As ‘Project X’ smoke clears, GE deal details stay foggy

June 23, 2013 Asheville , City - County Gov. , News Stories , Roger McCredie 1182 Views
As ‘Project X’ smoke clears, GE deal details stay foggy

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By Roger McCredie –

On Monday (June 17), the word was made official: the hush-hush Buncombe County business development deal officially spoken of only as “Project X” is in fact a multi-faceted incentive package put together for General Electric Aviation.

The deal’s components include a land purchase-and-swap arrangement, extensive enlargement and renovation of GE’s present plant facilities, and construction of a connected trucking terminal, together with monetary and tax rate incentives. Buncombe County Commissioners voted May 14 to contribute $15.7 million in taxpayer funds for property and construction, together with another $2.8 million worth of in-kind cash credits. On June 11, Asheville City Council appropriated an additional $1.58 million towards the project, making a total investment of $20,080,000. In return, according to the Economic Development Coalition for Buncombe County, the GE deal “would generate $1.2 million dollars annually in new city and county property tax receipts” and, statewide, “would sustain over 750 direct, indirect and induced local jobs, $34 million in annual income and another $4.3 million in annual state and local taxes.”

At a presentation at the GE Aviation plant on Monday, GE company officials and members of the EDC announced that the project formerly known as “X” involves refitting the Sweeten Creek Road facilities for the manufacture of a product called ceramic matrix composite (CMC), an aircraft engine material which GE says will “revolutionize jet propulsion.” In a news release issued at the time of the presentation, the EDC said the CMC components “will make GE jet engines the industry standard for efficiency, while simultaneously reducing emissions.”

Although the Buncombe/Asheville package is by far the largest, similarly-constructed incentive packages have been bestowed upon GE by three other city-county government agreements around the state: Durham county/city ($600,000), New Hanover/Wilmington ($875,000) and Ashe/West Jefferson ($1.2 million). Those incentive packages were all approved the same week as Asheville’s.

The revelation of Project X’s true identity and purpose was timed, officials said, to coincide with the opening of a major aviation industry exposition in Paris, where GE, along with most major aircraft component manufacturers, is maintaining an elaborate company exhibit. Such shows serve as meet-and-greet sales and media contact points and are frequently used as occasions to make major company development announcements.

GE company representatives and local government officials have cited a combination of maximum news impact and basic security precautions as the reasons for the strictly enforced anonymity of the project. In fact, early documents introducing “Project X” to county government stated flatly that GE would consider taking its present operations as well as its new business out of Buncombe County if the secrecy surrounding the deal should ever be compromised. (GE aviation presently employs some 270 workers; the new project, it said, will initially create 52 new jobs, involve a capital equipment investment of $126 million and bring more than $3 million in taxes to Buncombe County over a 10-year period.) The gag order apparently also applied to the other three locations involved, since their media referred to the deal as “Project X” as well.

Buncombe County Commissioners and Asheville City Council got the message. Public hearings, required by law in such matters, were held at the same meetings when votes were taken, with the minimum allowable advance notice, and approval of the unnamed deal sailed through both governing bodies.

But the public was a harder sell, and skepticism over the soundness of the bargain with GE, as well as criticism of the way in which the entire matter was handled, still runs high, exacerbated by a nagging suspicion on the part of many locals that they still don’t — and may never – know the whole story.

As for the secrecy issue, it was ruptured on June 8, when the Tribune broke the story identifying the company involved as GE Aviation, after a source who had been involved in early negotiations came forward on condition of anonymity. At the June 11 City Council meeting, Councilman Cecil Bothwell said, “We all know it [Project X] is GE.”

Thus, during City Council’s pre-approval public hearing, resident Jerry Rice expressed the bottom-line sentiment of a number of those present. “Why,” he asked, “are we propping up these companies that are so large they could buy and sell this city and county? This is nothing but corporate welfare and the taxpayers are going to foot the bill.”

Businessman Saul Chase and Dr. Milton Byrd both called Council’s priorities out of whack and demanded to know why, given the state of the city’s finances, the moneys earmarked for the project were not diverted instead to making urgently needed improvements to the city’s services and infrastructure.

Another speaker inquired what assurance there was that the 52 $40,000-a-year jobs to be created by the agreement would remain in place, or that the workers filling those jobs would actually be taxpaying residents of Buncombe County proper. He was told that it was impossible to make such a prediction, but that historically 65 to 70 percent of workers “tend to stay in the county.”

Social media, both before and after the formal announcement, have been abuzz with speculation and criticism, many users echoing the corporate welfare sentiment, others criticizing the methodology used to create the rosy income projections touted by the EDC. Harshest criticism seemed to be reserved for the enforced secrecy of the project and GE’s threat to take its marbles and leave if anybody told.

For its part, GE denied using any “strong-arm tactics.” And County Commissioner Mike Fryar took to the airways on WWNC’s Pete Kaliner Show to defend the handling of the deal and tout its benefits.

“This was never a 52-job deal,” Fryar said on-air. “It keeps 300 jobs in place.” Then, in contrast to what had appeared to be the county’s position, he said, “We didn’t want to build a building. But when you get pushed into a corner – “

“Were you pushed into a corner?” asked Kaliner.

“We weren’t forced into anything,” Fryar replied.

“It looks like they’re getting this deal for pennies on the dollar,” said Kaliner.

“As long as we get the tax money, I don’t care,” said Fryar.

Kaliner pointed out that the process involved collecting the tax money, then in effect giving part of it back. “That’s a rebate, isn’t it?” he asked Fryar.

“It’s no different from letting a bid,” Fryar said. “It’s like putting a bid out. They said, ‘Who wants us?’ [to several states, including South Carolina, Georgia, Tennessee and Mississippi]. There’s no difference.”

“And collecting taxes and giving them back isn’t a rebate?” Kaliner asked.

“It’s a rebate of a type,” said Fryar.

“I don’t like incentive packages,” Fryar added. “I don’t want the taxpayers paying for everything. But at least it brings jobs. Jobs brings tax money. Jobs brings cars. Jobs brings dinner downtown.

“We’re not losing a dime,” he said.

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