Incentives Land Big Investment but Only Five Jobs. Is It Time to Rethink Policy?
The County Commission has pledged up to $764,000 for a lodge project that will add $30.1 million to the tax base but only five well-paid jobs. Some officials say jobs need to come first.
BREVARD — An upscale lodge project planned for Brevard is a more-than-worthy recipient of up to $764,000 in county property-tax incentives, said Transylvania County Commission Chair Jason Chappell.
Its projected $30.1-million boost to the county’s tax base and the millions of dollars it will pour into the local economy each year make it “a perfect example of why we have incentive-based guidelines” to draw such investment, Chappell said at last week’s Commission meeting.
But he introduced his comments by acknowledging that, when it comes to employment, the project might leave some residents disappointed.
“We get questions about, ‘Why is this only five jobs?’ ” Chappell said.
One of the people asking — if not about that precise number, at least about jobs created under the county’s current incentive policy — is Aaron Baker, a member of both the Brevard City Council and the Transylvania Economic Alliance board.
So is another Alliance board member, former County Commission Chair Mike Hawkins, who helped create the incentive guidelines nearly a decade ago and who, earlier this year, raised concerns about the county’s pledge to grant as much as $2.3 million in tax rebates to a luxury RV park planned for the old Glen Cannon Country Club.
The issue then wasn’t the number of jobs the park pledged to create under its agreement with the county, but the average wage of those 128 positions — only about $3,300 higher than the $42,179 in the county as a whole.
The deal the Commission approved for the lodge project, Brevard Station, includes only the “top tier” of its anticipated workforce, its developer said. These jobs carry an average salary nearly double the countywide average, but, as Chappell noted, there are only five of them.
Both Hawkins or Baker were careful to say their comments aren’t meant to slam the agreement, and they acknowledged the need to diversify the county’s tax base. They praised the energy of the Alliance staff and the promise of Brevard Station, designed to fit in with the natural surroundings of its 16-acre site on Lambs Creek Road near Asheville Highway. “A very cool project,” Baker called it.
And they didn’t doubt that the Commission was following existing policy.
What they did say: It’s time to talk about changing it.
Tourism projects generally create few well-paid jobs and many of the service-sector positions that the county already has in abundance — and that often leave workers unable to afford Transylvania’s pricey housing.
“It’s a dirty little secret that we don’t need jobs. We’re sitting on a 3 percent unemployment rate,” Hawkins said. “We need good jobs.”
As one of the county’s few available tools to guide the local economy, incentives should be focused on sectors such as manufacturing that can bring stable, well-paid employment to the county. Or they should ensure that any future hotels, lodges or RV parks receiving tax incentives do the same.
“As a community, we should be much more focused on the quality of the jobs created by new economic development,” Baker wrote in an email. “This is what benefits our neighbors and citizens the most.”
The Project
Brevard Station’s site on Lambs Creek received its needed rezoning from the city of Brevard last year. The project will be anchored by a lodge with about 36 rooms and offer about 18 one- to three-bedroom cabins, bringing the total number of units, or “keys,” to 54.
The Station will also feature three restaurants open to the public and a 4,000-square foot, climate-controlled event space, said developer Brice Bay, who added that it will be similar to The Station, a lodge-and-cabin retreat in Travelers Rest, S.C. managed — as the location in Brevard will be — by Compo Hotels.
Bay’s company, Pisgah Hospitality LLC, will use sustainable materials in the buildings’ construction, replace invasive vegetation with native plants, and restore trout habitat in Lamb Creek, which runs through land, he said.
The lodge and cabins will be built mostly on existing open areas of the property, while most of its wooded acreage will be preserved.
“We’re going to have a very small footprint on the 16 acres that we own,” Bay said in an interview. “It should be a very green, lush campus with water features and lots and lots of green space.”
The five positions highlighted in the agreement with the county will include the “general manager and head of events and food and beverage,” he told the Commission last week.
The $80,000 average salary of these jobs easily meets the requirement in the county’s incentive policy, which says pay for credited jobs “must be at or greater than the average county wage.”
Bay acknowledged that many other positions at Brevard Station, including part-time housekeeping jobs, will pay far less. But the project will also create good jobs outside of the company, he said, including for chefs in leased-out restaurant spaces and fishing guides hired by Station guests.
