Winston-Salem considering $182,950 in incentives to grocery distributor

Winston-Salem City Council will consider a $182,950 request for incentives from a global grocery supply firm to relocate its facilities from High Point and Greensboro to an industrial park in Winston-Salem’s Union Cross Road area thanks to a unanimous recommendation on Monday from the council’s finance committee.

Bunzl Distribution USA, a division of a global distribution firm headquartered in London, operates more than 100 warehouses serving the United States, Canada, Mexico and the Caribbean, according to the company’s website. The company supplies food packaging and cleaning products to food processors, supermarkets and convenience stores.

The company told city officials it was evaluating options to consolidate operations in the Southeast, with expansion in the Triad vying with relocating operations to Richmond, Va. or Greenville, SC. In exchange for the relocation of warehousing facilities, the city would pay out incentives in an amount equal to 50 percent of the new property tax revenue generated by the project after the company after annual property taxes are paid — up to $182,950 over a five-year period. The payments would help defray the cost of construction of a new building in an industrial park off Union Cross Road adjacent to the Herbalife facility. The company plans to invest $13.4 million in construction, equipment and machinery in the facility.

The request comes before the full Winston-Salem City Council on Jan. 16. The company is also requesting an unspecified amount of incentives from Forsyth County.

Technically, the deal relocates 66 jobs from Greensboro and High Point to Winston-Salem, but it’s unlikely to have much effect on employment, either as a net gain for Winston-Salem or a loss to its Guilford County neighbors. The warehouse currently used by Bunzl on Chimney Rock Road near Piedmont Triad International Airport is only 15 miles to the east of the proposed site on the southeastern fringe of Winston-Salem. And Bunzl’s second facility, located at the northern fringe of High Point near the Piedmont triad Farmers Market, is only 11 miles away from the Union Cross Road location. In other words, the Greensboro and High Point facilities are likely already drawing some of their workforce from Winston-Salem, and the workers are likely to follow the jobs there.

“The city of Winston-Salem does not go out and recruit from our other Triad cities — Greensboro and High Point — and we hope they’ll do the same for us,” Mayor Allen Joines said. “This company was going to have to move because they checked out Guilford and could not find another location. We have a kind of gentleman’s/lady’s agreement with those other cities.”

Loren Hill, president of the High Point Economic Development Corp., said the company did not approach the city with a request for incentives to expand in High Point, and the first he had heard about the deal was on Monday.

From an employment perspective, Hill confirmed that the relocation wouldn’t be a total loss.

“The blow would be if we lost those jobs completely from the Triad,” he said. “If that’s not the case, then it’s not the end of the world, and High Point has another building to market to a prospective company.”

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Bunzl’s High Point facility is owned by Samet Corp. and is valued at $2.7 million. The owner paid $19,526 to Guilford County and $17,307 to the city of High Point in property taxes last year. The Pennsylvania real-estate investment company that currently leases warehouse space to Bunzl in Greensboro paid $46,760 to Guilford County and $40,487 in property taxes last year.

An analysis by staff at the city of Winston-Salem acknowledges that “no new jobs are being created.” Financing for the incentives will come out of the city’s Economic Development Project Fund. Even with the wash in employment, the public policy justification listed for the project is “stimulation of the local economy through the creation of new jobs and investment.”

From a government financing standpoint, the deal shifts local tax revenue from Greensboro and High Point to Winston-Salem. A recent development trends report issued by the city of Greensboro indicates that Greensboro’s tax base increased by 7.8 percent from 2010 to 2016, while High Point’s tax base remained flat and Winston-Salem’s tax base declined by 2.6 percent.