The Price of Liberty is Eternal Vigilance
County Council, December 16
Incentives for aircraft construction project approvedWarwick Jones, standing in for Shawn Keller who is on military duty in Iraq
The Finance Committee approved the financial incentives proposed by the County for the Vought Aircraft - Alenia Aeronautica joint venture that is planning a major investment in North Charleston. Plans of the JV have already been announced and they entail a facility that will manufacture and integrate the fuselage for the new Boeing 7E7 "Dreamliner" commercial aircraft. As noted by Charles Newton, the head of the JV, the investment is projected at $560 million and will be the largest single investment ever in the Charleston region and the second largest ever in the state. The JV and the partners will employ an estimated 645 persons with an annual payroll of $32.5 million.
County to receive about $1.65 million a year for first 10 years
Such a prize is certainly worth the incentives. The major incentive related to property taxes. Instead of a property tax, the joint venturers will pay a fee-in-lieu-of- taxes (FILOT) However the fee will be based on a tax that ensues from applying a 4% assessment rate (normally as high as 10.5% for manufcturing) and a millage rate of 273, the rate that applied in 2002. Annual payments will be equalized. As well, the company will receive a rebate in the first 10 years. This rebate in aggregate will equal 8% of FILOT projected over 30 years. However the rebate will be paid over the first 10 years. What does this mean in cash terms? The Joint Venturers will pay the County $2.2 million a year for 30 years but for the first 10 years, the rebate will reduce the annual payment to about $1.65 million.
JV assisted in obtaining temporary office space
There were other incentives as well. During the construction phase the Joint Venturers will be able to lease 20,000 sq feet of office space from the SC Research Authority for 2 years beginning this month. In a complex deal with obvious legal ramifications, the County will apply for a loan from the Berkeley- Charleston-Dorchester Council of Governments. The revolving loan of $231,000 will be used to "utilize funding from the Economic Development Fund" which in turn will be used to pay one of the two SCRA leases.
And some grants thrown in
The county also will make a grant award agreement with the SC Department of Commerce, accepting a $5 million Set-Aside grant, which will reimburse the JV for site preparation expense. Another grant award agreement will be made with SCANA Corporation, accepting a $500,000 License Tax credit grant to reimburse the JV for public infrastructure costs.
Employees to be drawn largely from the region
The JV expects that 90 % or more of the persons employed at the new facility will be drawn from local sources. So clearly the investment, both through construction and ultimately production, will have a major impact on the community.
A high tech facility with scope for expansion
The facility will be constructed close to Charleston Airport. And a major reason for the location is that the assembled parts will be flown to Boeing facilities in the US in aircraft that are specially designed to carry large assemblies. The JV will be making part of the fuselage of the new aircraft. But as well as this, it will be assembling other parts of the fuselage that is constructed in Japan and Italy. Breaking with tradition, at least for commercial aircraft, the fuselage will be constructed from carbon fiber.
In the longer term, there could be further benefits. There is space alongside the plant proposed for another plant of similar dimension. It is the JV's hope that another plant can be constructed to make fuselages for other aircraft, not yet planned.
The Neck area TIF approved. County to forego increased taxesThe City of Charleston is presently going through the approval process for the Tax Increment Funding (TIF) to be applied to the Neck area, that part of the Peninsula from about Mount Pleasant Street up to the boundary of North Charleston (See City Council story dated November 25). The Finance Committee of the County last night approved the plan and agreed to forego the revenue that will accrue from higher values. The City calculated that the assessed value of properties in the Neck presently amounts to $85.8 million. It estimates after the spending planned under the TIF ($117 million), the equalised assessed value will be $290 million. We discussed the process with a City official and as we understand the situation, property owners will be taxed still on the assessed value of their property and will pay higher taxes if millage rates remain steady or rise. However, the difference between the present tax level and the future level will flow to a Fund that will be used to make infrastructure improvements in the TIF area
We don't know the taxes derived from the Neck but expect they would be less than $1 million presently. Assuming the City succeeds in its plan to resuscitate the Neck, and values rise as projected, the County could be giving up $2 to $3 million a year in property taxes, we estimate.