2002-2005 Accomplishments 
 

• The Job Development Investment Grant program and the One NC fund were established and have gotten continued funding
• The North Carolina Military Business Center and the Military and Aerospace Industry team were established to ensure that military contracts are awarded to state businesses
• Business ServiCenter expanded to all 100 counties with permanent funding
• Small Business ombudsman position established and funded
•  Sales Tax Refund on Construction Materials created
•  William S. Lee business tax credit program extended till 2007
• State Ports Tax Credit extended to 2009
• Industry focus teams have been reduced in number and re-focused on seven key industry sectors
• Partial funding was obtained to coordinate North Carolina's marketing and branding activities 
   

Next Steps

• Continue to enhance NC's incentives portfolio
• Expand retention and entrepreneurship initiatives
• Advocate business tax reductions when feasible
• Establish business retention programs to reward those companies who have provided jobs in North Carolina for many years
  

Along with Governor Easley and the General Assembly, the following organizations are partners in the Economic Development Board's Recruitment and Retention Initiatives:

Boards and Commissions:

• NC Governor's Advisory Commission on Military Affairs

Public Organizations and Educational Institutions:

• The North Carolina Department of Commerce
• The North Carolina Department of Revenue
• The North Carolina Lt. Governor’s Office
• The North Carolina Department of the Secretary of State
• NC State Ports Authority
• North Carolina Utilities Commission
  

Private and Non-Profit Organizations:

• North Carolina Chamber of Commerce
• Economic Development Partnership Regions
• North Carolina Economic Developers Association
• Sanford Holhouser, PLLC
• Womble, Carlyle, Sandridge and Rice, PLLC  
• Duke Energy
• Wake County Economic Development
• NC Electric Membership Corporation
  
  

Develop and maintain North Carolina’s nationally superior business climate that consists of affordable business costs, fair regulation, and an equitable tax system.

Action 3.1.1: Review the William S. Lee Act to determine the effectiveness of the Act and to recommend changes.

1. Responsibility: Department of Commerce, Department of Revenue
2. Deadline: Changes recommended by January 2005 and evaluation ongoing
3. Funding Source: Existing resources
4. Expected Outcome/Return on Investment: Prepared synopsis and corresponding analysis on Lee study findings

2007 Update

The Department of Commerce’s evaluation, William S. Lee Act 2005 Assessment of Results, was submitted to the General Assembly in 2005 session.  Findings include:  1) Continued increase in outstanding liability for William S. Lee tax credits (".2 billion in 2005); 2) At least 30 percent of the state’s outstanding tax credit liability may not be taken due to tax credit expiration, company downsizings and audit disqualifications; 3) Most Willian S. Lee tax credits continue to be generated by large companies, usually located in Tier 4 and 5 counties.

The General Assembly took a significant step last year to improve the business climate in North Carolina. In 2007, the “Article 3J Tax Credits for Growing Businesses” legislation replaced the William S. Lee tax credit program. Changes in the tax credit program included converting to a three-tier approach; revising tax credit rates, thresholds, and qualification requirements; and abolishing certain provisions in the original act. These changes aim to enhance North Carolina’s economic competitiveness by helping the state attract new businesses and continue the state’s economic growth. 

Action 3.1.2: Develop legislative proposals for effective incentives.

1. Responsibility: Department of Commerce, Department of Revenue, and the Economic Development Board
2. Deadline: Ongoing
3. Funding Source: Existing Resources
4. Expected Outcome/Return on Investment: Recommendations for incentives that will help North Carolina more effectively retain and recruit business.

2007 Update

In 2007, the “Article 3J Tax Credits for Growing Businesses” legislation replaced the William S. Lee tax credit program. Changes in the tax credit program included converting to a three-tier approach; revising tax credit rates, thresholds, and qualification requirements; and abolishing certain provisions in the original act. These changes aim to enhance North Carolina’s economic competitiveness by helping the state attract new businesses and continue the state’s economic growth.

