Many companies in the Rock Hill region got incentives, but have they kept their promises?

A large company announces it’s opening, relocating to or expanding in the Rock Hill region. Company and economic development officials tout massive investments and new jobs. County and state officials sweeten the pot with tax breaks and other incentives.

The new company is hailed as an economic win.

But years after the company’s announcement and ribbon-cutting, have the companies kept their promises for investment? Have jobs actually been filled?

In light of several recent, massive announcements and others still in the pipeline, The Herald looked at past economic development performance and spoke with experts to find out what this area should expect.

How many promised jobs have actually been filled?

“The state does not approve discretionary incentives unless it has confidence that the jobs will be created,” said Alex Clark with the South Carolina Department of Commerce.

How many jobs are there?

The I-77 Alliance spans five counties along a corridor that connects Charlotte and Columbia. The economic development group includes York, Lancaster and Chester counties. The I-77 Alliance lists 97 large business announcements in the three-county area dating back to 2014.

Those announcements combine for almost $5.6 billion in pledged investment and 23,570 created jobs. Of those totals, 36% of jobs and more than 80% of investment come in manufacturing. Of note, what would have been the largest project by investment no longer appears in the I-77 Alliance data — the announced but failed $2 billion Carolina Panthers headquarters plan in Rock Hill.

Click on individual project in the image below to see York, Lancaster and Chester county projects by year, promised investment and job count.

The South Carolina Department of Commerce has its own list of corporate recruitment and incentive tracking. That list dates to 2011 and includes 60 York County projects, plus 41 in Lancaster County and 26 in Chester County.

Half of the 10 largest single announcements listed in terms of jobs statewide come from this three-county area. Fort Mill neighbors, LPL Financial (No. 2) with 3,000 jobs, and Lash Group (No. 4) with 2,400 jobs, lead Chester County’s Giti Tire at No. 7 with 1,700 jobs. Lancaster County companies CompuCom Systems and Red Ventures are t-No. 9 with 1,500 jobs.

Red Ventures had three separate announcements from 2012 to 2015 with a combined 2,700 jobs.

The Albemarle Corporation announcement earlier this year in Chester County is the fourth highest listed project statewide by investment amount, at $1.3 billion. The next highest area company is Giti Tire at No. 16 statewide with $560 million.

Chester County has the fourth highest total investment figure among all counties statewide at almost $3.24 billion. York County is No. 10 with $1.67 billion and Lancaster County is No. 15 with $1.17 billion. Only Spartanburg, Berkeley and Richland counties, respectively, have more announced investment than Chester.

In announced jobs, York County is third behind only Greenville and Charleston counties with 14,334 jobs. Lancaster County is No. 7 with 9,503 jobs. Chester County, despite the higher investment, is No. 12 with 4,195 jobs.

Announcement data shows manufacturing, a huge market in Chester County, tends to bring larger investment figures from companies. Headquarters and tech jobs, more prevalent in York County, tend toward higher job counts.

Why do job counts matter?

Quality, well-paying jobs help communities in obvious ways. They can improve quality of life for the workers who fill them and, given enough such jobs, the larger areas where those workers live.

“It’s helping to fund your schools, your fire department,” said York County Councilman Tom Audette, who chairs the county’s economic development committee. “It’s helping to fund many different things. The value of the work fulfills the needs of the community.”

Also, job commitments matter to companies’ and counties’ bottom lines. Economic incentive deals are based largely on projected investment and jobs created. Those deals can change how companies pay taxes, sometimes for decades. The deals can offer significant grants or reimbursements.

The commerce department listing of announcements since 2011 includes grants just from that agency. Not every project received state grants as part of incentive packages, but many did.

Chester County had 14 companies that received grants at a combined $79.2 million. The largest went to Giti Tire ($38.9 million), E&J Gallo ($24.8 million), Albemarle Corporation ($9 million), Carolina Poly ($1.8 million) and IKO Industries ($1.5 million). Those companies combine for 2,976 committed jobs, about 57% of them at Giti.

