When May NC Local Governments Pay an Economic Development Incentive?

<p>News outlets regularly report about the latest company that was lured to North Carolina through the payment of a cash economic development incentive by a local government and the state. Local government cash incentives often take the form of an annual cash payment to a company that is contingent on the company’s creation of jobs, investment in taxable property in the jurisdiction, and timely payment of property taxes, among other conditions. The statutory authority for making the incentive payment is supplied by G.S. 158-7.1, and the local government is required to approve and account for how the incentive payment is expended by the recipient company pursuant to G.S. 158-7.2. The accounting of payments is accomplished through an incentive agreement in which the recipient company agrees, typically, to create jobs at a facility that involves leasing or purchasing land, constructing a building, and/or installing equipment in the jurisdiction.</p> <p>For most of the last century, however, North Carolina local governments were not permitted to make such incentive payments. It wasn’t until 1996, following the loss of economic development projects to other states, that the North Carolina Supreme Court finally decided that economic development incentives serve a constitutionally-permitted public purpose—under certain conditions. These conditions continue to impose limitations on incentives today, so this post reviews the relevant limitations and summarizes the conclusions of a 2013 North Carolina Law Review article entitled, Economic Development Incentives and North Carolina Local Governments: A Framework for Analysis.</p> <p align="center">NC Constitution: Exclusive Emoluments and Public Purpose</p> <p>As a threshold matter, local governments are not permitted [...]</p>