Economic Impact of Boeing

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The Economic Impactof Boeing in South Carolina

P r e p a r e d f o rT h e A l l i a n c e f o r S o u t h C a r o l i n a ’ s F u t u r e

P r e p a r e d b y

C o l u m b i a , S CM a y 2 0 1 0


http://slidepdf.com/reader/full/economic-impact-of-boeing 2/30Ma 2010

T e E c n m i c I m p a c t f B e i n g I n S u t C a i n a

1

Tab e f C ntents

1. Intro uction..................................................................................................

2. Why We Nee Incentives...............................................................................Page 2

3. BMW’s Investment in South Carolina............................................................Page 9

4. Boeing’s Investment in South Carolina........................................................Page 11

5. Economic Impact of Boeing in South Carolina.............................................Page 14

6. Summary.....................................................................................................Page 19

Metho ology................................................................................................Page 20

Appen ix.....................................................................................................Page 22




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Manu acturing has been a major economic driver in South Carolina or the last 100 years. While many have predicted the demise o the industry inthe state and in the nation, South Caro-lina’s manu acturing sector continues to be a major component in the state’s economy – representing more than one- th o the state’s gross state product.Te recent announcement by Te Boeing Company to locate its 787 Dreamliner actory in Charleston is another indica-tion o the vitality o manu acturing in

South Carolina.

Te Dreamliner announcement has beenhailed by many as the most important economic development announcement inthe state’s history. In terms o its rela-

tive size, scope, immediate economic impacts and potential uture economic impacts, and the critical timing in the midst o the worst recession in 70 years – it certainly appears to be the most important one. Te impacts o Boeing have already been elt all across the state with announcements in Greenville and Marion counties a year be ore the new plant will be operational.

Tis report is intended to help policy makers understand the overall economic

impacts o Boeing’s decision to locate its Dreamliner acility in South Carolina.Tis analysis evaluates actual data and concludes that it is clear that Boeing is making a sound investment in SouthCarolina and South Carolina is making

a sound investment in Boeing.

Tis report includes a brie overview o why South Carolina uses economic devel-opment incentives. For some comparisonand perspective, the report highlights the success o a similar project South Caro-lina courted and success ully attracted in the early 1990’s --- BMW. In addi-tion, the report summarizes the Boeing investment and incentive package. And nally, the report includes estimates o the total economic impact on South

Carolina’s economy rom the new Boeing Dreamliner actory once the indirect,“multiplied” impacts are included.

1. Int ucti n

Like just about every other state inthe nation, South Carolina providesnumerous incentives or new andexpanding businesses. While somenon-practitioners argue on theoreticalbases that it would be better or alland more economically e cient i

South Carolina and other states didnot provide incentives, the real worlddictates otherwise. I South Carolina

were to do away with all economicdevelopment incentives, the state

would be at a great disadvantage with its competitors in the South-eastern United States. Unless all 50

states (and a host o other countries)eliminated incentives – South Caro-lina must continue to use incentivesto e ectively compete in the worldeconomy.1

Tere are many types o incentives

o ered by the states in their e orts toattract new investment. A summary o those provided by South Caro-lina compiled by the South CarolinaDepartment o Commerce and avail-able on their website is provided in the

Appendix to this report.2

2. W S ut Ca ina Uses Incentives t Att act New Manufactu ing Investments




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“ Without a FILO ,industrial property isassessed at 10.5% inSouth Carolina. ...Te10.5% assessment onindustrial property putsSouth Carolina at anextreme disadvantageto our neighboring

states.”

One o the most important incentivesSouth Carolina uses is the Fee-In-Lieu-o - ax (FILO ). Te FILO is usedto reduce the property taxes or new and expanding businesses. Te initialFILO incentive became law in 1987and allows a quali ying investment topay a lower assessment rate -- 6% ormost investments and 4% or very large investments.3 (Boeing quali-

ed or a FILO assessment o 4%.)FILO has been used extensively sinceit was created.

Without a FILO , industrial property is assessed at 10.5% in South Caro-lina. Commercial and rental property is assessed at 6% and owner-occupiedresidential property is assessed at 4%

(and exempt rom school operatingtaxes). Te 10.5% assessment on indus-trial property puts South Carolina atan extreme disadvantage to our neigh-boring states (some counties in Georgiao er ull property tax exemptions tonew industry or the rst 10 years -- $0taxes or 10 years!).

For example, a $50 million invest-ment in South Carolina would pay three or our times the property taxesthat a similar investment would pay

in North Carolina. Te ollowingexample o select border countiesdemonstrates the disadvantage SouthCarolina property taxes create oreconomic developers.

T A B l E 1ASSESSMENT ESTIMATEd ANNUAl

loCATIoN rATIo ProPErTy TAxES

lancaste C unt , SC regu a 10.5% $1,235,304lancaste C unt , SC 6% FIloT $705,888lancaste C unt , SC regu a 10.5% $1,816,567lancaste C unt , SC 6% FIloT $1,038,038

vsC eve an C unt , NC $360,000Meck enbu g C unt , NC $419,350Uni n C unt , NC $332,500

E igib e Ge gia C unties $0Source: M&A, Inc




4

As seen rom the comparison above,South Carolina is at an extreme disad-vantage to our neighboring states interms o property taxes on industrialproperty ---- even when a FILOT incentive is ofered .

A recent report by the Minnesotaaxpayers Association rein orces the

bad news about South Carolina’s highproperty taxes.3 In that study, SouthCarolina ranks #1 in property taxes

on industrial property in the UnitedStates (#1 = highest and #50 = lowest).

As seen in able 2 below, South Caro-lina ranked well above its neighboringstates Georgia and North Carolina.

STATE CITy rANK STATE CITy rANK

S ut Ca ina C umbia 1 S ut Ca ina C umbia 1

Ge gia At anta 18 Ge gia At anta 21

N t Ca ina C a tte 38 N t Ca ina C a tte 39

T A B l E 2$100,000 VAlUEd ProPErTy $25 MIllIoN VAlUEd ProPErTy

$50,000 Machinery and Equipment $125,000,000 Machinery and Equipment$40,000 Inventories $10,000,000 Inventories

$10,000 Fixtures $2,500,000 Fixtures

Te FILO incentive is extremely important or South Carolina whenrecruiting and attracting manu-

acturing investments like Boeing.Manu acturing has certainly declinedin terms o employment over the lastseveral decades, but it is still a vitalcomponent o the state’s economy.

Even though manu acturing employ-ment has declined by 150,000 jobs inthe last decade, the sector still contrib-utes 20% o the state’s Gross StateProduct. Te contributions to GrossState Product have held up well evenin the last ten years as seen below.




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One o the most striking aspects o the manu acturing sector and one thathas continued even with the decline in

employment is the role that manu ac-turing plays in the property tax base o the state. Tis is extremely importantto local governments and schooldistricts since they are so dependent onproperty taxes.

“ Te manu acturing sector paid more than

$521 million in property taxes in 2007.”

