Proposed $140 Million Project to Receive Incentives Despite Two-Year Delay

November 20, 2012

Investigative Reports

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Barnwell County SCAlthough nearly two years behind schedule, the planned South Carolina Tissue plant in Barnwell County will get at least $475,000 in incentives as a prelude to construction – courtesy of the S.C. Budget and Control Board.

The five-member, quasi-executive panel, chaired by Gov. Nikki Haley, recently approved a request by the S.C. Energy Office, a BCB division, to disperse $475,000 through the Barnwell County Economic Development Corporation (BCEDC) for sewer improvements at the site.

Total cost of the sewer improvements is pegged at $1.4 million, with $770,000, or 54 percent, to be covered with a state rural infrastructure grant, according to records.

It’s unclear exactly how much the proposed $140 million project, which is supposed to create 200 jobs over three years, will receive in taxpayer-backed incentives.

Marty Martin, executive director of the BCEDC, a nonprofit organization whose governing board is appointed by Barnwell County Council, told The Nerve that the plant would be eligible for job development credits, which are rebates of a portion of employee state income-tax withholdings; and a fee-in-lieu-of-taxes (FILOT) agreement that would allow company property to be assessed for years at 6 percent instead of at the standard manufacturing rate of 10.5 percent.

But Martin couldn’t provide specifics of the projected total cost of the incentives. The Nerve previously has reported that FILOT agreements and job development credits can yield millions in savings to eligible companies over the life of incentives agreements.

The Nerve in January 2011 asked the S.C. Department of Commerce for any incentives agreements with South Carolina Tissue under the state Freedom of Information Act. A Commerce spokeswoman in a written response at the time said the company had not been approved for “discretionary” incentives, noting, “Accordingly, the South Carolina Department of Commerce has no responsive public records in response to this request.”

Commerce, the Barnwell County Economic Development Commission and a regional economic development organization known as the SouthernCarolina Alliance in November 2010 jointly announced construction of the South Carolina Tissue plant, a privately owned company that would produce “parent” rolls of tissues, towels and napkins, according to a Commerce release.

“The community’s strong leadership and regional support are to be commended and have been a key element in attracting new jobs and investment,” Joe Taylor, the then-Commerce secretary, said at the time.

Construction of the plant was supposed to have begun in the “first quarter 2011” and been completed by “early first quarter 2012,” according to the Commerce release. But documents submitted for the Oct. 30 BCB meeting indicated that construction was expected to begin in the “fourth quarter calendar year 2012” and be completed “by first quarter 2014.”

Martin in an email Monday to The Nerve said the project was delayed because the site location was changed last year. The plant is to be located on a 40-acre tract in the Barnwell Airport Industrial Park, according to BCB documents; the original planned site was in the S.C. Advanced Technology Park in Barnwell County, according to the Commerce release.

Governed by a seven-member board appointed by Barnwell County Council, the Barnwell County Economic Development Commission was formed in 1987 and the Barnwell County Economic Development Corporation followed in 1989 to recruit new and existing, expanding industries through “loans, leases and the providing of assistance with obtaining federal and state grants,” according to ithe commission’s website.

The economic development commission and corporation are “self-supporting” and require “no funding from County taxpayers to operate,” according to the website.

Federal income-tax records for the Barnwell County Economic Development Corporation for fiscal 2010 show that the organization received $5.2 million in unspecified “pass-through” government grants. Martin said the grants were designated for two other multimillion-dollar projects.

Martin said he believes that projects recruited through his organization in recent years have been successful, though he acknowledged that the announced jobs typically don’t materialize immediately.

“There’s a lot of moving numbers,” he said. “These companies have an opportunity over a period of time to create the jobs they announced.”

“The staffing agency will ask for a number of people to come in and work for those 30, 60 or 90 days,” he continued. “If they do a good job, they can move from temporary staffing level to full-time.”

Martin provided The Nerve with a list of six multimillion-dollar projects announced for Barnwell County since 2008; of the six, four have not yet met announced job-creation levels.

Martin said companies receiving taxpayer-backed incentives have to meet certain requirements, typically agreeing to “generate X-amount of capital investment and a number of jobs by a specified time. That time frame is normally five years.”

“It’s not that you throw incentives out there,” he said.

He also said that to qualify for certain incentives, a company has to pay higher than the average wage in the county, which is about $11.25 per hour.

His cited average wage would work out to be $23,400 annually, based on a 40-hour week. The per-capita income in 2010 dollars in Barnwell County was $17,592, according to the U.S. Census Bureau; the state’s per-capita income, as listed last month by the S.C. Department of Revenue, was nearly $16,000 higher.

As a comparison, Martin’s salary in fiscal 2011 was $93,775, according to federal income-tax records for the Barnwell County Economic Development Corporation.

Barnwell County had the state’s fifth-highest unemployment rate in September at 13.2 percent, according to the S.C. Department of Employment and Workforce.

“As most of South Carolina (has experienced),” said Danny Black, president of the SouthernCarolina Alliance, in an e-mail to The Nerve, “our service region has experienced several plant closures and cutbacks over the last few years.”

Still, Black said, the region has been “pretty successful in recruiting and retaining industrial concerns,” noting that in the last 10 years, “we have been fortunate to land the largest dollar investment for a single year twice.”

But not every project comes to fruition, Martin conceded.

“Sometimes you’ve got economic factors that come into play at no fault to anyone,” he said.

Reach Weston at (803) 254-4411 or kelli@thenerve.org.