Action 3.1.3: Find a dedicated source of funding for the One North Carolina Fund.

1. Responsibility: Governor, Department of Commerce, Economic Development Board and General Assembly
2. Deadline:  Ongoing
3. Funding Source: General Fund or other dedicated funding source
4. Expected Outcome/Return on Investment:  The One NC Fund received a $20 million appropriation from the General Assembly for FY 04/05 - funded from the state surplus (HB 1352).  The intent of the most recent appropriation is to provide $10 million annually for this fund.

2006 Update

In 2006, the General Assembly expanded the One North Carolina Fund by $15 million. The One North Carolina Fund was established in 1993 to assist companies with the costs of new equipment and repairs. Continued efforts to secure a recurring/dedicated-funding source are needed.

Action 3.1.4: Extend North Carolina’s new Job Development Incentive Grant (JDIG).

1. Responsibility: Governor, Department of Commerce, Economic Development Board and General Assembly
2. Deadline:  Ongoing
3. Funding Source:  notapplicable
4. Expected Outcome/Return on Investment:  During the 2004 short session, the General Assembly extended the program one year (through 2005), increased the maximum number of JDIG grant awards per year from 15 to 25, and increased the maximum annual liability for grants awarded in any single year from $10 million to $15 million (HB 1414).  An additional extension of the program should be advocated during the 2005 session.

2006 Update

During the 2005 legislative session, the General Assembly acted to extend the JDIG program to January 1, 2008. The program was given legislative approval to expand its financial capacity from its current $15 million to $30 million in calendar year 2006. The change came at the request of the Department of Commerce to provide more flexibility in recruiting a large number of economic development projects.

Action 3.1.5: Continue to fund the Site Infrastructure Fund for infrastructure and workforce training of large, high-multiplier industrial projects that locate in North Carolina.

1. Responsibility: Governor, Department of Commerce, Economic Development Board and General Assembly
2. Deadline: Ongoing
3. Funding Source: General Fund or other dedicated funding source
4. Expected Outcome/Return on Investment:  In December 2003 legislation was enacted to fund infrastructure improvements and for the Merck project.  As a result, the Site Infrastructure Fund was created and $23 million was appropriated for the project.  Now established, this program could serve as the conduit for similar large projects – subject to General Assembly appropriation of funds.

2006 Update

The 2006 General Assembly presented the Department of Commerce with $10 million to create a “economic development reserve” fund for the purpose of awarding grants for “site acquisition and economic development projects” that promise to boost regional economies. The SBTDC was allocated funding by the General Assembly in 2006 to start a business services project in five western North Carolina counties.

Action 3.1.6: Reduce the corporate income tax rates to five percent, phased in over the next six to eight years. 

1. Responsibility: Governor, Department of Commerce, Economic Development Board and General Assembly
2. Deadline:  Phase-in complete by 2012
3. Funding Source: General Fund or through streamlining sales taxes
4. Expected Outcome/Return on Investment:  A lower corporate income tax rate will make North Carolina’s rate more comparable to its neighbors and competitors.  A lower rate should benefit existing and new businesses.

2007 Update

Several tax reductions passed by the General Assembly in 2006 also promise to foster economic development and expansion. The reduction of the sales tax from 4.5% to 4.25% and the reduction of the top personal income tax rate from 8.25% to 8.0% will allow state businesses and individuals to spend and invest more heavily in the North Carolina economy.  As an additional development stimulus, the 2006 General Assembly passed several pieces of legislation to provide special incentives to local manufacturers. For example, a tax reduction on electricity purchased by manufacturers and the small business health insurance tax credit both hold the potential to stimulate corporate growth.

Enable effective recruitment of both new economy and enduring traditional companies to North Carolina.

Action 3.2.1: Implement the Economic Development Information System through phase 5 in order to establish an economic intelligence capability within the Department of Commerce.

