Gates improves tier rating

Published 10:44 am Friday, December 2, 2011

GATESVILLE – Moving on up.

Gates County local government officials were notified Nov. 30 that the county’s tier designation for 2012 has improved. Gates was one of only four counties statewide to improve its tier designation, a formula, mandated by state law, that determines a variety of state funding opportunities to assist in economic development.

The county is moving from Tier 1 to Tier 2. Tier 1 counties are the most economically distressed and Tier 3 counties are the least. Eligible businesses that locate in lower-tiered counties are eligible for some grant programs and larger tax credits than those that locate in higher-ranked areas.

“This is one of those good and bad scenarios,” said Gates County Manager Toby Chappell. “On the good side the indicators used by the state in formulating tier designations show that Gates County’s unemployment rate (7.3 percent) is the third lowest in the state and that our population grew by 16 percent between the 2000 census and the 2010 census. Thusly, the criteria the state looks at for judging economic prosperity shows that Gates County is progressing.

“On the other side of the issue, as far as the day-to-day lives of our citizens there’s still much work that needs to be done, particularly in bettering the living conditions of our lower income population,” Chappell continued. “Improving our tier designation also lowers the amount of tax credits that the state awards per new job created by eligible businesses. We’re still eligible for those incentives, just at a lower rate.”

According to information from the North Carolina Department of Commerce, tier rankings are based on an assessment of each county’s unemployment rate, median household income, population growth, and assessed property value per capita. In addition, any county with a population of less than 12,000 or a county with a population of fewer than 50,000 residents with 19 percent or more of those people living below the federal poverty level automatically are designated as among the most distressed counties.

“Our goal is to encourage economic development statewide so all of our residents can find good jobs regardless of their location in our state,” said N.C. Commerce Secretary Keith Crisco. “These tier rankings provide important tools that help attract or retain businesses in all parts of North Carolina.”

Using a statutory formula outlined in the 2006 Tax Credits for Growing Businesses (more commonly referred to as Article 3J tax credits), the Department of Commerce assembles required statistics for each of North Carolina’s 100 counties, applies the formula and assigns a tier designation ranking from one to three.

The law calls for the 40 most distressed counties to be designated Tier 1, the next 40 counties designated as Tier 2 and the 20 most prosperous counties to become Tier 3.

“Our commissioners are pro growth,” Chappell noted. “They want to see Gates County expand its tax base, which prevents passing along tax increases to our citizens.”

One of the keys to Gates County’s growth is tied to the Hampton Roads area of Virginia. Chappell said it’s a well-known fact locally that many of the county’s citizens leave home each morning to drive into southside Virginia to work.

“That’s a reality we are already accustomed to; however, Raleigh is finally seeing that as well and are embracing the fact that our economy crosses the state line,” Chappell said.

The tier designation improvement will slightly impact the county’s efforts to secure grant funding.

“It doesn’t exclude us from any grants; we’ll just have to work a bit harder to convince granting agencies to look our way,” Chappell stated. “But our commissioners do not wait for the heavens to open and grant funding to come raining down. They are constantly seeking avenues to grow our county for the future.”

Gates County’s new designation, effective Jan. 1, means it will join neighboring Perquimans, Pasquotank and Camden counties in the Tier 2 ranking. Currituck and Dare counties are also Tier 2.

Meanwhile, neighboring Chowan County dropped from a Tier 2 to a Tier 1. Hertford, Bertie and Northampton counties all remain Tier 1.

Tier designations determine the available amount of tax credits for job creation and business property investment in a list of eligible industries. They include manufacturing, motorsports, aircraft maintenance and repair, air courier services, warehousing, customer service call centers, research and development, electronic shopping and mail order houses, wholesale trade and information technology.

All eligible companies are required to offer employees health insurance and pay at least 50 percent of the premiums, cannot owe back taxes and cannot have received a significant environmental violation notice from the state Department of Environment and Natural Resources. In Tier 2 and Tier 3 counties, companies also must meet a wage test.

Potential benefits to companies under each tier designation include:

• Tier 1 – $12,500 tax credit per new job with a requirement to create at least five jobs, and a 7 percent tax credit for eligible business property expenditures.

• Tier 2 – $5,000 tax credit per new job with a requirement to create at least 10 jobs, and a 5 percent tax credit for eligible business property expenditures of more than $1 million.

• Tier 3 – $750 tax credit per new job with a requirement to create at least 15 jobs, and a 3.5 percent tax credit for eligible business property expenditures of more than $2 million.

For more information about the tier designation system, visit

About Cal Bryant

Cal Bryant, a 40-year veteran of the newspaper industry, serves as the Editor at Roanoke-Chowan Publications, publishers of the Roanoke-Chowan News-Herald, Gates County Index, and Front Porch Living magazine.

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