York County had its $14.74 million in grants spread out more, with 41 of them but none at more than $2 million. Only three were for more than $700,000.

Lancaster County has 18 projects listed with grant money, at a combined $12.83 million. Three companies hit the $1 million or more mark with Keer America ($4 million), Continental Tire ($2.6 million) and CompuCom Systems ($1 million).

Counties where new jobs come are important too. Counties statewide are almost evenly split into four tiers. Rural areas allow companies to claim a refund for a portion of the employee state payroll tax at higher rates than more developed areas. It comes as a job development credit.

Chester County is on one end of the tier scale, where a company can claim a 100% refund. York County is on the opposite end, at 55%. Lancaster County falls in one of the middle tiers at 70%.

Projected job counts, along with projected economic investment, are two key factors economic development leaders consider in allocating grant or other incentive money. Business development grants, for instance, generally are limited to $10,000 per new job.

Jobs create payroll and sales taxes that fund the state. Jobs create tax bases to fund counties and schools. Investment, Clark said, is a measure of long-term stability.

“Both are important,” Clark said.

What incentives does SC offer?

Incentives to lure big business vary widely. Some are specific to company headquarters relocation or expansion. Some involve state decisions, others local decisions. Many large projects involve a mix.

Federally designated opportunity zones fueled downtown Rock Hill revitalization the past half dozen years.

Opportunity zones are investment incentives in distressed areas that allow deferral of, or drops in, taxes on capital gains. Main Street Fort Mill businesses benefited from the Bailey Bill, which locks in a lower property value as historic properties redevelop. Lower valuation means lower taxes.

Several Rock Hill properties were developed after ownership changes that allowed environmental cleanup funding for old mills or auto sites.

Billion dollar boom. Building Rock Hill, Fort Mill and beyond is big, big business.

The largest of deals often involve multiple state and local incentives. Some even warrant custom considerations. The failed Panthers deal had weeks of state legislature debate on a $115 million incentive package. Legislators changed state law to exempt professional sports teams from certain tax requirements. The Panthers deal was so big, it brought a new interchange off I-77 among publicly funded considerations.

The most common area incentive is a county-level one where companies are allowed to pay a negotiated fee instead of taxes. Multi-county business parks combine economic development incentives for large projects to benefit multiple counties. York and Chester counties often partner together on such deals.

County councils can set how much a new or expanding company will pay and for how many years, before they must pay traditional taxes. Councils can vary or set millage rates for the term. Credits or discounts can be used to fund public infrastructure — roads, utilities — that serve the area or spots that surround it.

Those county fee-in-lieu agreements come in exchange for promises of new jobs and total investment by the company. Often, a company will announce plans for more jobs or higher investment than are actually are required in the fee agreement. That means a company can meet its projected requirements but fall short of the originally announced job count.

Counties also have the ability to negotiate changes with the company once an agreement is set. A prime, recent example is Lash Group in Fort Mill. The company committed to 2,200 jobs and $80 million of investment in a fee agreement that’s been modified multiple times since it started in 2015.

Last fall, the company asked for and received a modification to cut the job requirement by 55%. The reason was COVID-19 changed the work environment and the company wouldn’t hit the 2,200 job count. But it far surpassed and more than doubled its investment commitment at about $167 million. Given the investment, York County reduced the job requirement to 1,000 positions and included remote workers.

The South Carolina Department of Revenue states companies can negotiate fee-in lieu agreements with investment of at least $2.5 million. The payment can reduce traditional property tax amounts up to 40%. The bigger the investment and job count, the better the incentive a company can negotiate.

Should York County offer tax breaks for business? Leaders say it’s time to talk

Clark said economic development, particularly in the Southeast, is fiercely competitive. South Carolina towns and cities compete with others across the nation and sometimes the world.

“We have literally hundreds of sites to choose from, a company is looking for a reason to eliminate a community from the list,” Clark said. “Incentives are often the tool that is needed to get South Carolina over any hurdles and allow it to be selected.”