1. Responsibility: Department of Commerce’s Policy, Research & Strategic Planning Division and Team EDIS, which includes representatives from the regional partnerships, SBTDC, and the NC Employment Security Commission
2. Deadline: December 2005 for phase 3 and December 2006 for phase 5 Funding
3. Source: $375,000 from the General Fund was appropriated for FY 04-05 to fund most of the project through phase 3. Funding from the General Fund for two permanent positions to build and maintain EDIS are needed at a cost of $165,000 per year
4. Expected Outcome/Return on Investment: Establishment of  state Economic Development Information System to house national, state, regional and local economic data for mapping, analyses and presentation for state, regional and local officials and organizations

2007 Update

The first version of the Economic Development Intelligence System (EDIS), an online application that will helpeconomic and community development professionals recruit and retain businesses around the state, will become available to the public in 2007. 

Action 3.2.2: Recognize, support and quantify the effect that the Military has on North Carolina’s economy. Encourage the development of industry in North Carolina directly related to the needs of the Military community.

1. Responsibility: Economic Development Board with the NC Advisory Commission on Military Affairs, Department of Commerce, Lt. Governor’s Office
2. Deadline: Ongoing
3. Funding Source: General Fund, Regional Partnerships, U.S. Department of Defense and East Carolina University
4. Expected Outcome/Return on Investment: A report that quantifies the dollar impact that military bases have on North Carolina’s economy has been completed by ECU, and North Carolina held a military summit at Fort Bragg in October 2003 to discuss issues that affect the state’s military community. Additionally, North Carolina should continue to develop strategies to actively recruit and develop industry to support the needs of the military.

2007 Update

Many developments have occurred toward the goal of supporting and quantifying the impact of the military in North Carolina’s economy. According to a 2003 report prepared for the North Carolina Advisory Commission on Military Affairs, the military contributed "8 billion to the state economy and was responsible for 7% of North Carolina’s gross state product. 

Connecting businesses to defense and other federal agency contracts continues to be an important effort in the state’s economic development plan.  The North Carolina Military Business Center, in concert with the North Carolina Community College System Small Business Center Network, has continued to promote the development of industries related to the needs of the military community since its opening in 2004. In calendar year 2005, center-assisted companies obtained 36 contracts with a value of $26 million. The center’s results in 2006 were even more impressive. Center-assisted companies received 162 contracts worth a minimum of "58 million.

The Defense and Security Technology Accelerator (DSTA), located in Fayetteville, North Carolina, is a new and innovative program designed to create collaborations with the military, entrepreneurs and innovators that will drive technology business development, technology commercialization, and job creation. This program will leverage two unique assets in North Carolina: the military bases in the Fayetteville/Cumberland County area, and the excellent research and innovation in the Research Triangle Park (RTP) and other regions in the state. The DSTA will operate as a business incubator assisting entrepreneurs with generating new, just-in-time security and defense technology solutions to meet the military’s technology needs, as well as business demands. The state legislature funded this program with a $2 million appropriation and the project received an additional $300,000 from the North Carolina Department of Commerce’ Economic Development Reserve Fund. The North Carolina Technology Association initially proposed the Accelerator and the Partnership for Defense Innovation administers the program.

Action 3.2.3: Foster development of several mega-sites across the state.

1. Responsibility: Department of Commerce
2. Deadline: Ongoing
3. Funding Source:  General Fund or other dedicated funding source
4. Expected Outcome/Return on Investment:  The Department of Commerce should continue to develop a strategy for acquisition of these sites. The Site Infrastructure Fund could serve as the conduit for mega-site projects – subject to a statutory amendment and General Assembly funding appropriation of funds. In the meantime, DOC has developed basic minimum standards for mega-sites, with the intention of developing more detailed standards in the future.

2007 Update

The 2006 General Assembly presented the Department of Commerce with $10 million to create an economic development reserve fund for the purpose of awarding grants for site acquisition and economic development projects that promise to boost regional economies. These funds will assist 11 government and non-profit entities with local and regional economic development projects. The fund received seventy-nine applications for consideration.

