by Paul Leakan
STAFF WRITER
Clarksburg city officials feel their plan to lure businesses into the city by offering tax-free incentives could help the city's economy blossom. But some business analysts and local business owners aren't so sure.
Under the plan, the city would grant a three-year business and occupation tax waiver to any business located within a mile of Clarksburg's corporate boundaries, but not in any other official municipality, in exchange for annexation.
Clarksburg City Council will consider the first reading of the ordinance amending the city's tax credit programs for businesses during its 7:30 p.m. meeting Thursday in the Clarksburg Municipal Building.
City Manager Percy Ashcraft feels the plan can only help the city.
"Anytime you can extend your boundaries and businesses, it has to be healthy for your city," he said. "If you have it on your books, and nobody takes advantage of it, you haven't lost anything. I think by council adopting it, it will be a proactive measure, not a reactive measure."
Some people aren't completely sold on the proposal, however.
Carl Rist, a senior program manager at the Corporation for Enterprise Development in Durham, N.C., an economic think tank, is skeptical of luring businesses with tax incentives.
Rist, the co-author of "Bidding for Business: Are Cities and States Selling Themselves Short?" said city governments can often foolishly believe that tax-free incentives will serve as the main route to economic prosperity.
He feels tax-free incentives should be used as one tool in a large tool-box of methods to promote economic growth.
"It's a tool that seems to work," he said. "(But) it seems to be a very minor factor in the large picture of what determines economic growth or health."
When cities dangle a tax-free carrot to businesses, they can also risk their future because businesses often fail to keep their promises, Rist said.
"Typically, the danger is that you can give incentives for businesses and they can come and not produce the amount of jobs and economic promises that you thought they would give," he said.
"Given some of the dangers and pitfalls of this, if a community decides to offer these incentives, they also have to be sure to hold businesses accountable. You have to make sure that the businesses are accountable for what they say they will deliver."
In addition, Rist said there's also a possibility of creating a bidding war for businesses located between several cities. In the end, the winner of a bidding war could wind up losing the battle because it could give up more than the business is worth, Rist said.
The city would closely monitor the success and interest of the plan, Ashcraft said.
Meanwhile, some local business owners are wondering why the city is offering out of town businesses such a good deal.
Sharon Skoloski, the owner of S & S Novelties on South Fourth Street, believes the city should be focusing on strengthening the existing businesses downtown.
"They need to try to give us some type of grants or incentives to keep us afloat," she said.
While Skoloski feels that adding more businesses to the city could potentially help her business, she doesn't think it's fair to offer out of town businesses such an economic advantage.
"If you're going to do it for out-of-town businesses, then you have to do it for all new businesses. Period," Skoloski said.
Ashcraft, however, said the city has been helping to breathe new economic life back into the downtown.
The city currently offers tax incentives to new and expanding businesses. Depending upon the location and type of business, new and expanding businesses can receive business and occupation tax credit for up to three years.
For example, new or expanding businesses in the Central Business District, Glen Elk and Montpelier areas could receive business and occupation tax credits of up to a maximum of $50,000 over the three-year program.
The city will continue to make efforts to improve the business climate downtown, Ashcraft said. It was simply more beneficial to make the offer to outlying businesses now, he said.
"If we pass the ordinance now, it would give us a chance to annex businesses as they agree," Ashcraft said. "If we waited, businesses and the city would have to wait to take advantage of the annexation. As we talk to businesses, we can say 'hey, if you come in tomorrow, you don't have to pay business and occupation taxes for three years.'"
A doctor's office has already inquired about moving within Clarksburg's borders. And Davis Funeral Home Inc., a Clarksburg business for more than 75 years, could also benefit from the tax break.
Davis plans on building a modern facility outside city limits along state Route 98. The business made it clear that it wants to remain in Clarksburg during council's conference session on Sept. 10.
Tim Holtz, general manager of Davis Funeral Home, declined comment on specifics of the plans, saying that a formal announcement will be made sometime this fall.