Citing a consultant’s study, Alliance Executive Director Burton Hodges told the Commission that the Station, once up and running, will account for “456 direct, indirect and induced jobs with nearly $20 million in new payroll activity,” and create a “total of $53 million in total economic output including taxes, sales, labor costs payroll and other property income.”
The Scorecard
Hodges also provided details to the Commission last week about how the project performed on the incentive policy’s “scorecard,” an eight-year-old document that awards points based on three main criteria: jobs created, total capital investment, and how the project fits in with a desired “industry cluster/business type.”
Because “tourism and hospitality” remains one of the five targeted markets of the Alliance — a county-supported, non-profit economic development agency — Brevard Station scored five points out of a possible 20 in that last category.
Which brings up one possible change to the policy, Baker said: “I don’t think it should receive a bonus” for being a tourism project.
The policy awards capital investment points for projects starting at $500,000, which is now just above the median sale price of a home in Transylvania. And any project valued at more than $7 million can receive the maximum of 50 points.
Pisgah Hospitality’s total taxable investment easily meets that threshold, and those 50 points were by far the biggest contributor to its total score of 75, which qualifies it for a reimbursement of 85 percent of the taxes it pays on new investment.
Those rebates will come only after the company shows proof it has met the terms of the deal, Hodges told the Commission, and will last for a period “not to exceed five years for each year of investment.”
Brevard Station also received 20 points out of a possible 30 for job creation, the section of the scorecard most ripe for reconsideration, Baker said.
That 20 points, for example, is only 10 less that it would have received if it had brought in “26 (jobs) or above,” the scorecard says.
And, unlike the guidelines of some other counties, Transylvania’s don’t grant extra points for jobs paying not just above the community average, but well above it.
In Buncombe, for example, a jobs table included with its policy shows developers can receive a $500 rebate for each position that merely matches the “area median income.” But those incentives climb rapidly with wages, topping out at more than $2,750 per job.
“Should we judge a project that creates 11 jobs at the county average salary the same as a project that creates 25 jobs at double the average county salary?” Baker asked in an email, referring to Transylvania’s policy. “Right now we're doing just that.”
Other Counties
The incentive policies and practices of nearby countries all share Transylvania’s two main goals: boosting taxable investment and creating jobs. But generally, bigger counties with already-diverse tax bases place less emphasis on the first and more on the second, while smaller counties are more likely to cast a broader net.
For example, Jackson County’s policy, like Transylvania’s, still lists tourism as a target sector for economic development.
Haywood County’s policy doesn’t define such targets, and especially since the recent closure of the Canton paper mill that had long been one the county’s major employers, “jobs are more important than tax base,” said Haywood Economic Development Director David Francis.
But as recently as 2018, Haywood granted tax breaks for the construction of a Hampton Inn in an effort to boost tourism and taxable investment, officials said at the time. They also saw the need to bring a recognized hotel brand, or “flag,” to the county, Francis said.
Meanwhile, Buncombe and Henderson counties long ago turned away from subsidizing hotels and other tourism-based projects.
One reason is political, said Brownie Newman, who serves as the chair of the Buncombe County Commission and was first elected in 2012.
The county hasn’t incentivized hotel construction during his tenure on the Commission, partly because of a growing backlash against the dominance of the tourism industry, which the headline of a new investigative story in Asheville Watchdog calls a $3-billion-a-year Behemoth.
The first in a planned series, the story documented that 65 hotels have been built in the county since 1983.
“There has been so much hotel construction in downtown Asheville that if anyone proposed subsidizing a downtown hotel, that person would not be reelected,” Newman said, “It’s just that simple.”
Of the economic reasons for denying grants to lodging projects, the most obvious is the relatively low-wage jobs they create and support, Henderson and Buncombe officials said.
“Our Commission is fully committed to (providing) living wages and well above,” said Buncombe Economic Development Director Tim Love, “so a project that didn’t have wages similar to those in that (jobs) table you see would likely not move forward.”
Brittany Brady, president of the Henderson County Partnership for Economic Development, also cited a lack of competition from other counties as a major reason her Commission hasn’t granted incentives for a hospitality project since she started with the Partnership in 2010.
