Durham City Case Study

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by Nichola Lowe

The City of Durham has established itself as a pioneer in incentive reform in North Carolina. In 2001, in response to concerns raised by the social justice coalition Durham CAN, the City adopted living wage standards for all incentives applied to new job creation. The City also extended this wage requirement to businesses that worked under government contracts, including those providing city-wide maintenance and sanitation services. This decision quickly triggered a review at the County level as well, which soon followed with a similar wage standard for firms it contracted with and also those seeking incentives to expand or locate facilities in the County.  Living wage levels for both the City and County are currently set at $11.91 and will increase to $12.17 per hour.

The City of Durham maintains a pioneering approach in its negotiation of economic development incentive agreements. Working again with Durham CAN, the City adopted an innovative policy in 2009 to require all incentivized firms to sign a workforce agreement outlining a commitment to providing opportunities for Durham residents to apply for positions created by the projects that are slated to receive incentives.  In signing the workforce agreement, incentivized businesses commit to giving Durham’s JobLink Career Center—a federally-funded employment agency in Durham that is jointly managed by Durham City and North Carolina Department of Commerce staff—priority in recruiting and referring Durham-based applicants for job openings. The JobLink Career Center System operates under the auspices of the Durham Workforce Development Board, a public/private partnership that was created by the federal Workforce Investment Act of 1998 and formalized in an inter-local consortium between the Durham City and County governments. Individual incentive contracts and accompanying workforce agreements specify the number of jobs to be created on a particular project and any additional base thresholds needed to qualify for incentives.

As with most local hiring policies in the United States, the City of Durham does not mandate local hiring. Rather, its policy is based on ‘good-faith’ principles and a strong reporting system that enables city officials to make an affirmative attempt to provide opportunities and track results. Employers, while not required to hire or even interview any applicants that are referred from JobLink, must still document all referrals that they receive and the eventual outcome of their applications in quarterly compliance reports. Additionally, by establishing a long-term relationship with workforce development specialists at JobLink, incentivized businesses provide city officials with information that is useful for assessing industry skill needs and evaluating the effectiveness of local training supports in addressing them. As a result, Durham has one of the most sophisticated and institutionally embedded local hiring systems in North Carolina. A sample of the workforce agreement can be viewed here, along with a more detailed case study of Durham’s local hiring policy and events leading up to its adoption.

Since 2009, workforce agreements have been signed by six companies that have established or expanded facilities in the City of Durham. These range from Burt’s Bees (a natural cosmetic manufacturer – 52 jobs), ACW (a British electronics manufacturer – 45 jobsi) and Save-A-Lot (a discount food store – 21 jobs). A more recent agreement for the redevelopment of the Hill Building in downtown Durham has added explicit provisions for targeted youth internships for a proposed boutique hotel, a welcomed addition given Durham’s high youth unemployment rate. Developers of several large-scale residential, mixed use and entertainment projects, including West Village Expansion and the Durham Performing Arts Center (DPAC), signed similar workforce agreements prioritizing local and youth hiring for construction jobs.

In addition to increasing the tax base for the City of Durham, the West Village and DPAC projects have generated roughly 313 job opportunities for Durham residents. But job creation is not the only benefit for the City of Durham. Coupling incentives with a structured workforce agreement enables JobLink to establish itself as a more visible and valued institutional partner of Durham-based businesses and has motivated the agency to make significant changes to how it works with employers and job seekers in the community. As one example, the agency recently moved its facilities to a storefront location at a centrally-based Durham mall in an effort to increase foot traffic and create a more professional and user-friendly atmosphere for businesses wishing to conduct interviews with prospective employees.

Durham’s incentive offers, like those given by Chatham County (see the Chatham County Case Study), are performance based—meaning businesses are required to first meet their stated investment or job creation goals before receiving any incentive payment. Larger incentive offers are typically reserved for Durham-based businesses that generate considerable capital investment or jobs. Still, the City of Durham also sets aside funding support for smaller retail and commercial facilities as parts of its Retail and Professional Service Grant. Through this program, the city provides up to $15,000 as a match for interior renovations and improvements, including commercial kitchen equipment installation. To qualify, facilities must be located in Downtown Durham or closely located Community Development Areas. In addition, the business must be open for business five days a week, including Saturday or Sunday, and also during both lunch and dinner hours when pedestrian traffic in downtown areas is at a peak. The City also provides funding to offset costs of exterior façade improvements or new signage with the goal of enhancing the pedestrian experience in downtown Durham and proximate areas www.durhameconomicdevelopment.org.

There are opportunities for other communities to draw insights from the City of Durham. While Durham, as a vibrant entrepreneurial economy in close proximity to the Research Triangle Park, has many economic advantages, it still struggles with pockets of poverty and underemployment that continue to motivate its search for improved practices around incentive negotiations. Living wage standards, local hiring provisions and support for locally-owned retail and professional service firms represent attempts by the City to extend the community benefits of its economic development activities and investments. The City also represents an excellent model of transparency, making all documents and decisions related to economic development incentives available for public review and comment. As counties in the Eastern part of North Carolina look for models to emulate and adapt, the City of Durham is a good starting place.


i ACW agreement involved the creation of 155 jobs.  However, the plant closed before all of the slated jobs were created and hence, no incentive payments were made, despite the fact that 28 of the 45 hires were Durham JobLink referrals.

Incentives Policy Contract

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Download the Contract


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Case Studies

Chatham County
Durham County
Warren County

Case studies by Nichola Lowe, PhD, Associate Professor City and Regional Planning, UNC-Chapel Hill


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Leveraging Incentives for Community Economic Development [PDF] by Kate Dydak and Heather Hunt

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Team

Ashley Brown
Kate Dydak
Heather Hunt
Bill Lester
Mark Little * project lead
Nichola Lowe * project lead
Sid Subramanian

In collaboration with the Department of City and Regional Development