T A B l E 3 G ss State P uct 1998–2008 C nstant 2000 d a s

% ChANGEINdUSTry 1998 2008 1998-2008

A in ust t ta $107,126 $127,065 18.6%

P ivate in ust ies $90,887 $108,097 18.9%

Agriculture, forestry, fishing, an hunting $795 $913 14.8%

Mining $160 $127 -20.6%

Uti ities $2,807 $3,202 14.1%

C nst ucti n $6,628 $4,466 -32.6%

Manufactu ing $23,994 $23,531 -1.9%

du ab e g s $10,202 $14,913 46.2%

N n u ab e g s $13,826 $8,765 -36.6%

W esa e t a e $5,839 $7,560 29.50%

retai t a e $8,608 $12,803 48.70%

Transportation an warehousing, exclu ing Postal Service $2,482 $2,985 20.30%

Inf mati n $2,458 $5,095 107.30%

Finance an insu ance $4,568 $5,933 29.90%

rea estate an enta an easing $11,330 $13,273 17.10%

P fessi na an tec nica se vices $4,479 $7,107 58.70%

Management f c mpanies an ente p ises $797 $853 7.00%

A minist ative an waste se vices $2,929 $4,748 62.10%

E ucati na se vices $485 $611 26.00%

hea t ca e an s cia assistance $5,225 $7,734 48.00%

A ts, ente tainment, an ec eati n $1,017 $959 -5.70%

Acc mm ati n an f se vices $3,477 $4,370 25.70%

ot e se vices, e cept g ve nment $2,798 $2,858 2.10%G ve nment $16,235 $18,948 16.70%

* Millions of current dollars Source: US Department of Commerce, Bureau of Economic Analysis




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As able 4 below indicates, the manu-acturing sector pays almost 13% o

all property taxes in South Carolinaalthough it represents only about5% o all establishments in the state.

While this percentage o the totalhas declined over the last decade, the

sector still paid over $521.0 millionin property taxes in FY 2007 to localgovernments. Te vast majority o these property taxes went to schooldistricts across the state. In most areaso the state the school operating anddebt service millage assessment repre-

sents about 60% o the total millageburden. Assuming 60% o theseproperty taxes went to schools, themanu acturing sector paid over $300million in tax revenues to school acrossthe state in FY 2008.

Tere has never been a more importanttime in the last 50 years or SouthCarolina to support and attract new manu acturing investment. Terehave been numerous accounts in thepress about layo s by city, county andschool districts across the state. Budgetcuts at the state level have grown tomore than $1 billion over the last 24months. Unemployment in the stateis well above the national average andmuch worse in many rural areas.

As seen below in able 5, there aremore than 46,000 unemployed

workers just in Charleston and thesurrounding area according to thelatest data rom the South CarolinaEmployment Security Commission.5

Te unemployment rates in neigh-boring counties ranges rom 9.4% to15.5% as o March 2010. Most econ-omists predict that many o these jobs

will not return and at best, the state

will su er through these above averageunemployment rates or several years.6

New job growth through capitalintensive manu acturing investments

will not replace all o these lost jobs,but they provide new opportunities

or many South Carolinians.

T A B l E 4 Manufactu ing’s S a e f P pe t Ta es% f % f % C ange

Fy 97 T ta Fy 08 T ta 97 t 08

T ta P pe t Ta revenues $2,142,427,074 $4,064,343,235 89.7%

owne occupie $293,630,514 13.7% $936,460,043 23% 218.9%

Ag icu tu a (P ivate) $18,744,926 0.9% $25,109,927 0.6% 34%

Ag icu tu a (C p ate) $5,781,668 0.3% $5,078,485 0.1% -12.2%

C mme cia /renta $623,317,477 29.1% $1,538,629,716 37.9% 146.8%

Pe s na P pe t (Ve ic es) $440,242,442 20.5% $437,914,884 10.8% -0.5%

ot e Pe s na P pe t C unt $0 0% $69,519,786 1.7% NA

Manufactu ing $390,094,425 18.2% $329,682,277 8.1% -15.5%

Fee-in-lieu an J int In ust ia Pa k $0 0.0% $191,499,702 4.7% NA

Mfg + FIloT $390,094,425 18.2% $521,181,979 12.8% 33.6%

Uti it $254,201,202 11.9% $346,504,937 8.5% 36.3%

Business Pe s na $116,409,272 5.4% $168,189,739 4.1% 44.5%

M t Ca ie $0 0% $15,753,739 0.4% NA

Source: South Carolina Budget and Control Board, Local Gover nment Finance Report, 2009




7

Te importance o attracting new manu acturing industries is impor-tant or many reasons but two very important ones are the relatively highinvestment per job (aka…potentialproperty taxes or schools) and therelatively high wages the industrialsector pays.

Te ollowing able 6 highlights the

Boeing Dreamliner investment per jobto the average in South Carolina inseveral years since 2003. Te capitalinvestment per job is a good indicator

o whether the new acility will helpsupport local government, especially schools. Based on the assessment rateand local millage rates, the Boeing

acility will pay almost $2.5 milliona year in Charleston school taxes.Once the 15-year tax incentive is over,the acility will pay an estimated $5million in school taxes per year.

Manu acturing rms in general pay well above what other classes o property pay in South Carolina. On atypical value o $100,000, a manu ac-

turing rm will pay almost ve times what a typical owner occupied residento the same county would pay in totalproperty taxes. Tis higher burdenis a two-edged sword – it helps keeptaxes lower on home owners – but atthe same time it makes competition

with neighboring states or new acili-ties that much more di cult.

While the manu acturing sector hasdeclined in total number o jobs in thestate, it still pays some o the highest wages o any sector in South Carolina.

lab Unemp e Unemp mentC unt F ce rate

Be ke e 80,523 8,443 10.5%C a est n 175,224 16,530 9.4%C et n 17,458 2,403 13.8%d c este 63,902 6,272 9.8%Ge get wn 31,255 4,108 13.1%o angebu g 41,453 6,378 15.4%Wi iamsbu g 16,049 2,495 15.5%

ToTAlS 425,864 46,629 10.9%Source: South Carolina Employment Security Commission, March 2010

T A B l E 5 Ma c 2010

B eing d eam ine 2008 2007 2006 2005 2004 2003

T ta P ivate Capita Investment* $1.025 $4.170 $4.045 $2.998 $2.662 $2.759 $1.128

di ect J bs 3,800 18,993 15,666 14,420 12,370 13,491 8,700

Capita Investment Pe J b $269,816 $219,541 $258,205 $207,906 $215,198 $204,507 $129,712

* Billions ** Source: SC Department of Commerce

T A B l E 6 S ut Ca ina T ta s **




8

As seen in able 7 below, the manu-acturing sector pays wages well above

that o the average industry in the state.Te average manu acturing wage o $46,192 is more than 27% above thestatewide average and there are many,many industries that pay well above thesector average. A number o industriespay two or three times the statewide av-erage and 40 or more pay 50% or moreabove the state average o $36,253.

Tese pay di erentials may actually be more than those indicated below.Most manu acturing employees inSouth Carolina work or rms thatprovide additional ringe bene tssuch as health care and vacation time.Many non-manu acturing jobs in thestate do not provide additional ben-e ts. I these bene ts were added tothe wages below the manu acturing

wages would stand out even more.

