NCEDA 2022 Local Incentives Survey

The North Carolina Economic Development Association and Creative Economic Development Consulting surveyed local economic development agencies across North Carolina to gauge the usage and terms for incentives for economic development. The findings were compared to a 2011 study to see how incentive policy has changed in the state. The results of this study can be used to inform local governments about standard incentive practices in North Carolina.

North Carolina local governments have increased requirements for incentives while keeping the amount paid in incentives about the same over the last 10 years. More local governments have implemented thresholds for eligibility including investment, jobs, wages, and employer contributions to health insurance. Beyond these eligibility requirements, local governments consider return on investment, economic impact, potential to strengthen a cluster, and infrastructure impact when considering applications for incentives. The percentage of local governments that require an incentive contract increased from 92% to 98%. Additionally, the percentage of local governments with an adopted policy also increased.

While local governments implemented restrictions on incentives and formalized incentive policies, they offer about the same amount in incentives. Most communities offer grants equal to 71-80% of net new tax revenue for five years. Cash is king in incentives, with 81% reporting it as the most popular form of incentive. The second most often cited form of incentive is infrastructure improvements (65%). Very few local governments place restrictions on cash incentives; 79% report no requirements. However, grants are typically paid after taxes are paid – post performance.

Incentive Policy Trends:

  • Increase in eligibility thresholds: investment (64% to 65%), job (38% to 49%), wage (57% to 80%), and employer contributions to health insurance (30% to 63%).
  • Grants as a percentage of net new property tax revenue stayed about the same at 71-80%. At the county level, that category tied with the 51-60% category.
  • Most cited years of grant payments stayed the same at 5 years.
  • Cash grants as the most common form of incentive declined from to 94% to 81%.
  • Increase in the % requiring an incentive contract, from 92% to 98%.

Click here to read the full report and here for a summary that may be useful to share with local leaders. We hope the economic development community will use the findings to inform local officials about standard practices in incentive policy in North Carolina.

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