The City of Clinton has followed Sampson County’s lead in extending tax incentives to a company proposing to expand its local footprint.
Brooks Brothers Group, Inc. is considering expanding its operations in Sampson County, including an investment of $1.27 million and the creation of 56 full-time jobs at its Clinton Distribution Center over five years, with the largest investment ($619,000) occurring this year.
To that end, the City Council on Tuesday agreed to extend 50 percent grant-back incentives over five years, down from the 59 percent proposed but in line with the maximum percentage allowed by city policy.
The company anticipates increasing its full-time employment by 56 positions (it currently has 48 full-time positions and 30 part-time or temporary positions) during that time, with salaries ranging from $21,500 to $42,000, with the average at $22,700. To assist in their expansion, Brooks Brothers requested an incentive of 75 percent for years 1-2 and 50 percent for years 3-5, averaging 59 percent over the five years, a total of $8,434 of the $14,181 in new property taxes.
That would leave the city with revenues of $5,749.
Brooks Brothers has requested a slightly higher average incentive because of the relatively small amount involved, city officials said. City manager Shawn Purvis offered a breakdown for the 50 percent for five years, which the City Council typically grants, as a comparison. The total grant back at 50 percent for all five years would be $7,091, with the same amount as city revenues — a nominal increase of $1,343 over the five years.
Purvis explained the Council’s Economic Development Incentive Policy, adopted in 2004 to encourage new businesses and the expansion of existing ones. Consistent with N.C. General Statutes, the policy establishes guidelines regarding return on investment in terms of tax revenues and creation and commitment to capital investment and quality jobs.
According to that policy, a company requesting economic development incentives must meet minimum requirements of capital investment, which include $1 million for new projects, $500,000 for expansion, job creation (15 for new projects, 10 for expansion) and competitive wage levels.
“Brooks Brothers’ proposed investment and job creation numbers are sufficient for the city’s Economic Development Incentive Policy, making them eligible for the grant back incentive,” Purvis stated. “They do meet that criteria.”
Last month, the Sampson Board of Commissioners unanimously approved offering grant back incentives for the expansion of both Brooks Brothers’ Clinton Distribution Center and the Garland Shirt Factory, which currently employees 270 full-time and six temporary employees.
For Brooks Brothers, the expansion project would bring taxable investment of nearly $5 million ($3.7 million in Garland, $1.3 million in Clinton) over five years and the creation of 84 full-time jobs (56 at the Clinton Distribution Center at an average salary of $22,700, 28 at the Garland Shirt Company at an average salary of $33,000).
As part of its incentive agreement, the county will garner $85,172 in additional revenue for the first 10 years after 41 percent total grant back incentives — $60,000 — to be paid out in the first five.
The Sampson County Economic Development office will be responsible for monitoring the actual investment and job creation benchmarks before the city or county provides any grants.
“While the increase in property tax base is marginal, the increase in full-time job creation is considerable and a benefit to the community,” said Purvis, who noted that the company purchased its current building in 2012 after leasing it for several years.
As of 2013, the tax value for the Brooks Brothers facility was $1.41 million. With that set to grow considerably, City Council looked favorably on the request by the Sampson County Economic Development Commission regarding Brooks Brothers Group Inc. Purvis said it was up to the Council to consider whether to approve the requested 59 percent grant-back rate or the typical average rate of 50 percent.
Council opted for the latter.
“This is in line with our policy,” Mayor Lew Starling said of the 50 percent grant-back. “This is our maximum amount.”
Councilman Steve Stefanovich said he believed the city should stick to that policy.
“The fact of the matter is we have been doing 50 percent,” said Stefanovich. “I think we should amend (the request) to 50 percent from 59 percent. We’ve done 50 percent in the past.”
Chris Berendt can be reached at 910-592-8137 ext. 121 or via email at email@example.com.