“ While the manu-acturing sector has

declined in totalnumber o jobs in thestate, it still pays someo the highest wageso any sector in SouthCarolina.”

S ut Ca ina Ave age $35,620

Pet c emica manufactu ing $78,780M t ve ic e b manufactu ing $78,312In ust ia bui ing c nst ucti n $77,844resea c an deve pment in Bi tec n g US $73,008Basic c emica manufactu ing $71,084P we gene ati n an supp $70,668Pu p, pape , an pape b a mi s $69,680

ot e bi gica p uct manufactu ing $69,628Pape b a mi s $68,588Uti ities $68,432Tu bine an p we t ansmissi n equipment mfg. $68,016Pipe ine t ansp tati n f natu a gas $65,676E ect me ica appa atus manufactu ing $62,348N n esi entia bui ing c nst ucti n $62,036P astics mate ia an esin manufactu ing $61,204Natu a gas ist ibuti n $60,008Fe e a G ve nment Ave age $59,124r e stee s ape manufactu ing $58,188I n an stee mi s $54,184A Manufactu ing Ave age $44,876State G ve nment Ave age $40,092l ca G ve nment Ave age $38,948Te ti e mac ine manufactu ing $37,336retai T a e $23,862G ce st es $21,001depa tment st es $17,732Fu -se vice estau ants $14,404Acc mm ati n an F Se vices $14,357

Ave ageIn ust Annua Wages

Source: South Carolina Employment Security Commission, 2009 Q2

T A B l E 7




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3. BMW’s Investment in S ut Ca ina

o bring some perspective to theBoeing investment, it may help toreview another major manu acturinginvestment that was similar in scopeand importance – the BMW acility in Greer.

Te initial investment by BMW washeralded at the time as one o thegreatest announcements in the state’shistory. Few people disagreed with itat that time. Te acility was goingto create 2,000 jobs and BMW was

going to invest at least $300 million.Te capital investment per job was$229,370 (in 2009 dollars), slightly

less than that o Boeing. Te incen-tive package or BMW was reportedat the time equal to $89.3 million

which is roughly $136 million in2009 dollars. Based on the 2,000

jobs created by the initial investment,the BMW incentives cost the Stateapproximately $68,276 per job.

As seen in able 8 below, that initialinvestment has mushroomed over theyears. At the end o 2009, BMW hasinvested over $4.4 billion in South

Carolina and employs 5,000 workersdirectly. Tey have over 40 suppliersin the state in 11 di erent counties.

Attracting BMW to South Carolinahas proven to be one o the state’s mostprudent economic development invest-ments with ar greater returns thananyone ever anticipated. Te similari-ties between the genesis o BMW andBoeing investments in South Carolinaa rms the state’s primary economicdevelopment ocus o creating highquality jobs and improving the state’sper capita income.

“ Attracting BMW to South Carolina hasproven to be one o the state’s most prudent economic development investments with argreater returns than anyone ever anticipated .”

T A B l E 8

1992 2009Employees (direct) 2,000 5,000Captial Investment (Millions)* $459 $4,400Capital Investment Per Job $229,370 $880,000

Annual Compensation $80,000,000 $435,000,000Source: BMW *1992 Capital Investment equaled $300 in 1992 but is reflected here in 2009 dollars

Based on the Consumer Price Index




10

I Boeing’s investment in SouthCarolina grows in a similar pace asBMW’s did over the last 17 years,Boeing’ impact would be even moreimpressive. As seen in the able 9below, i the capital investment and

jobs at Boeing grow at BMW’s pace( rom 1992 – 2009) or the next 17years, the total number o direct jobscreated by Boeing would be 9,500and the company would have invested

almost $10 billion dollars in the State.Boeing’s annual payroll would be over$800 million a year.

T A B l E 9

2010 2027Employees (direct) 3,800 9,500Captial Investment (Millions)* $1,025 $9,831Capital Investment Per Job $269,737 $1,034,873

Annual Compensation $152,000,000 $826,500,000Source: Miley & Associates, Inc.




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4. B eing’s d eam ine Investment in S ut Ca ina

Te announcement o the invest-ment by Boeing in the all o 2009 was also heralded as one o the greatestannouncements in the state’s history. While everyone is in agreement that theannouncement is a major win or thestate, a ew have questioned whetherthe State made a wise investment. TeBMW experience as highlighted aboveis indicative o why Boeing and similarinvestment opportunities are such animportant part o attracting jobs andcapital investment to South Carolina.

Te new Dreamliner acility will create3,800 new jobs (this is in additionto the 2,200 employees that Boeingalready had in the area).Te investment and impact estimates in this report donot include the 150 additional jobs and additional investment already announced by Boeing in May, 2010.7 Boeing isgoing to invest at least $1,025 billion

in the new acility. Te capital invest-ment per job is $269,816 – more thanthe statewide average in 2009 and morethan BMW (1992 investment adjusted

or infation). o put the magnitude o the $1.025 billion in capital investmentby Boeing in perspective, it will almostequal the entire capital investment inthe state in 2003 ($1.3 billion – see

able 6).

Te incentive package or Boeing isin many ways very similar to all stateeconomic development incentivepackages – there is a state componentdetermined by State o cials and thereis a local component determined by

county o cials. In addition, the stateinsisted on clawback provisions in theincentive package. Tese clawback provisions require Boeing to reim-burse the state i certain investmentand employment levels are not met andmaintained by Boeing.

Te state component o Boeing’s incen-tive package is shown below in able 10and is estimated to be $417.0 million.Te majority o these unds will be

rom $275 million in in rastructure

bond unds. It is important to notethat even i Boeing were to leave be orethe 30 years is over, the in rastructurethat was unded by the state’s bonds will still be in South Carolina. Teimprovements that are unded with thebond unds can not be removed romthe site by the company i it were stopproduction and leave South Carolina.Te other incentives are all based on

existing economic incentives that areavailable or any eligible investment.Many o the incentives provided toBoeing are similar to those o ered toother companies investing in SouthCarolina in that they are per ormance-based. Tat is, the amount o incentiveis tied to the amount o jobs createdor the amount o capital investmentmade. I the company creates ewer

jobs than planned, then the incentives will be less and vice versa.

Based on the 3,800 jobs created by theinitial investment, the Boeing incen-tives will cost the State approximately $109,743 per job.

In recent reports, Boeing has indicatedthat the reasons it chose to locate inSouth Carolina were primarily the work orce, the business climate, reli-able and abundant power at attractivepricing rom SCANA and SanteeCooper, the location o the site nearthe South Carolina Ports Authority

acilities, the Charleston Airport andinterstate highways, the presence o the existing acility purchased romVought and the state and local leader-ship’s commitment to Boeing. Tey

also re erenced the company’s partnersin past relationships with the state.

