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Breaks draw defense company
Meggitt plans building in Suwanee

SUWANEE - Expect to see more businesses lured to Gwinnett with tax incentives in the future, those involved with the county's economic development said Tuesday.

Alfie Meek, director of Gwinnett's economic analysis division, said he could see the county doing four to six tax incentive deals a year to entice businesses to relocate to Gwinnett.

The county celebrated its second tax incentive draw Tuesday at a groundbreaking ceremony for Meggitt Defense Systems FATS/Caswell's new building on Brogdon Road in Suwanee.

Meggitt Defense Systems FATS, which was known as Firearms Training Services before being acquired by Meggitt, had been located in Forsyth County. The company recently merged with another Meggitt branch and was in need of more space.

The company searched metro Atlanta and settled on Suwanee, but was drawn across the Chattahoochee River largely because of an estimated $515,822 in county, school, state and city tax incentives over the next five years. The county's portion of those incentives is $155,533.

County commissioners chose in December 2005 to start offering tax incentives to companies looking to relocate and bring high-paying jobs.

"We had folks all around us who seemed to be doing a better job of attracting businesses," Chairman Charles Bannister said Tuesday of the decision to give incentives to select businesses. "If we had more tools to work with, we could attract more businesses."

The first company to take advantage of a tax abatement was Hewlett-Packard in May 2006.

The company was looking for a location for a data center that would bring an estimated 140 high-paying jobs to the county and $240 million worth of capital investment. Capital investment falls in two categories: real (the property and the building) and personal (furniture, fixtures and equipment).

When the deal was done with Hewlett-Packard, the company was expected to receive estimated tax breaks of $8.3 million in county, school, state and city taxes over 10 years, Meek said. The county's portion of those abatements was $2.5 million and came in the form of both real and personal capital investment breaks.

The abatements Meggitt received were much less and only applied to real capital investments, but county and chamber officials stressed the two deals were very different.

"We tried to put together a package that was the most appropriate for the deal and could make Gwinnett the most attractive option," said Chip Mitchell, project manager for the chamber's economic development department.

Meek said the Hewlett-Packard deal resulted in larger incentives because of the extremely large amount of capital investment - $240 million. Meggitt, on the other hand, committed to bring a minimum of $17 million in capital investment between now and 2012.

Meggitt will bring a far greater number of employees, however, committing to bring 575 by 2012 with a minimum average annual salary in excess of $60,000, Meek said.

These added employees will have a positive trickle down effect on the county's economy, Mitchell said.

"They're spending their money here buying houses, eating out, shopping and all those other things," Mitchell said.

But Meek said with so many employees and a lower capital investment it became a little harder for Meggitt to create the positive fiscal impact necessary for the county to allow any tax abatements.

Fortunately, many of Meggitt's employees already live in Gwinnett County and already receive residential and school services.

Services for residential property cost $1.12 for every $1 in revenue in 2004, the county said, whereas services for commercial property cost $0.80 for that same $1 of revenue.

So by keeping Gwinnett residents from commuting out of the county for work, it helps shift some of the tax burden back to the commercial side.

"One of the reasons this deal works so well for Gwinnett County is because we already have so many of these employees living here," Meek said.

Bannister said prior to the county's economic development initiatives, the tax base was around 60 percent residential and 40 percent commercial. Things are now moving closer toward an even split, he said, with ratios of roughly 52 percent residential and 48 percent commercial.

"(Shifting the tax burden) takes a future load off the residential folks and it also brings in high-paying jobs, which is always a good thing," Bannister said.

Nick Masino, director of economic development for the chamber, said he hasn't been surprised more companies have yet to take advantage of the county's tax incentive policy, saying it's something the county has needed time to get out and sell.

"When the incentive packages were voted on and approved I think there was hope that there'd be more interest, but at the end of the day you have to go out and market it," Masino said. "That's why Partnership Gwinnett and the incentive package work so well together."

Partnership Gwinnett is an economic development initiative by the chamber aimed at bringing 65,400 new jobs and $5.8 billion in new net wealth to the county over the next five years.

Masino said he expects the new economic development marketing strategies and incentives programs to result in a little more than a business each quarter moving to the county.

So far Suwanee, recently named one of Money Magazine's top-10 best places to live, has been the beneficiary of the county's two main economic development catches. Hewlett-Packard's data center is also located in the city.

Masino, finishing up his final term as Suwanee's mayor, pointed out the negotiations to bring Meggitt to the Gwinnett-side of Suwanee began well before he took over as the chamber's economic development director in February.

"It has to be noted this was happening before I started," Masino said. "Chip (Mitchell) was working on this project a year ago. This was Chip's project."

A look at the estimates on jobs, salaries, capital investment and tax incentives for the first two companies to receive tax abatements under Gwinnett's economic development ordinance:

Company:

Hewlett-Packard

Meggitt Defense Systems

Estimated Jobs:

140 by 2011

575 by 2012

Estimated Average Salaries:

Roughly $60,000

Roughly $60,000

Estimated Capital Investment:

$240 million by 2011

$17 million by 2012

Estimated Tax Abatement

(County, school, state and city):

$8.3 million over 10 years

$515,822 over 5 years

Estimated County Tax Abatement:

$2.5 million over 10 years

$155,533 over 5 years

Source: Gwinnett County Economic Analysis Division