Develop a Model Program of Existing Industry Services.

Action 3.3.1: Commission a benchmark study of other states’ existing industry efforts, obtaining data to reveal the impact of various communication methodologies and their outcomes.

1. Responsibility: Economic Development Board and Department of Commerce
2. Deadline: December 2005
3. Funding Source: Existing resources or funding from private source to hire contractor
4. Expected Outcome/Return on Investment: Develop recommendation supporting requested ARC and other funding for full Board review and vote.

2006 Update

In 2004 the Economic Development Board sponsored a best practices study of other states’ recruiting, retention and business relocation marketing programs in order to develop recommendations for North Carolina’s economic development. Entitled the Ticknor Report, this study was endorsed by the Board through a formal resolution in February 2005. Conducted by Tom Ticknor & Associates and generously funded by Duke Energy, the study’s primary conclusion was that North Carolina could achieve significant economic development benefits from relatively small incremental investments.  Specifically, the Ticknor study recommended additional outlays for internal capacity building, such as Web site redesign, sales management system development, training and research/analysis staff expansion. Ticknor also proposed new or additional appropriations for marketing the state as a business destination through advertising and public relations campaigns. In response to the compelling findings of the study, the General Assembly approved new funding in July of $1.5 million for Web site, systems and marketing enhancements and indicated an openness to additional investments in 2006.

Action 3.3.2: Help develop a marketing strategy for the Existing Industry ServiCenter, which may include tools like toll-free numbers, pro bono billboard advertising and public service announcements and other communications efforts with ServiCenter partners and their audiences.

1. Responsibility: Department of Commerce
2. Deadline: 2005
3. Funding Source: Existing resources
4. Expected Outcome/Return on Investment: A marketing/PR plan to implement statewide awareness of DOC, economic development services.  A general statewide marketing strategy was developed for the ServiCenter prior to receiving funding from the General Assembly.  Having secured funding, ServiCenter staff will develop a detailed marketing strategy.

2006 Update

The Business ServiCenter in the Department of Commerce received full funding in 2004 to implement a marketing strategy that would advertise its resources to business clients. By 2006 the Business ServiCenter was fully staffed and actively promoting its services to communities across the state. This service has continued to attract clients through regional trade shows, magazine ads, brochures, presentations to community development groups, and meetings with regional chambers of commerce. To increase its accessibility the Business ServiCenter allows anyone in North Carolina to make a toll-free call to a customer representative - including one Spanish speaking representative - who can address the needs of information startups and small business owners. Six business counselors make field visits and speak with economic development officials in local communities. As of 2006, the Business ServiCenter received 3,000 to 3,500 contacts from local businesses per month.

Develop an Effective, Coordinated Statewide Marketing/Branding Program

Action 3.4.1: Review the current marketing efforts by state agencies and the regional partnerships.

1. Responsibility: Economic Development Board task force
2. Deadline: December 2005
3. Funding Source: Existing Resources
4. Expected Outcome/Return on Investment: Provide recommendation for coordinated marketing plan to improve upon the Department of Commerce and the Regional Partnerships’ existing efforts.  (NOTE: A marketing council has been created between the Marketing Division of the Department of Commerce and the regional partnerships.  This group meets monthly to coordinate marketing efforts.  Additionally, a marketing matrix has been developed to properly monitor the activities of each group.)

2007 Update

Work underway to align Commerce marketing infrastructure/capacity for optimal effectiveness. Elements of this infrastructure include the Commerce website, currently undergoing a comprehensive redesign, with an expected launch window in late spring 2007. EDIS, the Web delivered, business intelligence (BI) data system, is nearing launch. Advertising and public relations agencies have been engaged (Trone Advertising, DCI) and initial campaigns to market the state as a business destination have begun to appear in national and international media. State-level branding program to business audiences being implemented (State of Minds) with a strategic message platform and integrated communications plan. Marketing Council group meeting regularly, and is coordinating a strategic marketing planning meeting ahead of 2007-08 budget year.