“ Te announcement o the investment by Boeing in the all o 2009 wasalso heralded as one o

the greatest announce-ments in the state’shistory. ”




Incentive T pe Incentive Va ue

12

State IncentivesInf ast uctu e Fun sEc n mic deve pment B n $270,000,000Set Asi e G ant $5,000,000State IncentivesC e itsC p ate Inc me Ta

J b Ta C e its2 $56,025,000EIZ Ta C e it3 $11,000,000

Statut Sa es Ta IncentivesSa es Ta E empti n n Equipment $23,000,000Sa es Ta E empti n n C nst ucti n Mate ia s4 $18,000,000T aining

ea SC $34,000,000 T ta State Incentives $417,025,000

l ca Incentives

FILOT Incentives $53,000,000Aircraft Tax abatements5 NA T ta l ca Incentives $53,000,000

T ta State an l ca Incentives $470,025,0001 Assumes $3.5 million liability for 5 years2 Assumes 3,800 jobs are created at the project and the site is a multi-county park 3 Assumes 85% investment in equipment is qualififed as manufacturing and production equipment

4 Assumes 70% of the costs of construction are construction materials that are exempt from71% of sales taxes

5 Not available at the time of publication

Source: Various newspaper reports October 2009 - February 2010 and estimated by Miley & Associates, Inc.

T A B l E 1 0




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Te local incentive to Boeing prima-rily consists o the FILO and specialsource revenue credit incentives previ-ously allowed by state law or use by lo-cal governments. Boeing will be payingan assessment rate o 4% or 30 years.Boeing will receive a 50% credit againstthese taxes or the rst 15 years whichreduces their assessment ratio to 2%.Beginning in the 16th year, Boeing willpay the assessment ratio o 4%. Te2% assessment incentive is estimated tobe equal to approximately $53 million.

Boeing will also be eligible or exemp-tions on taxes on several aircra t used totransport parts to and rom the acility.Tese incentives were originally pro-vided in the agreement to Vought andBoeing acquired these incentives whenit bought Vought. Te value o theseincentives are not known at this time.

Based on the assessment rate and local

millage rates, the Boeing acility willpay almost $3.5 million a year in localgovernment property taxes. More than$2.5 million o this will go to Charlestonschools. Once the 15-year tax incentiveis over, the acility will pay an estimated$7 million a year in local governmentproperty taxes with more than $5 mil-lion o this going to Charleston County schools. From years 16-30, Boeing will

pay more than $105 million in localproperty taxes to Charleston County and Charleston County schools.

In a separate, cost-bene t analysis con-ducted by the Coordinating Council onEconomic Development, the CCED

ound that the Boeing investment will

result in a net positive bene t to the stateonce all costs o incentives, local andstate government are taken into account.Te CCED ound that the Net PresentValue o all public sector bene ts and allcosts in the 15th years were more than$13 million. Te CCED ound that theprivate sector bene ts to across the entirestate were much greater. Based on theiranalysis, the net present value o the rst15 years o the Boeing acility will to-tal more than $4.4 billion to the state’seconomy. In typical Cost-Bene t analy-

sis, any investment that returns greaterbene ts than costs is considered to bea positive investment. Te conclusions o the CCED report support those reached in this report. However, the methodology used in the CCED study difers rom that used in this analysis and there ore some o the estimates difer in magnitude and are not directly comparable.

O particular note is that Boeing didnot take advantage o all the major eco-nomic development incentives that areavailable by state law. Boeing was eli-gible but did not receive a commonly used incentive that other companiesusually use. Te State Job Develop-ment Credits range rom 2% to 5%o the withholding taxes paid to thestate or employee withholding. Tis

incentive would have been substantialor Boeing. It is estimated that Boeing would have earned over $7.2 million in JDC’s per year or a total o over $108million or the rst 15 years. Tese

ees would have reduced South Caro-lina income taxes by that amount.

“ Te Coordinating Council on EconomicDevelopment ound that the Boeing invest-ment will result in themore than $4.4 billionin private sector bene-fts to South Carolina’seconomy.”




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5. Ec n mic Impact f B eing in S ut Ca ina

Benefits f m t e C nst ucti n P ase

Te new Boeing Dreamliner operations will create impacts to the Charlestonand surrounding area and across thestate in two phases. Te initial impacts will occur during the construction o theDreamliner acility. Once the acility is constructed and operational, there will also be annual economic impactsto Charleston and the surrounding area

rom ongoing operations o the acility.

Te economic impacts rom theconstruction and ongoing operations

o the Dreamliner acility are outlined

in this section o the report. Tis anal-ysis utilizes impact models generatedby the IMPLAN modeling system.IMPLAN is a nationally recognizedsystem o local economic models thatare speci cally designed to representlocal economies such as the Charlestonarea. Te IMPLAN models are modi-

cations o the national input-outputmodels developed by the Bureauo Economic Analysis, US Depart-ment o Commerce. Te IMPLANmodels incorporate the most recent

data available and are generally 2008

unless otherwise noted. Te esti-mates are based on constant dollarsand assume no infation during theproject’s construction. Tis assump-tion applies to all estimates in thisanalysis, including: property values,incomes, sales, construction materials,etc. Te assumption o constant dollarsassumes revenues and costs will increaseat similar rates during the constructionperiod and a terwards.

Te construction o the Dreamlinermanu acturing acility and all relatedconstruction involved in developing theDreamliner acility will have substantialimpacts on the Charleston area and thestate. Tese impacts will be relatively short-term in nature since the construc-tion o the acility will be completed within the next year or so. Although short-term, the magnitude o the constructione ort will have ar reaching impacts onthe Charleston and surrounding area. A Greenville, South Carolina company orexample, has already been selected to helpin the construction o the new acility.

It is estimated at this time that the

construction o the Dreamliner acility will cost $872 million. Te totalamount o the capital investment by Boeing is estimated to be more than $1billion and will include several hundredmillion dollars o capital equipment.However, investments in capital equip-ment will not have much o a ripple

e ect on the local economy and areexcluded in this analysis.

Te initial construction phase o theBoeing acility will result in a direct invest-ment o approximately $872 million.

Tis investment is outlined in able 11below. As the construction dollars arespent and re-spent in the Charleston area,additional economic activity is created

or those companies and individuals thatsupply goods and services to the construc-




15

tion o the acility. Te recipients o thisincome will spend this income on othergoods and services.

Each time, some o the purchases will beor goods and services inside Charleston

and surrounding counties and some willbe or goods and services rom outsidethe area (re erred to as “leakages”). Te well-known “multiplier e ect” estimatesthe aggregate amount o local buying andselling that occurs.

Te multipliers used in this analysis esti-mate three components o total change within the local area:

• Direct efects represent the initialchange in the industry in question.

• Indirect efects are changes ininter-industry transactions assupplying industries respondto increased demands rom thedirectly a ected industries.

•

Induced efects refect changes inlocal spending that result romincome changes in the directly andindirectly a ected industry sectors.

Tis cycle o spending continues untilleakages rom the region (spending ongoods and services outside the area)stop the cycle. Due to these multipliere ects, the initial, direct investmentresults in indirect and induced impactso many more dollars.

“ Te initial construction phase o the Boeing acility will result in a direct investment o

approximately $872 million.

