Allstate’s pulling out of NC incentive deal continues trend

One of the nation’s oldest and largest insurance companies had its incentives package terminated by the North Carolina Economic Investment Committee Tuesday for failing to add thousands of jobs to its operations center in Charlotte.

Allstate was set to receive a Job Development Investment Grant (JDIG) of up to $17.8 million in tax breaks over the span of twelve years, but the state decided to end the 2017 agreement after the company’s pledge to add 2,250 jobs by 2020 didn’t come to fruition. At that time, Allstate had already employed 1,400 people.

Reports say that executives told NCEIC that the new COVID-19 pattern of remote work is to blame and incompatible with the grant rules. While most employees are remote, a little over 200 employees currently work at the Charlotte campus.

While the state hasn’t paid any money from the grant, local governments have reportedly given the project cash grants of $1.4 million. Allstate has spent nearly $34 million in expanding the site.

A yearly payroll impact of more than $105.3 million was expected from Allstate once all positions were filled. The project was supposed to grow the state’s economy by an estimated $3.9 billion over the 12-year term of the grant.

The company’s JDIG agreement also called for moving as much as $5.95 million into the state’s Industrial Development Fund – Utility Account because of Allstate’s location in Mecklenburg County. The Utility Account helps rural communities finance necessary infrastructure upgrades to attract future business.

When asked why the state waited until 2023 to end the agreement if Allstate promised to create 2,250 jobs by 2020, David Rhodes, communications director for the NC Department of Commerce, which oversees the JDIG grants, told Carolina Journal in a phone interview that companies were given what could be called a “grace period” of one year to fulfill any job creation agreements due to the COVID-19 pandemic. 

While that would push the agreement to 2021, Rhodes said he didn’t know why the agreement wasn’t terminated sooner. CJ has not received further comment prior to the publication of this article.

Allstate’s failure to follow through only adds to the terrible track record that JDIG and other state incentive programs have, with most being terminated before completion.

Among the most notable failures: Last August, Centene Corporation, a provider of managed health care services, backed out of plans to move its east coast regional headquarters to Charlotte. its $1 billion Charlotte campus was nearly complete after a year of construction.

In 2020, the NC Dept. of Commerce struck a deal with Centene, pulling $338 million in tax incentives through an add-on to the state’s JDIG. JDIG was originally designed to bring companies to poorer areas of the state, but Centene was awarded the first “transformational” JDIG grant to build its hub in urban Charlotte. 

At the time, Centene said they abandoned the campus and the east coast headquarters plan because of the shift to remote work.

Originally, Centene promised to bring more than 6,000 high-paying jobs to Charlotte over the next 12 years, but that promise was later downgraded to 3,200 jobs.

In July 2022, Advance Auto ended its Community Economic Development Agreement (CEDA) with the state, which involved relocating its corporate headquarters from Roanoke, VA, to Raleigh in 2018 and creating over 700 full-time jobs.

Reports say that company officials told the state that they were unable to add the hundreds of jobs agreed upon as part of the agreement. They cited competition for talent and being more flexible with workers, like allowing for remote work due to changes that occurred with the pandemic.

Company officials stressed that while the agreement ended, they would not be relocating their headquarters or workers already here.

The initial project was slated to grow North Carolina’s economy reportedly by $1 billion.

In March 2022, Microsoft pulled the plug on two state economic incentive grants approved in 2019 that would have been worth $20 million in economic incentives. The company said they were uncomfortable sharing the amount of employee data needed to complete the validation of job creation specified in the previously approved Job Development Investment Grants.

The company planned multi-million-dollar expansions of its operations based in Charlotte and Morrisville in 2019, with the creation of hundreds of jobs at both locations. Approved incentives packages were tied to plans for both locations, including an additional million-dollar incentives deal from Wake County in 2020 on the condition that Microsoft would bring hundreds of jobs with the deal.

Sonic Automotive sent a letter in February 2022 to the state’s Economic Investment Committee terminating their economic incentive agreement of almost $7 million. They said they couldn’t create the hundreds of jobs needed to fulfill the agreement due to the pandemic.

NCEIC terminated two companies’ incentive packages in November for not following through on job commitments.

Conduent, a spin-off of Xerox and S&D Coffee, blamed the COVID-19 pandemic.

EIC, part of the Economic Development Partnership of North Carolina, voted to end a $2.1 million grant awarded to Conduent in 2017. The business services company was to create approximately 200 jobs in Morrisville. The company would have received the grant money through payroll tax rebates.

At the time, the state awarded the company a JDIG grant and a community college grant program. The company was also slated to receive over $41,500 in incentives from Wake County and approximately $40,500 from the town of Morrisville. 

In 2017, the company employed more than 5,500 workers across the state. 

Soon after receiving the grant, Conduent began to cut jobs in its Raleigh and Charlotte locations. Reports said 73 positions created through the JDIG grant would be retained, but the company cited COVID and changing business conditions as reasons for not meeting employment goals. 

S&D Coffee, which provides products to restaurants like Dunkin’ and McDonalds, was awarded a $2 million JDIG grant in 2012, promising to create 180 jobs and retain around 600 in Concord. 

EIC received a letter from S&D owners Westrock Coffee that said COVID had hurt their business, forcing it to close its route distribution business and terminate and furlough many employees, leaving their total employment numbers below pre-pandemic levels. 

The company said it would retain 450 employees at its Concord location. 

There are two other notable projects in progress that have been awarded JDIG grants.

One is Apple, awarded $845 million in tax breaks over 39 years, provided the follow-through on creating jobs at its planned billion-dollar campus in Research Triangle Park.

The other is VinFast, the Vietnamese electric vehicle maker. If the company meets hiring goals, it could get up to $316.1 million in reimbursement from the state over three decades. 

The troubled company is set to break ground Friday on its $4 billion EV plant in Chatham County.

The post Allstate’s pulling out of NC incentive deal continues trend first appeared on Carolina Journal.

 

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