October 13, 2013

Daimler got $2 million state grant in 2008, but never built hoped for headquarters

South Carolina gave Daimler Trucks $2 million in 2008 to buy land for an office building near Lake Wylie. The hope was the site would become the company’s headquarters, employing thousands of workers in high-paying jobs.

South Carolina gave Daimler Trucks $2 million in 2008 to buy land for an office building near Lake Wylie. The hope was the site would become the company’s headquarters, employing thousands of workers in high-paying jobs.

But last month, Daimler announced plans to expand its current headquarters in Portland, Ore. The company now wants to sell the undeveloped York County property, but it won’t have to repay South Carolina’s $2 million grant.

In 2009, state officials determined that because Daimler opened a sales and marketing facility in Fort Mill that initially employed 300 workers, terms of the Lake Wylie grant had been met.

The facility, located near Knights stadium, now employs 500 people.

Daimler got credit for spending $16.1 million on the 400 acres near Lake Wylie and $10.6 million in improvements to the Intelli Center building it leases in Fort Mill. The state grant had required a $26.7 million investment, purchase of 200 acres and creation of 300 new jobs.

A Daimler spokesman said the company “far exceeded” grant commitments.

Details of the grant were not reported in 2008. The Herald recently obtained the grant agreement under the S.C. Freedom of Information Act.

The 2008 deal came as South Carolina competed with sites in Charlotte and Mooresville, N.C., according to news accounts at the time. York County and Indian Land were on the company’s short list, and the Lake Wylie off S.C. 274 near Crowders and Allison creeks was thought to be the frontrunner as the lakefront property was similar to the Portland headquarters, said Tom Smith, who represented the area on the York County Council at the time.

When York County was selected, Mooresville, N.C., officials complained they couldn’t compete with South Carolina’s incentives.

It was a deal different from most.

York County Council declined to participate in the state grant because of concerns the county would be financially liable if the project failed, former county administrator Jim Baker said recently. Typically state grants are directed through the county where the project is located.

Negotiations between the county and Daimler were spotty at best, said Buddy Motz, then chairman of the County Council. It was hard to pin down Daimler officials on their exact plans, Motz said.

To direct the money to Daimler, the state’s Advisory Coordinating Council for Economic Development awarded the $2 million grant to Clover, which then passed then money onto Daimler.

Allison Harvey, Clover town administrator, said, the grant may appear odd, but, “we didn’t mind helping the state.”

The agreement contained provisions for repayment if Daimler failed to fulfill the requirements. When the coordinating council determined the firm met the deal’s minimum requirements, the state lost any repayment rights.

Nonetheless, Motz said deals such as this need to have “an asterisk in cases where the deal falls through.”

State Sen. Wes Hayes said deals such as Daimler are “part of the cost of doing business.” Once the state and the company meet their minimal obligations, “that’s the best you can hope for,” he said. “We do need to be careful, however, and make sure the payback is adequate.”

Having economic development projects fulfill expectations is an ongoing issue, Hayes said.

A spokesman for the state Department of Commerce said grants can still be awarded for land purchase. But Mark Farris, York County’s economic development director, said such outright state grants for land purchases are rarer now.

Despite their misgivings about the $2 million grant, county officials were excited about the possibility of Daimler bringing its headquarters here. “They had great plans for a real showcase,” Motz said.

County officials compared Daimler coming to York County to BMW purchasing 900 acres between Greenville and Spartanburg for a new assembly plant. The Daimler jobs – as many as 3,000 – would help an already rapidly growing county expand.

The state estimated that 300 employees at the Fort Mill office would create 737 other jobs in support businesses.

The public costs of the project would be $4 million for the first year with benefits from income and taxes about $63 million, according to state estimates. For every $1 in public money, there would be $31 in private investment or benefits, the state estimated.

The minimum threshold for most economic development projects in York County now is $10 generated in benefits for every $1 spent, according to Farris.

A company headquarters would take the county’s economic development efforts to a new level, officials said in 2008.

While Farris was recruiting Daimler, the County Council was debating how 2,000 acres of land near the lake would be developed. The council decided to rezone some industrial land to commercial, and developed a master plan that envisioned 1,500 homes on 500 acres and with the remaining acres for commercial, retail, recreational and school use.

While Daimler had been looking for sites for more than two years, Smith remembers discussions between the company and the county moved swiftly once the Lake Wylie location was identified.

Although county officials were wary about the grant, they agreed to the typical fee-in-lieu of tax agreement that would have reduced property taxes by 43 percent for 30 years. The agreement was never used because Daimler never built on the property.

The county’s Pennies for Progress program also widened S.C. 274 to five lanes, an action independent of the Daimler decision. But the county paid for acceleration and deceleration lanes to improve access to the Daimler site.

While Daimler’s headquarters remains in Portland, Farris said having the Daimler name on the Fort Mill building helps economic recruitment efforts.

“It’s one of the sites on (the) tour we show to prospects,” he said, “It adds to our ability to influence companies.”

York County also benefits from Daimler’s wages, he said. In 2008, the state estimated the average salary paid at Daimler would be about $65,000. Daimler officials declined last week to provide salary information to The Herald.

Farris said his office is also ready to assist in the sale of the Lake Wylie land, as long as it is for similar commercial, job-producing uses.

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