”

di ect In i ect In uce T ta *output $872,220,000 $251,890,000 $241,791,000 $1,365,901,000lab Inc me $246,771,000 $91,182,000 $75,520,000 $413,473,000J bs 5,725 1,883 2,277 9,885

* Totals may not equal sum of components due to rounding.

T A B l E 1 1 Ec n mic Impacts f B eing d eam ine Faci it C nst ucti n




While most o these jobs will beconcentrated in the construction andrelated sectors, jobs will also be createdin many other industrial sectors. able12 highlights the job creation in the30 industries that will see the most jobcreation during this period. As seenin able 12, jobs will be created inthe pro essional sectors, retail, healthcare, ood and beverage, automobile,and many other sectors in CharlestonCounty and the surrounding area.

16

T ta J bT p 30 In ust ies Impacte Supp te

A c itectu a , enginee ing, an e ate se vices 353F se vices an inking p aces 323rea estate estab is ments 309W esa e t a e businesses 224Emp ment se vices 203lega se vices 157offices f p sicians, entists, an t e ea t p actiti ne s 122Se vices t bui ings an we ings 112Acc unting, ta p epa ati n, b kkeeping, an pa se vices 102P ivate use pe ati ns 90Civic, s cia , p fessi na , an simi a ganizati ns 86retai St es - F an beve age 80retai St es - Gene a me c an ise 79P ivate spita s 70Nu sing an esi entia ca e faci ities 69M neta aut ities an ep sit c e it inte me iati n activities 65T ansp t b t uck 62Aut m tive epai an maintenance, e cept ca was 58retai St es - M t ve ic e an pa ts 56Secu ities, c mm it c nt acts, investments, an e ate activities 53Te ec mmunicati ns 51retai St es - C t ing an c t ing access ies 48Management, scientific, an tec nica c nsu ting se v 47Business supp t se vices 45retai St es - Misce ane us 45rea -mi c nc ete manufactu ing 43retai N nst es - di ect an e ect nic sa es 42C mme cia an in ust ia mac ine an equipment 38C i a ca e se vices 36retai St es - Bui ing mate ia an ga en supp 35

T A B l E 1 2




17

ong ing Benefits f m t e B eing d eam ine Faci it

“ Based on this levelo average employ-ment at the acility,it is estimated that the employees and economic activity asso-ciated with the Boeing

acility will generate anincrease in direct annual

output in the Charle-ston and surrounding area o more than $4.5billion.”

In addition to the impacts rom theconstruction activity related to the Boeing

acility, once the acility is constructed,Charleston and the surrounding area and

many areas across the state will experi-ence impacts rom economic activity generated by the operations at the Boeing

acility and the employees o Boeing. Teeconomic impacts o the operations o the Boeing acility estimated in this study are based on the projected employmentlevel o 3,800 new ull-time workers atthe Boeing Dreamliner acility.

Based on this level o average employ-ment at the acility, it is estimated thatthe employees and economic activity associated with the Boeing acility willgenerate an increase in direct annualoutput on Charleston and surroundingarea o more than $4.5 billion. As seenin able 13, this direct impact will then

have indirect and induced impacts o another $1.4 billion or a total o over$5.9 billion impact on the Charlestonand surrounding area per year. However,

the impacts rom Boeing will not stop atthe local area. Beyond the $5.9 billionin output generated by Boeing in theseven county study area, the acility will generate another $186 million ineconomic activity per year in the state ora total economic impact in South Caro-lina $6.14 billion in output.

Based on estimates rom Boeing, there

will be an additional 3,800 new jobscreated at the new Boeing Dreamlineroperations. However, in addition to

these direct employees, there will beanother 11,478 jobs supported by theindirect and induced e ects or a totalo 15,278 permanent jobs supported inthe Charleston and surrounding area asa result o the Boeing Dreamliner opera-tions. Tese impacts will begin to occurimmediately once the acility is opera-tional and will continue or the entireli e o the acility. Te impacts rom

di ect In i ect In uce T ta *

output $4,537,943,000 $709,261,000 $711,513,000 $5,958,716,000

lab Inc me $768,459,000 $237,146,000 $222,415,000 $1,228,020,000

J bs 3,800 4,788 6,691 15,278* Totals may not equal sum of components due to rounding.

T A B l E 1 3 Ec n mic Impacts f B eing d eam ineFaci it on-G ing ope ati ns

As seen in able 11, the compound-ing e ects o the multiplier cause theinitial direct investment o $872.2million to result in an indirect impacto $251.9 million and an induced im-pact o $241.8 million or a total in-crease in output o $1.4 billion in theCharleston and surrounding area. Itis estimated that there will be as many as 5,725 jobs directly supported in thegreater Charleston County area romthe project’s construction. In additionto these direct jobs, another 4,160 jobs

are estimated to be supported as indi-rect and induced e ects o the con-struction activity or a total o 9,885

jobs supported in Charleston County

and the surrounding area during theconstruction activity o the BoeingDreamliner acility.

Labor income is another important in-dicator o economic activity. As seenin able 11, the compounding e ectso the multiplier cause the initial con-struction activity to result in a directimpact on labor income o $246.8million dollars. Tis will be multi-plied throughout the region and resultin indirect and induced impacts o an-

other $166.7 million in labor incomeor at total increase o in labor income

in the region o $413.5 million.




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6. Summa

As outlined in the accompanyinganalysis, it is clear that the BoeingDreamliner operation will producepositive economic impacts or the Char-leston and the surrounding area. Teseimpacts will be generated rom both theconstruction phase and the permanentoperation o the Boeing acility.

Boeing plans on a direct investment o more than a billion dollars at their new Dreamliner acility. Te impacts rom theconstruction o the acility will be concen-

trated in the rst year o constructionand will result in a direct impact o $872million and an indirect impact o $251.9million and an induced impact o $241.8million or a total increase in outputo $1.4 billion in Charleston and thesurrounding area. It is estimated that there will be as many as 5,725 jobs supported inthe greater Charleston County area romthe project’s initial construction.

In addition to these direct jobs,another 4,160 jobs are estimated tobe supported as indirect and inducede ects o the construction activity or atotal o 9,885 jobs supported in Char-leston County and the surroundingarea during the construction activity o the Boeing Dreamliner acility.

Based on an estimated 3,800 new,permanent employees at the acility,it is estimated that the employees andeconomic activity associated with the

Boeing Dreamliner will generate anincrease in direct annual output in theCharleston County area o over $4.5billion. Tis direct impact will thenhave indirect and induced impacts o another $1.4 billion or a total o over$5.9 billion impact on Charleston andthe surrounding area per year.

In addition, to the 3,800 direct new employees at Boeing, there will beanother 11,478 jobs supported by theindirect and induced e ects or a totalo 15,278 permanent jobs created andsupported as a result o the ongoingoperations o the Boeing Dreamliner

acility in Charleston. Tese impacts will begin to occur immediately oncethe acility is operational and willcontinue or the li e o the acility.

