The North Carolina Court of Appeals, in a unanimous ruling, upheld the constitutionality of the $280 million economic development incentives package extended to Dell Computer by the State of North Carolina to encourage the computer manufacturer to build a facility in Winston Salem, N.C. The decision upheld the trial court’s dismissal of the case filed by seven state residents who challenged the legality of the incentives package.
The ruling is a critical acknowledgment of the importance of the state or local jurisdictions to be able to use incentives as a tool to attract new and expanding businesses. The Dell challenge has been closely followed by local governments and economic development advocates all across the country.
“The State of North Carolina remains a business leader because we are able to compete at the highest levels with other states for business,” said Burley Mitchell, one of the attorneys for Dell who is also a former Chief Justice of the North Carolina Supreme Court. “The Court of Appeals’ decision to uphold Dell’s incentives is important to our State because it allows us to continue to compete by offering incentives to attract business.”
The court held that "every state provides tax and other economic incentives as an inducement to local industrial location and expansion" and that questions about the wisdom of particular incentives were properly for the legislature and not the courts. The court found that the Dell incentives (and incentives generally) serve the public and therefore do not violate the public purpose clause of the North Carolina Constitution.
The court rejected each of the plaintiffs' 22 challenges to the Dell incentives. Click here to read the Court of Appeals opinion.
“The court’s ruling has huge implications for our state,” said Millen. “The Cuno1 case challenging incentives in Ohio was thrown out by the U.S. Supreme Court based on the plaintiffs’ lack of standing. The North Carolina Court of Appeals’ ruling reached the merits of the incentives and found that the incentives packages provided to Dell met constitutional muster.”
Dell received a combined incentives package from the State, the City of Winston-Salem and Forsyth County to build the 750,000-square-foot factory that has the potential to be worth around $280 million to the company if it meets all of the targets outlined in its agreements with the governmental entities. Securing the facility has brought over a thousand high-paying jobs to the region and provided a significant boost to the local tax base.
In May 2006, Dell, represented by Mitchell, Millen and Andrussier, defended the state and local incentive package the company received to build its new manufacturing plant in Winston-Salem. A group of citizens filed suit to halt the payments, claiming the incentives were unconstitutional. However, Wake County Superior Court Judge Robert Hobgood dismissed all 22 separate claims asserted by the plaintiffs and stated the legality of such incentives was well-established.
The plaintiffs then took their case to the North Carolina Court of Appeals, where a hearing was held Wednesday, April 25th. That three-judge Court of Appeals panel heard the arguments and issued its decision upholding the incentives package.
For MORE NEWS BRIEFS, click here.
For a FREE SUBSCRIPTION to Expansion Management magazine, click here.
For MORE NEWS BRIEFS SORTED BY STATE, click here.
For MORE NEWS BRIEFS SORTED BY INDUSTRY or FUNCTION, click here.
For MORE NEWS BRIEFS SORTED BY COUNTRY, click here.
Means the article is accessible only to our magazine subscribers.
