Atlanta’s pitch to convince payments processor Worldpay US to move into the city from Sandy Springs included a $1.5 million grant.
Gwinnett County lost major operations of top financial services companies Fiserv and NCR, which announced moves aided in part by incentives packages from neighboring communities. Perhaps the best-known relocation of late — the Atlanta Braves to Cobb — came with the pledge of hundreds of millions of dollars in taxpayer aid over three decades.
Incentives are a common and controversial currency in the job creation battle between job-hungry states, but some recent high-profile company moves within the metro Atlanta region have also involved significant local perks to help close deals.
Some question whether deploying incentives to get a company to cross a county or city line is necessary and suggest it may set a bad precedent. Local economic development and government leaders who talked to The Atlanta Journal-Constitution say they must remain competitive with in-state and out-of-state peers, and incentives are part of the equation.
A handful of metro areas in other parts of the country have pacts among local governments to try to prevent neighbors from stealing companies or pitting communities against one another in an incentives arms race.
Greg LeRoy, executive director of Good Jobs First, a left-leaning watchdog group that tracks state and local incentives, called granting perks to companies that merely move jobs around a metro area a “job creation shell game.”
Incentives can be effective to realize certain goals such as revitalizing blighted areas, he said, but perks can set a costly precedent just to facilitate a move that might have happened without aid.
“There’s huge amounts of (taxpayer) money being invested just to change people’s commuting patterns,” LeRoy said.
Moves such as the new Braves stadium in Cobb or NCR’s recent decision to head to Midtown Atlanta involved companies that took the initiative to approach those jurisdictions, say economic development officials, who chafe at any suggestion such activity amounted to poaching.
Relocating companies, they say, add vibrancy to local tax bases and create new or spinoff jobs. The local discretionary perks are validated by the private investment, they say. (Sometimes the moves also involve state incentives.)
Atlanta Mayor Kasim Reed has used local incentives to recruit both out-of-state and existing metro Atlanta firms. The city also lost the Braves after the ball club cast its gaze to the north and struck its deal with Cobb.
Reed said judicious use of local incentives is “entirely appropriate,” and he called the recent NCR deal “the biggest single jobs move into the city of Atlanta in more than 50 years.”
NCR, the financial technology giant and Fortune 500 company, announced this month it will move its headquarters from Duluth to Midtown Atlanta, shifting 3,600 jobs.
The 25-mile move will be aided by a $3.2 million grant from Atlanta, but the total incentives package is likely to be richer. Invest Atlanta, the city’s economic development arm, is formalizing an incentives package that could include property tax breaks on a new $260 million campus. NCR also said it will build a second facility in the “northern suburbs.”
Invest Atlanta has estimated the NCR move will create an annual economic impact of $1.2 billion in direct and indirect spending.
Broader strategy
Reed said the NCR incentives fit with a broader strategy to attract high-paying jobs in-town and retain top talent from Georgia Tech.
In any case, incentives in intra-state recruiting is “a reality going forward,” he said.
“Sometimes it will be favorable, sometimes less so,” the mayor said.
Reed said he has shown his commitment to the betterment of the region and state, citing his vocal support for the Savannah harbor deepening.
Many companies routinely move without significant government aid. They cite access to better transportation options, proximity to clients or more modern facilities among the myriad reasons for a change of address. But some eagerly seek handouts along the way.
In metro Denver and the Ohio cities of Dayton and Cleveland, community economic development groups have agreed to measures to curb competition between cities. Fifty-nine communities in Cuyahoga County in metro Cleveland agreed to an “anti-poaching protocol” that prevents communities from soliciting companies to move within the county.
The pact also states that communities will not publicly offer incentives for an intra-area relocation unless the business has notified its hometown or the competing community has informed its peers.
The AJC first reported NCR’s in-town interest last March, but Gwinnett officials still were blindsided by the company’s actual announcement.
Wary of limitations
Despite the loss, Gwinnett commission chairman Charlotte Nash said she is wary of creating a protocol that might inadvertently “create some inflexibility in how we try to keep those businesses in the same metropolitan region.”
Communities need to have the ability to compete and use incentives as they see fit to create jobs and generate new investment, she said.
“In moving from one part of the metro area to another at least they’re still in the state of Georgia and the metro Atlanta area … even if they maybe have changed ZIP codes,” she said.
It was only about six years ago that NCR uprooted its headquarters from Dayton, Ohio, to Gwinnett. That move, and the promise of more than 2,000 jobs statewide, garnered an incentive package that could be worth $109 million. Most of that came in state tax credits and grants.
NCR will not receive a state discretionary grant for its move intown. But it might qualify for statutory state tax credits for net new jobs it brings to or creates in the state. The company’s planned headquarters site is also within an Opportunity Zone, a designated area that can supersize tax credits for new jobs.
The state will usually get involved in an intra-state corporate move only when it involves significant new facilities and jobs.
For instance, Fiserv, which moved from several northern suburb campuses into a new home in Alpharetta, also pledged to create 500 jobs as part of a new regional hub. The move included state and local incentives, including property tax savings.
Worldpay US is moving its headquarters to Atlantic Station and doubling its metro Atlanta head count to more than 1,200. Invest Atlanta officials have said the company could have been lost to Orlando, and the firm’s CEO had entertained thoughts of shifting some jobs to California to tap that state’s tech talent. The company also is eligible for state jobs tax credits for new positions.