I the Boeing investment succeeds and

grows at a similar pace as BMW in theupcountry has done since 1992, theimpacts will be even greater. I Boeinggrows at the same pace as BMW, there

will be 9,500 direct jobs at the acility and Boeing’s investment will be almost$10 billion.

1 See or example, Burstein, M.L. and A.J. Rolnick. 1995. Congress should End the Economic War Among the States. Federal Reserve Bank o Minneapolis 1994 AnnualReport 9 (1): 3-19; and Mauey, Joe, and Mark M. Spiegel. 1995. Is State and Local Competition or Firms Harm ul? Federal Reserve Bank o San Francisco Weekly Letter:(95-26).2 See also the SC Department o Commerce website -- http://sccommerce.com/locate-sc/grants-incentives3 See or example: Woodward, Douglas, Harry Miley, and Holley Ulbrich. 2000. Education and Economic Development in South Carolina. Te Strom Turmond Institute.Clemson University, http://www.strom.clemson.edu/teams/ced/edecdevsc/4 “50-State Property ax Comparison Study, Payable Year 2008”, Minnesota axpayer Association, April 2009.5 “Work orce rends”, South Carolina Employment Security Commission, April 16, 2010.6 Wall Street Journal, February 11, 2010, “Economists Expect Shi ting Work Force.”7 IMPLAN is regional modeling system developed by MIG, Inc., Stillwater, MN.8 Te latest data available or the IMPLAN modeling system are or the 2006 calendar year. However, the nal dollar impacts estimated in this analysis refect 2008 prices.9 Island Packet, March 3, 2010.




20

Met g

Tis study estimates the economicimpacts on the state o South Carolina

rom the recently announced location o the new Boeing assembly plant in Char-leston. Te methodology used in thisstudy is the IMPLAN regional input-output modeling system developed by MIG, Inc. o Stillwater, Minnesota. Tisstudy uses 2008 data, the most recentdata available or the IMPLAN models.

IMPLAN was developed by MIG, Inc. asa cost-e ective means to develop regional

input-output models. Te IMPLANaccounts closely ollow the accountingconventions used in the “Input-OutputStudy o the US Economy” by theBureau o Economic Analysis (1980) andthe rectangular ormat recommended by the United Nations.

Te IMPLAN Input-Output Modelmathematically describes commodity

fows rom producers to interme-diate and nal consumers. Purchases

or nal use ( nal demand) drive themodel. Industries producing goods

and services or nal demand alsopurchase goods and services rom otherproducers. Tese other producers, inturn, purchase goods and services. Tisbuying o goods and services (indirectpurchases) continues. Leakages romthe region eventually stop the cycle.

Te IMPLAN input-output modelmathematically derives the indirect andinduced e ects. Te resulting multipliersdescribe the change in output or every regional industry caused by a one-dollar

change in nal demand or any givenindustry. Te notion o a multiplier restsupon the di erence between the initiale ect o a change in nal demand and thetotal e ects o that change. otal e ectsare the direct e ects plus indirect e ects,plus induced e ects. Direct e ects are theproduction changes associated with initial

nal demand changes. Indirect e ectsare production changes in backward-

linked industries caused by the changinginput needs o directly e ected industries.Induced e ects result rom the householdexpenditures rom the directly or indi-

rectly generated labor income.

Te multipliers used in this analysisestimate three components o totalchange within the local area:

• Direct efects represent theinitial change in the industry in question.

• Indirect efects are changes ininter-industry transactions assupplying industries respondto increased demands rom the

directly a ected industries.• Induced efects refect changes in

local spending that result romincome changes in the directly andindirectly a ected industry sectors.

Tis cycle o spending continues untilleakages rom the region (spending ongoods and services outside the area)stop the cycle. Due to these multiplier

e ects, the initial, direct investmentresults in indirect and induced impactso many more dollars.




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In essence, the multipliers estimated by this methodology represent the consecu-tive rounds o buying and selling thatripple through an economy. o produceone dollar o new product, employeesmust be hired and paid. Te wages paidto these workers will then be spent ongoods and services, such as ood, gaso-line, clothes, housing, etc. within theregion and outside the region. As thesecents are spent, they become income tothe recipient, and the spending continuesover and over again. Te induced e ect

is the cumulative amount o spending.

Te economic activity o the projectalso requires intermediate inputs tobe purchased such as electricity, raw materials, transportation services,labor etc. Tese expenditures becomeincome to the recipient and pay orthe purchases o raw materials, labor,etc. Tey, in turn, are then spentover and over again in the economy.Purchases made rom outside theregion are considered “leakages” romthe economy. Te consecutive roundso selling goods and services continue

until these leakages rom the regionend the cycle. Te indirect e ect is the

cumulative amount o such spending.

Data or this analysis is 2008 dataunless otherwise noted.

Additional data such as employmentand unemployment data are rom theSouth Carolina Employment Security Commission; Bureau o Labor Statis-tics, US Department o Labor; the USDepartment o Commerce, Bureauo Economic Analysis; the SC Budgetand Control Board; and the Boeing

Company.

T e Stu A ea

Te economic impacts o the Boeingoperations will extend throughoutthe metropolitan Charleston area,the surrounding Lowcountry and theentire state. However, the ocus o this analysis is to estimate the impactson the greater Charleston metro-politan area. For the purposes o thisanalysis, the study area is de ned as the

ollowing seven counties:

Berkeley GeorgetownCharleston OrangeburgColleton Williamsburg

Dorchester

Factors o production such as laborand materials reely fow between andacross these county lines. oday’s

work orce is very mobile and many workers travel 40-50 miles to work everyday.




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Appen i

1. Statutory Incentives

JOB AX CREDI

Te Job ax Credit (J C) is a statutory incentive o ered to companies, both existing and new, that create new jobs inthe state. Te credit is available to companies that establish or expand corporate headquarters, manu acturing, distri-bution, processing, quali ed service-related, research and development acilities. Tis credit is extremely bene cial orcompanies, because it is a credit against corporate income taxes, which can eliminate 50% o a company’s liability.

ECONOMIC IMPAC ZONE INVES MEN CREDI

South Carolina allows manu acturers locating in Economic Impact Zone (EIZ) counties a one-time credit against a compa-ny’s corporate income tax o up to 5% o a company’s investment in new production equipment. Te actual value o the

credit depends on the applicable recovery period or property under the Internal Revenue Code.

CORPORA E HEADQUAR ERS CREDI

In an e ort to o set the cost associated with relocating or expanding a corporate headquarters acility, South Carolinaprovides a generous 20% credit based on the cost o the actual portion o the acility dedicated to the headquarters opera-tion or direct lease costs or the rst ve years o operation. Te credit can be applied against either corporate income taxor the license ee. Tese credits are not limited in their ability to eliminate corporate income taxes and can potentially eliminate corporate income taxes or as long as 10 years rom the year earned. Eligibility or this credit is determined by meeting a number o speci c criteria.

RESEARCH AND DEVELOPMEN AX CREDI

In order to reward companies or increasing research and development activities in a taxable year, South Carolina o ersa credit equal to 5% o the taxpayer’s quali ed research expenses in the state. Te term “quali ed research expenses” isde ned in Section 41 o the Internal Revenue Code. Te credit taken in any one taxable year may not exceed 50% o thecompany’s remaining tax liability a ter all other credits have been applied. Any unused portion o the credit can be carried

orward or 10 years rom the date o the quali ed expenditure.