Action 3.4.2: Integrate North Carolina’s current brand strategy into a wider range of marketing products.

1. Responsibility: Department of Commerce
2. Deadline: December 2005
3. Funding Source: Existing Resources
4. Expected Outcome/Return on Investment: A branding campaign was developed by NCIETA to provide a clear, unified message to the nation and world that positions or “brands” North Carolina in the eyes of business and industry leaders as a premier location for knowledge-driven, technology-based industrial development.

2007 Update

"North Carolina – The State of Minds" logo and identity system now incorporated into all advertisements, promotional materials, and collateral, and the identity assets themselves are being refined and updated. Implementing a more comprehensive branding program featuring a strategic message platform and an integrated communications plan. Brand messaging as well as identity is being embedded into all advertising, public relations, and direct marketing initiatives.

Action 3.4.3: Identify new funding sources, as well as underutilized current funding sources, for marketing.

1. Responsibility: Economic Development Board task force and Department of Commerce
2. Deadline: December 2005
3. Funding Source: Existing Resources
4. Expected Outcome/Return on Investment: Monitor and track ongoing participation and partnerships with current and new funding sources to fully appreciate the value available. 

2007 Update

In response to the compelling findings of the Ticknor study, the General Assembly approved new funding in 2005 for Web site improvements, systems and marketing enhancements and indicated an openness to additional investments in 2006. The Department is developing a strategy to increase the amount of private donations that are used for marketing efforts.

Action 3.4.4: Orchestrate a limited, low-cost outreach campaign to advertise North Carolina’s recent efforts in economic development.

1. Responsibility: Department of Commerce and the Economic Development Board
2. Deadline: December 2005
3. Funding Source: Existing Resources
4. Expected Outcome/Return on Investment: North Carolina needs to let the national business and site-selection community know that the state is taking a number of specific steps in building upon its rich tradition of economic development leadership.

2007 Update

Advertising and media relations agencies have been engaged (Trone Advertising, DCI) and initial campaigns to market the state as a business destination have begun to appear in national and international media, including relevant B2B trade magazines (ie: Site Selection, Business Facilities, Southern Business & Development). Comprehensive redesign of the Commerce website will provide a new platform to build the state’s brand among business audiences, communicate news to relevant stakeholders, and explain in-depth the wide spectrum of economic development programs underway in the state.

Action 3.4.5: Advocate for adequate levels of funding for the N.C. Department of Commerce so that the Department may fulfill its obligations as the state’s lead economic development agency.

1. Responsibility: Economic Development Board and partners, including NCCBI, NCEDA and NCEITA
2. Deadline: December 2005
3. Funding Source: Existing Resources
4. Expected Outcome/Return on Investment: To enhance its efforts, it is recommended that the Board schedule a quarterly board meeting during the legislative session and host a reception for members of the General Assembly.  This will allow board members to personally articulate their support for DOC efforts and adequate funding.  With the support of the board, DOC will continue to advocate for additional funding and resources.

2006 Update

The Ticknor study recommended additional outlays for internal capacity building, such as Web site redesign, sales management system development, training and research/analysis staff expansion. Ticknor also proposed new or additional appropriations for marketing the state as a business destination through advertising and public relations campaigns. In response to the compelling findings of the study, the General Assembly approved new funding in July of $1.5 million for Web site, systems and marketing enhancements and indicated an openness to additional investments in 2006. In addition, the Department of Commerce recieved funding for three positons to support the 21st Century Community program.

To encourage regional growth, the General Assembly passed a special provision in 2006, which includes a proposal developed by the Department of Commerce and the Rural Center to earmark $ 1 million of CDGB funds for entrepreneurial and small business assistance grants.