Public Hearings for Cash Incentives: An Unwritten Rule?

<p>North Carolina local governments frequently use cash grants as an economic development incentive to lure businesses into their respective jurisdictions. The grants are authorized under the Local Development Act, G.S. 158-7.1 et seq., but a quick read of the statutes might obscure the need for a public hearing prior to approving such incentives. To understand the source of this hearing requirement, you have to look closely at the statute and the case law.</p> <p>Those familiar with the Local Development Act are aware of the stringent notice and public hearing requirements for activities related to acquiring, improving, and conveying property authorized by subsection (b) of G.S. 158-7.1, such as constructing and conveying shell buildings, extending utility lines to a facility, and engaging in site preparation. For those enumerated activities, the hearing requirements are clearly spelled out in G.S. 158-7.1(c) and (d).</p> <p>But what about an appropriation for a cash incentive to induce a company to bring jobs and capital investment to North Carolina? Some argue that the award of a cash grant is not authorized by the property-related provisions of subsection (b); rather, they suggest that the authority to offer cash incentives is likely derived from the general grant of authority described in G.S. 158-7.1(a), which is a catch-all authorization for economic development appropriations. If that were the case, then a cash incentive would conveniently avoid all of the procedural requirements associated with property-related activities authorized under subsection (b). That argument just doesn’t hold up under closer examination. This post explains why.</p> <p>North Carolina’s seminal economic development case, Maready [...]</p>