2. ax Structure

South Carolina’s tax incentives include:

PROPER Y AX

In South Carolina, only local governments may levy property taxes. A company’s property tax liability is a unction o :Property Value x Assessment Ratio x Millage.




23

o determine Fair Market Value, real property is appraised, while tangible personal property is recorded at cost andthen depreciated based on a statutory depreciation rate ( or manu acturers) and income tax depreciation ( or other busi-nesses). Te Fair Market Value is then assessed at rates established in the South Carolina Constitution. Te local millagerate is applied to the assessed value to determine the property taxes. Millage rates in South Carolina are site speci c and setannually by local government. A mill is equal to $0.001.

Property ax Exemptions may include inventories (raw materials, work-in-progress, nished goods), intangibles (stocks,dividends, interest) and pollution control equipment. A partial Property ax Exemption, called an abatement, may bemade available to manu acturing, research and development, corporate headquarters, o ce and distribution acilitiesmeeting certain requirements.Companies may also be able to negotiate a Fee-in-Lieu (FILO ) o property taxes, which can greatly reduce their property tax liability. Tis property tax incentive is o ered at the discretion o local governments. Companies investing as little as$2.5 million dollars may negotiate this exemption with the county in which they locate. Tis 20-year incentive creates

signi cant savings or companies by lowering the assessment ratio rom 10.5% or manu acturers to as low as 6%. Further-more, the millage may be held lower than i the property were not under a FILO . CORPORA E AX

At 5%, South Carolina’s Corporate Income ax Rate is among the lowest in the Southeast. Te state is currently phasingin a single actor sales ormula or apportioning income that will be ully implemented by 2011.

Many companies quali y or a HYPERLINK “http://sccommerce.com/locate-sc/grants-incentives/statutory-incentives” Job ax Credit, which eliminates up to 50% o a company’s corporate income tax liability or a speci ed number o years.

Te Corporate License ax Rate is $1 or each $1,000 o capital stock and paid-in or capital surplus, plus a $15 annual ee. SALES AX

South Carolina’s sales and use tax rate is 6%. Counties, by approval o a majority o county voters, may assess an addi-tional 1-2% local option sales tax. Proceeds go towards in rastructure improvements or a rollback o property taxes. A variety o sales tax exemptions or companies is o ered.

3. Discretionary Incentives

JOB DEVELOPMEN CREDI

A Job Development Credit (JDC) is a discretionary, per ormance-based incentive that rebates a portion o new employees’ withholding taxes that can be used to address the speci c needs o individual companies. JDCs are approved on a case-by-case basis by the S.C. Coordinating Council or Economic Development (CCED). o quali y, a company must meetcertain business requirements and the amount a company receives depends on the company’s pay structure and location.




24

ECONOMIC DEVELOPMEN SE -ASIDE PROGRAM

Te Economic Development Set-Aside Program assists companies in locating or expanding in South Carolina throughroad or site improvements and other costs related to business location or expansion. Overseen by the Coordinating Council

or Economic Development, it is the Council’s primary business development tool or assisting local governments withroad, water/sewer in rastructure, or site improvements related to business location or expansion.

EN ERPRISE ZONE RE RAINING CREDI PROGRAM

Te Enterprise Zone Retraining Credit Program helps existing industries maintain their competitive edge and retain theirexisting work orce by allowing them to claim a Retraining Credit or existing production employees. I approved or theEnterprise Zone Retraining Credit, companies can reimburse themselves up to 50% o approved training costs or eligibleproduction workers (not to exceed $500 per person per year). Tis program is also overseen by the Coordinating Council

or Economic Development.

RURAL INFRAS RUC URE FUND

Te Rural In rastructure Fund (RIF) assists quali ed counties in the state’s rural areas by providing nancial assistance orin rastructure and other activities that enhance economic growth and development. It can be used or job creation and/orproduct development. Quali ed counties are designated as “ ier One” or “ ier wo” by the Department o Revenue andhave received approval or an economic development strategic plan by the Coordinating Council or Economic Develop-ment.POR VOLUME INCREASE CREDI

South Carolina provides a possible income tax credit to entities that use state port acilities and increase base port cargovolume by 5% over base-year totals. o quali y, a company must have 75 net tons o non-containerized cargo or 10 loaded

EUs transported through a South Carolina port or their base year.Te Coordinating Council has the sole discretion in determining eligibility or the credit and the amount o credit thata company may receive. Te total amount o tax credits allowed to all quali ying companies is limited to $8 million percalendar year. A company must submit an application to the Coordinating Council to determine its quali cation or, andthe amount o , any income tax credit it will receive.

OURISM INFRAS RUC URE DEVELOPMEN GRAN S

Te ourism In rastructure Development Grant supports new or expanding tourism or recreation acilities or designateddevelopment areas primarily through in rastructure projects. Tis program is generated rom a share o the state admis-sions tax on quali ed tourism and recreation establishments and is overseen by the Coordinating Council or EconomicDevelopment.




25

HE COORDINA ING COUNCIL FOR ECONOMIC DEVELOPMEN

Te Coordinating Council or Economic Development, established in 1986 by the General Assembly, was ormed inresponse to a general need or improved coordination o economic development e orts by those state agencies involvedin the recruitment o new business and the expansion o current enterprises throughout the state. Te Council consists o the heads or board chairs o 10 state agencies concerned with economic development: S.C. Department o Commerce,State Ports Authority, S.C. Department o Parks, Recreation & ourism, S.C. Department o Agriculture, S.C echnicalCollege System, S.C. Research Authority, S.C. Employment Security Commission, S.C. Department o Revenue, Jobs orEconomic Development Authority and Santee Cooper.

4. Financial Resources

South Carolina o ers several nancing tools to enhance the business and economic climate o the state. South Carolina’sFinancial Resources include:

BCI LENDING SERVICES

HYPERLINK “http://www.bcilending.com/” \t “_blank” BCI Lending Services (BCI) is a not- or-pro t, statewide devel-opment nance institution that provides innovative nancial products and capacity-building services to promote growthand competitiveness o new and existing small- and medium-sized businesses in South Carolina. BCI complements privatesector activities through a variety o lending programs to ll gaps in unding o ten aced by these businesses, especially inrural and distressed areas o the state.

BUSINESS DEVELOPMEN CORPORA ION

Te HYPERLINK “http://www.businessdevelopment.org/” \t “_blank” Business Development Corporation (BDC) o South Carolina is a privately owned, non-banking nancial institution organized or the purpose o promoting economicdevelopment within the state. It provides term loans to both new and expanding businesses that are unable to obtain

nancing through normal banking sources. Loans can be obtained or most business purposes and by various types o busi-nesses, except or investment, speculative and eleemosynary ventures.

