Years of efforts propel Richland County’s growing economy, recent $2B deal. What’s next?

Richland County has struggled for decades with a reputation of not being as business-friendly as other counties in the state that have grown at a faster pace.

But a decade’s worth of efforts have culminated in a $2 billion deal that may be overturning that narrative and is anticipated to encourage other, smaller companies to invest in the Midlands. The question now is, how far can the county ride this recent wave of economic growth?

Scout Motors, an American company newly revived by Volkswagen to produce electric trucks and SUVs, announced earlier this month that it would make a Blythewood site home to its first production plant.

The deal is the largest in county history and is expected to bring 4,000 jobs to the Midlands as well as cement Richland County’s growing foothold in the automobile industry.

An electric vehicle battery recycling company, Cirba Solutions, also is coming to another Richland County site in Pineview Industrial Park off Shop Road. The company is expected to invest in a $32 million plant and bring some 300 jobs.

These announcements come on the heels of a banner year for investments in Richland County in 2022.

Last year’s economic highlights included:

• Mark Anthony Brewing cut the ribbon on its $490 million, 1.3-million-square foot brewery in the Pineview Industrial Park. The development brought more than 300 jobs.

• The Ritedose Corporation is expanding at the Carolina Research Park in a $81 million investment that will create nearly 100 jobs.

• Summit Real Estate Group is investing $28.6 million toward the development of a 350,000-square-foot speculative building in Columbia’s Pineview Industrial Park.

• Palmetto Millworks of the Carolinas is relocating to Lightwood Industrial Park off Interstate 20 and Farrow Road in a $5.5 million investment that will create about 50 jobs.

• PurePower is expanding in Blythewood in a $5.4 million investment that will create 300 jobs.

• LaserForm and Machine is expanding in a $5 million investment that will create about 50 jobs.

• City Roots farm is expanding to a new site in a $4.4 million investment that will create 60 jobs.

• Owen Steel Company is expanding in a $3 million investment that will create about 20 jobs.

• Miwon Specialty Chemical also opened a 65,000 square-foot manufacturing facility in Pineview Industrial Park.

“It’s like economic development on steroids,” said Jeff Ruble, Richland County’s director of economic development.

But new announcements are expected to slow in the future. Richland County’s labor force can only support so many job openings, and high taxes are still barriers to developments across the county, Ruble said.

TREATMENTS, NOT CURES

High taxes have long been one of the largest barriers for Richland County and Columbia, as the state capital.

Not being able to tax government buildings, public universities, nonprofits or military sites has placed one of the biggest burdens in the state on commercial developments in the Midlands.

The limited taxable property in and around the capital city compounds another foundational tax problem for businesses here: The state tax rate for non-residential properties is higher than for primary residences (6% compared to 4%); plus, primary residences don’t pay all the taxes levied by school districts, while commercial properties do.

“It’s very hard to do business in Richland County,” said Carl Blackstone, president and CEO of the Columbia Chamber of Commerce. “We don’t land many deals because of our taxes.”

A fee in lieu of tax agreement was approved for both Scout and Cirba Solutions that effectively reduces the tax rate to be competitive with other states, Ruble said. Any company that is investing more than $2.5 million over five years can qualify for a similar county tax break.

With the unprecedented size of Scout’s investment, the county added additional bonuses on top of the fee in lieu of tax agreement to seal the deal: More land will be made available to turn into an on-site training center for Scout employees, the local fire station will be upgraded to be able to handle any potential lithium ion fires, and money will be set aside each year to provide child care stipends to Scout’s employees, Ruble said.

On top of this, the state approved $1.29 billion worth of incentives for the automaker. Incentives for large deals like this are common and can often help seal the deal, pushing a company to choose the location that is offering better incentives over other competitive sites.

As the Richland County continues to recruit smaller businesses to supplement the newer automotive advances, it will still need to navigate its high tax rates with additional incentives.

And Scout’s investment will compound the need for affordable housing in the area, Ruble said. But taxes are high for those types of commercial developments, too.

Columbia had an ordinance to curb commercial tax rates, but it expired at the end of 2022. Even to begin with, it was considered a mere bandage on a larger issue that’s ingrained in the capital city’s character.

The city tax credit ran from 2019 through 2022, allowing businesses to get up to 50% off their taxes for up to a decade as long as the dollar value of the tax credit didn’t exceed any expenditures on public infrastructure, according to the Commercial Development Tax Credit Policy resolution.

The goal of the incentives was to encourage growth in taxable, commercial development, to increase the density of commercial development and to encourage the retention of talent, according to the resolution.

The effort was successful. Projects in the BullStreet District, off-campus college student apartments and hotels took advantage of the commercial tax credit.

But it’s unclear what will come next. Will fewer businesses choose to make large investments without readily available tax breaks?

Columbia’s largest long-term economic development goal is to be cost-competitive and business friendly, Columbia Economic Development Director Ryan Coleman said.

This means figuring out how to lower taxes as a whole instead of giving incentives.

For its part, the city has been strategizing how to mitigate its tax problem, an effort that was largely being driven by the late councilman and former state commerce secretary Joe Taylor. One solution proposed by a city committee is a tax credit effectively reducing the tax rate for commercial properties to be the same as for residential. But it can’t happen overnight, and it would require a change in state law and the adoption of county legislation to opt in to the would-be program.

So far, no action has been taken on that proposal.

FOCUS ON ADVANTAGES, NOT DISADVANTAGES

Despite hurdles, South Carolina’s economy has been growing on average more than other states throughout the past decade and shows no signs of slowing down, according to University of South Carolina research economist Joseph Von Nessen.

And the future is in the automobile industry, Von Nessen said.

With South Carolina being one of the two major automotive hubs in the U.S. (the Greenville-Spartanburg and Charleston regions are home to Volvo, BMW, Michelin, Mercedes-Benz Vans and General Dynamics Land Systems), it makes sense that Columbia is adapting to the future wave of the automobile industry — electric vehicles — by adding Scout Motors, he said.

But along with nurturing the automotive industry, Richland County needs to lean into its comparative advantages to compete with South Carolina metro areas such as Greenville or Charleston or other capitals across the Southeast in the future.

“We do have a lot of advantages locally — it’s just a matter of building on them,” Von Nessen said.

Richland County’s comparative advantages include its relatively low cost of living, natural amenities and higher education industry, Von Nessen said. Other assets include access to the Congaree River, Lake Murray and the central location between the beach and mountains, Blackstone noted.

Another industry the county can hunker down on is its “sweet spot,” higher education, according to Blackstone.

Columbia’s universities are going to be the drivers of economic development over the next couple decades, according to Blackstone.

For example, he said, the University of South Carolina’s new medical school campus planned to be developed in Columbia’s BullStreet District will benefit not just the university, but the entire district and surrounding areas.

Scout’s recent announcement of 4,000 future jobs might “cool the appetite” of other companies that were looking at making investments that require a large labor force, according to Ruble.

But the universities will come in handy again, as Scout President and CEO Scott Keogh said the company plans to look at engineering talent coming out of nearby universities to help fill its positions.

So even though other companies may be wary of making investments that require a large labor force after Scout’s recent announcement, one potential solution is to make Columbia more attractive so college graduates stay in town and join the local labor force.

And seeing smaller business investments instead of massive ones might even be good for the county, Ruble said.

“We’ve hit the home run. Now we just need to hit singles and doubles,” Ruble said.

Some investments the city and county can make to transform Columbia economically and retain more college graduates include developing along the Congaree River, making the city more walkable and creating more housing downtown and better job opportunities, Coleman said.

“We have all the pieces in place in Columbia to be very optimistic about our future,” Von Nessen said.