COMMERCE ANNOUNCES 2008 ECONOMIC DEVELOPMENT TIER RANKINGS
All 100 Counties Retain 2007 Rankings

RALEIGH ― N.C. Commerce Secretary Jim Fain today announced county tier designations for 2008. All of North Carolina’s counties retained their current rankings under a new system adopted by the General Assembly in 2006. The designations, which are mandated by state law, determine a variety of state funding opportunities to assist in economic development.

“The tier designations help ensure that our less prosperous counties have the tools they need to attract businesses to their communities,” Fain said. “Our goal is to enhance economic opportunities statewide and create One North Carolina where all of our residents can find jobs that pay enough to sustain their families, regardless of their location in our state.”

Using a statutory formula outlined in the 2006 Tax Credits for Growing Businesses (more commonly referred to as Article 3J tax credits), the Department of Commerce assembles required statistics for each of North Carolina’s 100 counties, applies the formula and assigns a tier designation ranking from one to three with Tier 1 being the most economically distressed and Tier 3 being the least.

The law calls for the 40 most distressed counties to become Tier 1 counties, the  middle 40 counties to be designated as Tier 2 and the 20 most prosperous counties to become Tier 3 counties. Eligible businesses that locate in lower-tiered counties are eligible for larger tax credits than those that locate in higher-ranked areas. For 2007 and 2008 only, 41 counties have been designated as Tier 1 counties.

The rankings are based on an assessment of each county’s unemployment rate, median household income, population growth and assessed property value per capita. In addition, any county with a population of less than 12,000 or a county with a population of fewer than 50,000 residents with 19 percent or more of those people living below the federal poverty level automatically are designated as one of the 40 most distressed counties.

In 2007, counties were ranked according to the Article 3J formula for the first time. Prior to that, the state had used a five-tier system designated by the previous tax credit law, the William S. Lee Act. One reason lawmakers moved from a five- to three-tier system was to provide more stability for counties and minimize changes in their status, which could affect their ability to attract new industry.

 Tier designations determine the available amount of tax credits for job creation and business property investment in a list of eligible industries. They include manufacturing, motorsports, aircraft maintenance and repair, air courier services, warehousing, customer service call centers, research and development, electronic shopping and mail order houses, wholesale trade and information technology.

Another reason that no counties changed tier rankings in 2008 is an Article 3J requirement that any county that is designated as a Tier 1 county must keep that designation for a minimum of two years. Since last year was the first year for the new rankings, all of the 2007 Tier 1 counties automatically retained that ranking for 2008.

All eligible companies are required to offer employees health insurance and pay at least 50 percent of the premiums, cannot owe back taxes and cannot have received a significant environmental violation notice from the state Department of Environment and Natural Resources. In Tier 2 and Tier 3 counties, companies also must meet a wage test.

 Potential benefits to companies under each tier designation include:

• Tier 1 - $12,500 tax credit per new job with a requirement to create at least five jobs, and a 7 percent tax credit for eligible business property expenditures.
• Tier 2 - $5,000 tax credit per new job with a requirement to create at least 10 jobs, and a 5 percent tax credit for eligible business property expenditures of more than $1 million.
• Tier 3 - $750 tax credit per new job with a requirement to create at least 15 jobs, and a 3.5 percent tax credit for eligible business property expenditures of more than $2 million.

For more information about the tier designation system, visit http://www.nccommerce.com/en/BusinessServices/LocateYourBusiness/WhyNC/Incentives/CountyTierDesignations/

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