Several people interviewed for this story made the same point: Incentives are designed to back projects that might otherwise be lost to competing locations.
Investors in jobs-rich industrial and professional facilities can often shop around for the best tax package and land wherever they get the best deal. Tourism-related projects are more likely to be wedded to destinations, such as Western North Carolina, offering existing attractions and tourism traffic.
“That probably has been the greatest hurdle for, maybe, hospitality projects,” Brady said; their developers “are not looking at two locations or pitting two locations against each other for economic development incentives.”
“There’s not a very compelling argument that taxpayer investment is needed to see that sector grow,” Newman said, “because it’s growing like crazy on its own.”
In Transylvania
How do these lessons apply here?
For starters, Bay pushed back on the idea that incentives can’t determine the location of lodging projects.
Yes, Brevard has a lot to offer, he said, calling it a “wonderful, wonderful place.”
But securing loans for construction projects is “extremely difficult right now,” and the promised rebates from the county “are incredibly important to get (the Station) financed,” he said. “Of course you are going to go where you can get the best return for investors.”
Also, said the County Commission’s representative on the Alliance, Vice Chair Jake Dalton, the county and Alliance already place a high priority on creating high-quality manufacturing jobs.
Another target market listed on the Alliance website is “biotechnology and life sciences.” And though Dalton didn’t mention other projects by name in his email last week, he has previously touted two major job-creating expansions in this sector — of Raybow USA and Pisgah Labs Inc. — that county incentives helped secure in recent years.
Echoing remarks he made in Monday’s meeting, he wrote, “I was not enthralled” with the Station’s creation of just five well-paid jobs. But he voted to approve it mostly because it builds and broadens a county tax base now heavily dependent on residences and consisting of only about 5 percent industrial properties.
This is a fraction of the percentage in Buncombe and Henderson, making them inappropriate models for Transylvania’s policies.
“You are comparing apples to oranges,” wrote Dalton, who was joined by three other commissioners in voting for the incentive deal; Commissioner Teresa McCall recused herself because of her husband’s involvement in its real estate transaction.
The coming investment from Brevard Station, Dalton said, “is tax burden that is removed from our county citizens. We must diversify our tax base to give relief to those who live here.”
Because of those two other counties’ large pool of hotels, he also wrote, “they have the accommodations to get those people to stay for longer than just one day.” And they often draw them, he added, by marketing attractions in Transylvania such as Pisgah National Forest and DuPont State Recreational Forest.
Because of the crowds who flock to such destinations, he understands the growing public frustration with tourist traffic. So do members of the Transylvania County Tourism Development Authority, said Executive Director Clark Lovelace.
But there’s no denying the sector’s economic impact, Lovelace said, citing the Authority’s most recent annual report, which shows tourism spending topped $188 million last year and generated $7.4 million in local tax revenue.
No, this does not mean the county should prioritize creating tourism positions over generally better-paid manufacturing jobs, he said. But neither should it fail to capitalize on the sector’s employment opportunities, some of which can lead to rewarding, lucrative careers, Lovelace said.
“There are some opportunities we have to seek out and work on, and there are others that exist organically,” he said. “Let’s keep working on those other (opportunities), but not reject the ones that already exist.”
Rejecting tourism isn’t what Baker and Hawkins have in mind, they said, and they are suggesting not an overhaul of the current policy but an adjustment.
“That doesn’t mean saying ‘no’ to every hospitality developer that comes along, but we should have a tiered approach to our incentives so we can guide the economic development . . . to most benefit our community,” Baker wrote. “It’s time to be a little more picky.”
“You don’t have to reinvent the wheel,” Hawkins said.
“The real question is, ‘What do we want our economic environment to look like?’ ” he said. “Should we be taking a look at a policy that is pretty old right now? My answer is ‘yes.’ ”
Editor’s note: Recommended reading for subscribers who want to know more about the crucial story of HCA Healthcare’s management of the Mission Health System, which includes Transylvania Regional Hospital: Asheville Watchdog has been writing some great stories on this subject, with this being just one example. Check it out.
Email: brevardnewsbeat@gmail.com
It would be helpful for officials who say jobs need to come first give examples of the solution.
Thanks for your work on this.
My only concern: why all this ugly architecture these days?