CHARLESTON – West Virginia is certainly making progress on several fronts, but some in the state are determined to sabotage our potential for progress by trying to outlaw or restrict one of our most successful economic development tools.
In Jefferson County, where debates between pro-growth and anti-growth residents have become commonplace, a minority group of both residents and non-residents have challenged a Payment In Lieu of Taxes, or PILOT, agreement between the county and a private business that will be investing over $100 million and creating 140-150 good-paying jobs with benefits.
This lawsuit may focus on one project, but it has the potential to disrupt economic development work all over West Virginia.
By way of background, PILOT agreements have been a critical tool in helping West Virginia communities attract major investment for years.
PILOT agreements allow local governments to leverage future tax revenues to secure typically long-term, major developments. Essentially, businesses involved in PILOT agreements make an up-front payment to the County Commission and the county board of education and are relieved of some or all of the property taxes on new development over several years. In return, the new business is expected to bring new jobs or economic activity to offset the loss in future tax revenue.
In Berkeley County, for example, a PILOT agreement was approved in July for a $7.3-million building redevelopment project in downtown Martinsburg. And in 2017, Berkeley County approved a PILOT agreement for the Proctor & Gamble plant being constructed south of Martinsburg. P&G has said it is investing about $800 million and will employ over 700 people at the new plant.
The PILOT program was implemented in the 1990s and has since helped spur developments all over the state. Proponents of the current legal challenge believe that Jefferson County PILOT agreements are separate from existing or potential PILOT agreements in the state’s 54 other counties.
This is simply not the case. How might Berkeley County residents feel if their neighbors in Jefferson County successfully litigate PILOT agreements out of existence?
The West Virginia Development Office and county economic development authorities have few tools available to help them attract business investment. Despite recent improvements in our state’s economy, West Virginia is still recovering from an economic downturn and can’t offer cash incentives or other carrots to lure major investment. These incentives have become commonplace in surrounding states.
We also have some business taxes that are anti-competitive, such as our property tax on inventory, machinery and equipment — a tax that must be repealed, albeit in a responsible way. It is regressive and puts West Virginia out of step with the rest of the country. Absent that repeal, PILOT agreements are a tool that West Virginia must keep.
Even with other incentives, other states use PILOT agreements to lure big investment just like West Virginia does. Amazon announced its new split headquarters will be built in New York and Virginia. Part of the New York deal involves a PILOT agreement with Long Island City, N.Y.
Taking PILOT agreements away from West Virginia would remove one of the few tools we have to compete with other states that can offer so much more to attract investment.
When false narratives don’t work, we understand that groups opposed to development in their own back yard often turn to the court system for relief. Unfortunately, the actions of a few to oppose development in a small area can have far-reaching negative consequences for the entire state.
The Jefferson Circuit Court should recognize long standing laws and court decisions in favor of PILOT agreements and dismisses this lawsuit.
McPhail is president of the West Virginia Manufacturers Association. This opinion piece originally appeared on the Daily Mail editorial page in the Charleston Gazette-Mail.