Program Grant from the county this year.

The grants function like a tax cut. The company signs a contract that outlines certain terms, such as jobs that will be created by an expansion. In return, the company receives grant money equal to 50 to 90 percent of the property taxes paid on the new facility. This year, the Board of County Commissioners approved $18 million in total grant funding, most of which will be paid out by 2016.

Typically, the grant is paid over a period of three to five years, but some companies are granted extensions. The first payment to SPX is expected to be in fiscal 2013.

The purpose of the grant is to encourage expansion and new development in Mecklenburg County, said John Allen, the county’s economic development director. The crux of the program is a “but for” clause stating that the expansion would not be possible without the grant.

Allen said the company applying for the grant presents the county with other incentive offers that have been made and the cost of building in other areas to show that that the company has alternatives to expanding besides Mecklenburg County.

But David Swindell, director of the public policy program at the University of North Carolina at Charlotte, said such programs are a bad idea. The “but for” clause may be good in theory, but often a business who has made a decision to expand does not necessarily need a grant or tax break, he said, adding that since such incentives are available from so many cities, counties and states, it creates a sense of entitlement.

“The company will try to get them to sweeten the pot,” Swindell said. “And (the local governments) have to. There’s basically a gun to their head.”

In the case of SPX, the grant will be used to build a 230,000 square-foot office building in Ballantyne and purchase two new aircrafts, which will be stored in Charlotte hangars. In turn, the expansion is expected to create 180 new jobs — for which the average salary will be $82,000 — over the next five years. Allen said he does not know when the jobs will be filled but that it probably wouldn’t be until 2011 when the company begins making new hires.

According to the county’s fiscal impact analysis, the net benefit to the county of SPX’s expansion, even after the grant payments, will be $4.9 million over 10 years.

Commission Chairwoman Jennifer Roberts called the number of jobs to be created by the expansion “terrific” and called the grant program “responsible,” saying there are provisions that protect the county’s investment.

The company does not receive any public money upfront. Only after it has paid taxes for the year and can prove that it has created the agreed-upon number of jobs that year will the grant be paid. If the company does not meet the requirement in the contract, there is a provision that allows the county to get its money back.

“I believe that we are protective of the taxpayers that way,” Roberts said.

Caitlin Coakley can be reached at caitlin.coakley@mecktimes.com.

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