S.C. CAPI AL ACCESS PROGRAM

Te purpose o the HYPERLINK “http://www.businessdevelopment.org/sccap.php” \t “_blank” S.C. Capital AccessProgram (SC CAP) is to promote economic development and job creation through small businesses in South Carolina by providing nancial institutions with a fexible and non-bureaucratic resource.SC CAP is based on a reserve und concept and is undamentally di erent rom traditional insurance or guarantee programs,

which guarantee individual loans. Rather, SC CAP works on a port olio concept. In other words, i a nancial institutionparticipates in SC CAP, a special reserve und, which is owned by the state, but managed by Business Development Corpo-ration o SC, is set up to cover uture losses rom a port olio o loans that the institution makes under the program. Te




26

SC CAP reserve und is not speci c to individual loans, but is used to o set losses on any loan in the participating nancialinstitution’s SC CAP port olio.

U.S. SMALL BUSINESS ADMINIS RA ION LOAN PROGRAMS

Te HYPERLINK “http://www.sba.gov/” \t “_blank” U.S. Small Business Administration’s (SBA) loan programs enhancethe ability o lenders to provide long- and short-term loans to small businesses that might not quali y through normallending channels. o quali y or an SBA guaranty, the lender must certi y that it cannot provide unding on reasonableterms through normal lending channels.

Tere are three major SBA loan programs:

HYPERLINK “http://www.sba.gov/ nancing/sbaloan/7a.htm” \t “_blank” Basic 7(a) Loan Guaranty: Serves as the SBA’s

primary business loan program to help quali ed small businesses obtain nancing when they might not be eligible orbusiness loans through normal lending channels. It is also the agency’s most fexible business loan program, since nancingunder this program can be guaranteed or a variety o general business purposes. Loan proceeds can be used or mostsound business purposes including: working capital; machinery and equipment; urniture and xtures; land and building(including purchase, renovation and new construction); leasehold improvements; and debt re nancing (under specialconditions). Loan maturity is up to 10 years or working capital and generally up to 25 years or xed asset.

HYPERLINK “http://www.sba.gov/ nancing/sbaloan/cdc504.htm” \t “_blank” Certi ed Development Company (CDC),a 504 Loan Program: Provides long-term, xed-rate nancing to small businesses to acquire real estate or machinery orequipment or expansion or modernization. A 504 project typically includes a loan secured rom a private-sector lender

with a senior lien, a loan secured rom a CDC ( unded by a 100% SBA-guaranteed debenture) with a junior lien coveringup to 40% o the total cost, and a contribution o at least 10% equity rom the borrower. Te maximum SBA debenturegenerally is $1 million (and up to $1.3 million in some cases).

HYPERLINK “http://www.sba.gov/ nancing/sbaloan/microloans.htm” \t “_blank” Microloan, a 7(m) Loan Program:Provides short-term loans o up to $35,000 to small businesses and not- or-pro t childcare centers or working capitalor the purchase o inventory, supplies, urniture, xtures, machinery and/or equipment. Proceeds cannot be used to pay existing debts or to purchase real estate. Te SBA makes or guarantees a loan to an intermediary who, in turn, makes themicroloan to the applicant. Tese organizations also provide management and technical assistance. Loans are not guaran-teed by the SBA. Te microloan program is available in selected locations in most states.

U.S. DEPAR MEN OF AGRICUL URE BUSINESS AND INDUS RY GUARAN EED LOAN PROGRAM

Te HYPERLINK “http://www.rurdev.usda.gov/rbs/busp/b&i_gar.htm” \t “_blank” U.S. Department o Agriculture(USDA) Business and Industry (B&I) Guaranteed Loan Program helps create jobs and stimulates rural economies by providing nancial backing or rural businesses. Te program provides up to 80% o a loan made by a commercial lender.Loan proceeds may be used or working capital, machinery and equipment, buildings and real estate and certain types o debt re nancing.




27

B&I loan guarantees can be extended to loans made by recognized commercial or other authorized lenders in rural areas(this includes all areas other than cities o more than 50,000 people and the contiguous and urbanized areas such as citiesor towns).

JOBS-ECONOMIC DEVELOPMEN AU HORI Y

HYPERLINK “http://www.scjeda.net/” \t “_blank” Jobs-Economic Development Authority (JEDA) seeks to provideinnovative nancial direction and o er products and tools to promote growth and competitiveness among new and existingbusinesses, create jobs and improve living conditions in South Carolina. Tey accomplish this task through loans, invest-ments, exportation and the promotion o services and capital revenue produced within the state. Created in 1983, JEDA has assisted with the creation o nearly 57,000 jobs or small and medium sized businesses and closed more than 750 loansrepresenting more than $4 billion total.

Administered by JEDA, Te New Market ax Credit (NM C) program is a ederal tax incentive program that was

authorized by Congress in 2000, to help spur the investment o $15 billion o capital into businesses that are located inlow-income communities.

INVES SC, INC.

InvestSC, Inc. can best be described as a und o unds and is committed to promoting economic development withinthe state. Te program provides an invaluable resource or companies already located in South Carolina or or compa-nies looking to locate here. Formed by JEDA, InvestSC, Inc.’s purpose is to assist the Venture Capital Authority (VCA)o South Carolina in meeting their goals and objectives. Te VCA has partnered with our venture capital unds that are

willing to invest in companies looking to locate or expand within the state.

Source: South Carolina Department o Commerce




28

Tis economic impact analysis is nota budget or orecasting document andis not intended to depict a de nitivecourse o action. Moreover, economicimpact analysis is not designed as aspace or acility-planning document.Many assumptions underlying scaland economic impact analyses are basedon policy decisions which, i modi ed, would a ect the overall results.

Tis study is based on estimates,assumptions and other in ormation

developed by Miley & Associates, Inc.rom its independent research e ort,

consultations with the client andits representatives, and primary andsecondary sources. We have utilizedsources that are deemed to be reliablebut cannot guarantee their accuracy.Moreover, estimates and analysis arebased on trends and assumptions and,there ore, there will usually be di er-

ences between projected and actual

results because events and circum-stances requently do not occur asexpected, and those di erences may bematerial. No responsibility is assumed

or inaccuracies in reporting by theclient, the client’s agent and represent-atives or any other data source used inpreparing this study.

Tis report is based on in ormationthat was current as o March 2010 andMiley & Associates, Inc. has not under-taken any update o its research e ort

since that date. We have no obligation,unless subsequently engaged, to updatethis report or revise this analysis aspresented due to events or conditionsoccurring a ter the date o this report.

Possession o this study does notcarry with it the right o publicationthereo or to use the name o “Miley & Associates, Inc.” in any manner

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rom Miley & Associates, Inc..

Tis study is quali ed in its entirety by, and should be considered in lighto , these limitations, conditions andconsiderations.

Gene a limiting C n iti ns




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in 1993 by Harry W. Miley, Jr. Ph.D. Te Company is an economic and

nancial consulting rm providing arange o analytical services to publicand private sector clients. Miley & Associates conducts scal and economicimpact analyses o proposed new devel-opments and has extensive experiencein assisting clients with their economicdevelopment and community revitali-

zation projects.

Mi e & Ass ciates

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Economic Impact of Boeing

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