Albany ups the ante in fight for jobs

Median household income

Residents below poverty level, 2007-2011

Sources: Georgia Department of Labor; U.S. Census Bureau

The Great Recession and a manufacturing exodus over the past 10 years sapped this city of 77,000 on the banks of the Flint River.

A trio of factory closings cost about 3,000 jobs in the Albany area. An aquarium on the river and a park dedicated to famous son Ray Charles haven’t sparked a downtown resurgence.

So city leaders decided on a new tack: Dangle a $30 million recruitment fund in front of businesses that might choose Albany for relocation or expansion.

Albany’s “deal-closing fund” is believed to be the biggest any Georgia city has ever deployed. It raises the stakes in the ongoing struggle among communities hungry for jobs and growth.

It's also the latest example of local governments willing to shower the private sector with public dollars in hopes of sparking economic renewal. As such it will be closely watched — both by other cities and counties and by critics who regard the practice as wasteful job-buying.

Albany Mayor Dorothy Hubbard said she hopes the fund will help generate thousands of jobs, recharge the tax base and and ignite an economic renaissance. Her city’s jobless rate is more than a percentage point higher than metro Atlanta’s. Albany’s median household income is about $30,000, well below the state average of about $50,000.

“We need those jobs here,” Hubbard said from her corner office overlooking the city. “It would give us an edge and keep us in the hunt.”

The recruitment program, if successful, could spur other Georgia counties and cities to copy it.

“There are states that don’t have that kind of deal closing fund,” said Grant Wainscott, the head of economic development for Clayton County, which has considered starting a similar program but hasn’t identified a source of cash.

At least three other communities in Georgia, including the city of Atlanta, have similar programs — though none is anywhere near as large as Albany’s.

Atlanta's Economic Opportunity Fund has provided $6.1 million in grants since 2007, using money from the city's general fund. That fund helped create 3,264 direct jobs, $222.5 million in private investment and $1.1 billion in new economic output per year, said Brian McGowan, president of Invest Atlanta, the city's development authority.

By contrast, Albany is not using general tax revenue for its war chest. The money will come from a $90 million rebate the city received from the Municipal Electric Authority of Georgia.

Customers of Albany’s city-owned utility paid extra to MEAG for years to hedge against the potential effects of deregulation. That’s never happened, so the money is being returned.

City officials say returning $90 million to ratepayers would be impractical; some longtime ratepayers have moved or died. About one-third is going to the general fund for new equipment for police and other uses, and another third is going into the city utility’s reserves.

Cities with deal closing funds rarely start with such a large financial windfall.

“The scale is what’s unusual,” said Brent Lane, director of the Carolina Center for Competitive Economies at the University of North Carolina at Chapel Hill.

Economic development chiefs in several metro Atlanta counties told The Atlanta Journal-Constitution they would have to consider forming deal-closing funds to add to their arrays of tax breaks if they found themselves at a disadvantage.

Albany’s fund could be “a game changer,” said Nick Masino, head of economic development for Partnership Gwinnett. His county doesn’t have a closing fund but would consider one if Gwinnett’s incentives “proved uncompetitive,” Masino said.

Critics call such funds corporate welfare that usually goes to prospects that would have come anyway. Backers say they’re critical to recruiting.

An AJC analysis last May found that nearly half the companies the state of Georgia provided with cash under its main deal closing programs failed to provide the full number of jobs promised on schedule. The state rarely demanded the money be repaid.

Albany officials say their program has safeguards based on stricter standards adopted recently by the state. They can cut awards if 80 percent of the jobs and investment totals aren’t reached in three years.

As of last week, Albany had yet to receive an applicant for funding. But prospect inquiries have increased since city commissioners unanimously approved the fund in May, said Ted Clem president of the Albany-Dougherty Economic Development Commission.

He also said he’s fielded calls from communities interested in duplicating the program.

Clem said the city is recruiting food processors, advanced manufacturers and logistics firms to key off Marine Corps Logistics Base Albany. It already has a MillerCoors brewery, a Proctor & Gamble paper products plant and a Mars Chocolate North America plant.

The MEAG rebate is arriving over several years. The city’s closing fund currently holds about $13 million.

Corporate recruits can apply to Clem’s development commission for a grant, and their applications will be scored by number of jobs created, amount of private investment and how wages would compare to the local average, he said.

Eligible projects must create at least 100 jobs or invest at least $10 million within the first three years, Clem said. No project is eligible to receive more than $6 million, according to the city. The money would reimburse companies for expansion-related expenses such as land and equipment, Clem said, and the city commission would have to approve.

“We have to operate in the sunshine,” he said.

Albany resident Brenda Adams views the city’s bid to entice companies as “an answer to prayer.”

“Albany used to be a more prosperous place,” said Adams, whose church serves dinner to more than 150 people in need every Sunday.

The three factory closures last decade were a triple whammy to the agricultural and manufacturing hub of southwest Georgia, among the poorest areas of the state.

Bob’s Candies, Cooper Tire and pharmaceutical giant Merck all shut down plants. Unemployment, foreclosures and falling home values battered the community.

“Everybody talks about the Great Recession,” Clem said, “but we were a depressed community for a lot of reasons.”

Albany’s city finances are strong, Mayor Hubbard said. The city trimmed its budgets but didn’t have layoffs.

Hubbard said the city hopes to sustain the recruitment program by potentially replenishing the closing fund with taxes paid by new recruits.

“Our goal is to always perpetuate the fund, so that in years to come, future (city) commissions will have access to these funds to increase and improve business in this city,” she said.

Eric Culbreath, owner of downtown ice cream shop Cool Scoops, said he wants more jobs, but would prefer more city investment in the central business district.

“They need to make this downtown move,” Culbreth said.

Luke Flatt, president and CEO of local bank AB&T, said the region needs “a difference maker,” adding this could be it.

“I think the business community is 100 percent behind it,” he said.