Proof of new jobs

The South Carolina Coordinating Council for Economic Development formed in 1986 to help state agencies attract new business and expand existing ones. The council oversees state set-aside, closing and rural infrastructure funds. Also, grants and job development, tax or other credits used to attract or grow business.

Last year the council awarded 83 new business development grants from those three funds at more than $226 million to 30 counties. They combined for a projected 11,914 new jobs and $4.75 billion investment. Commitments were made to 99 more projects where a company has South Carolina in consideration. Those projects would add up to 16,400 new jobs and $7.5 billion investment.

Last year four projects in the three-county region — two each in York and Lancaster counties — received grants. They combined for 386 committed jobs and almost $91.5 million of investment. The grant amounts combined for $1 million.

Companies typically have five years to meet hiring expectations set in incentive deals. Some deals allow eight years. Certification that companies met requirements can last well beyond the investment period. Extensions happen. So promised jobs aren’t proven for some time.

However, if requirements aren’t met, the state can seek repayment and terminate future incentives.

According to annual reporting by the coordinating council for economic development, the more than 460 grants awarded since 2006 that closed or began maintenance periods have created 99.8% of the jobs they promised. Some projects and even years overshoot job projections considerably. Others miss just as often.

The Herald reviewed the past five years of coordinating council reporting and found 40 economic incentive deals where a York, Lancaster or Chester company is named with projected and confirmed job count data. Those deals relate to set-aside, closing and rural infrastructure incentive funds.

Five of those companies hadn’t yet reached their deadline. A couple companies confirmed hundreds more jobs than were required. Several were short by hundreds, or never confirmed any new jobs.

The figures are specific to incentive deals, and not always overall employment at a company. An existing company can get incentives for expansion, for instance, that might bring few or no new employees. Companies relocating to the area might count their full staff in hiring figures. Sometimes companies are listed in multiple deals.

Take Schaeffler Group in York County as an example.

The coordinating council lists a 2016 agreement for 105 jobs, where none have been confirmed. But the council lists a separate 2015 agreement where Schaeffler confirmed more than 112 required jobs -- 118 actual jobs -- and York County Economic Development puts the company atop its list of largest manufacturers with more than 1,000 total employees.

The 40 area deals listed in the past five years of annual reporting are a combination of projects that either closed, were certified, went into performance maintenance, had amended incentive amounts, grant period or other deadline extensions.

What to expect from new deals?

Companies must provide financial data to the state economic development council to get incentives, which Clark said the state doesn’t approve without confidence the company can deliver. The state can require job or investment thresholds to be met before incentives start, or repayment if thresholds aren’t met. At the county level, Audette said there are routine one-, three- and five-year checks on job and investment progress.

“We look at what is going to be the trend based on them hitting their goals, in order to meet their next threshold to continue to get this fund or discount,” Audette said.

Still, many companies hit targets and many don’t. Experts can’t predict the future, but they can look for the types of companies that are most successful.

“There are some measurables that identify that this is a very productive opportunity,” Audette said.

One measurable is promised investment, the metric almost always tied to promised job creation and one that helps sustain jobs.

“The more money a company invests in an area, the less likely it will be to leave,” Clark said.

Officials who make incentive deals not only recruit, but study new companies.

“You look at their track record as a company,” Audette said. “You look at what they’re proposing to bring in. What is the product? Where is the product direction going?”

The Rock Hill region is near a massive international port in Charleston. It’s even closer to a major airport in Charlotte, and an interstate runs through the region. Those advantages, along with rail access and a strong worker base due to area community colleges, mean area counties can be selective with corporate recruitment.

If an incoming company creates a product or provides a service that complements existing businesses, Audette said, there’s better potential the new company will hit its job and investment targets.

“What is the market?” Audette said. “What is the industry that most fits into our area? You look at, what are surrounding businesses that support that same model?”

It’s no guarantee, but the best odds for companies meeting job thresholds come when officials target high-growth companies with potential for sustained, long-term growth, Clark said. Often with higher wages and potential to bring new opportunity outside just their own walls.

“Businesses and industries that bring new wealth to an area – by way of job creation or capital investment – are the companies that the state seeks to incentivize,” Clark said.