news The 2021 County Development Tiers map shows persistent poverty— and prosperity—in the usual regions. NCDOC map.
Smoky Mountain News
December 23-29, 2020
Economic development ranking system ‘cuts both ways’ BY CORY VAILLANCOURT POLITICS E DITOR ach year around this time, North Carolina takes a look at the economic prosperity, or lack thereof, in every one of its 100 counties. That analysis reveals the haves and the have nots, but it’s about much more than just bragging rights. Millions of dollars of state funding tied to economic prosperity, or more appropriately, economic distress, is disbursed in a highly competitive arena where winners and losers are decided as grant applications are approved or rejected and projects progress or wither on the vine. A shift in rank has very real implications, but when rankings are published each year, one thing holds true — questions over whether the state’s County Development Tiers designation system accurately reflects economic realities in counties, rich and poor, from Appalachia to the Atlantic Ocean.
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DEFINING DISTRESS
The state’s County Development Tiers designation system is designed to measure a county’s relative prosperity as compared to others, and to encourage economic activity in those counties that are found to be less prosperous. Guidelines for calculating a county’s Development Tier designation are provided in General Statute 143B-437.08, but publication of the rankings is left to the North Carolina Department of Commerce. Since at least 2007, four factors have been 6
used to determine a particular county’s designation. The first, average unemployment rate, takes data from the NCDOC’s local area unemployment statistics program for the most recent 12 months. Median household income over the previous 12 months is the second factor. The third is percentage population growth over the past 36 months, and the final factor is the adjusted property tax base per capita. The only metric that includes data collected during the Coronavirus Pandemic is unemployment. Counties are ranked on a scale from 1 to 100 in each of the four factors. All are equally weighted. The highest possible score is 400, and the lowest possible score is four. Then, counties are ranked by final score, from most economically distressed to least economically distressed. Tier Three indicates the most prosperous counties, and Tier One indicates the most economically distressed. Per statute, there must be 40 counties in Tier One, 40 counties in Tier Two and 20 counties in Tier Three. Rankings are published on or before Nov. 30 each year, take effect on Jan. 1 and there is no appeal process. Once they’ve all been sorted into tiers, counties may then become eligible for a number of incentive programs, contingent upon their tier assignment. One is NCDOC’s Job Development and Investment Grant (JDIG) program, which provides up to 80 percent of tax withholdings from new jobs for counties in Tier One, but 75 percent for counties in tiers two or three. Another, the OneNC fund uses tier desig-
nations in a similar way. A discretionary cash grant program for job creation, OneNC requires a local government match for all grants. That local match is $1 per state dollar in the most prosperous (Tier Three) counties, $1 per two state dollars in Tier Two counties, and $1 per three state dollars in the most distressed counties (Tier One). Those are just two of several dozen statewide initiatives that utilize the tier system to determine where funding should be directed, but the system is also helpful for private developers looking to locate in a certain economic development environment. For example, in North Carolina, budget chain Dollar General has 143 locations in 109 municipalities spread across 69 counties, but only 22 percent of Dollar General locations are in prosperous Tier Three counties. In 2019, the tier system was tweaked a bit to remove favorable adjustments to counties with small populations or extremely high unemployment rates. Also eliminated was the stipulation that counties designated as Tier One would remain in that tier for at least one additional year, regardless of ensuing metrics.
A TALE OF TWO TIERS Next year’s rankings show 22 counties with different designations than they had in 2020. Haywood had alternated between Tier Three and Tier Two from 2014 to 2017, but was a Tier Three county from 2017 through 2020. This year, along with Alexander,
Brunswick, Buncombe, Burke, Cherokee, Davie, Hoke, New Hanover, Randolph and Rowan counties, Haywood dropped a tier and is once again a Tier Two county. “You know it’s funny, when you first get the news it’s a little like, ‘Yes!’ but then it’s a little melancholy because being in Tier Three, we’re pretty prideful in a lot of ways,” said David Francis, a program administrator who handles much of the economic development work on behalf of Haywood County. “Now we’re in Tier Two, which is definitely more reflective of where we need to be.” In 2020, Haywood was ranked as the 18th most-prosperous of North Carolina’s 100 counties. Now, it’s the 36th most prosperous. The North Carolina Department of Commerce said in a memo that the 2021 tier change for Haywood was prompted by a huge shift in the county’s unemployment rate. In 2020, only five counties had lower unemployment than Haywood County. Now, 62 counties boast lower unemployment. “In February, we were at 4,200 jobs lost,” Francis said. “The unemployment rate in May was 14.8 percent, the highest in 30 years.” More than 55 percent of those job losses came in the accommodation services, retail, arts, entertainment and recreation sectors, which historically have been the pistons powering Haywood’s economic engine. Francis said that all but about 1,900 of those job losses have returned, so Haywood is clawing its way back from pandemic-induced shutdowns in 2020. However, the impact of those job losses — and the resulting Tier Two designation — could help the county come back even stronger. “We were excluded from all state-level broadband grants due to the Tier Three status, so now we’re opened up to those. The North Carolina Main Street program and building reuse designations, now we can qualify for those,” he said. “Reuse grants are going to be nice to have. We weren’t able to get infrastructure grants as well, so yeah, this
